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Sunday, April 6, 2008

5 Myths of NAFTA

Here is an excellent article about some demagoguery of NAFTA.

Let me sum up...with the truth...

1)NAFTA has NOT had the transformational effect on our economy that its proponents claimed. This is true and frankly anyone that claimed this prior to the agreement was being overly optimistic. Even the internet's effect on our economy is still an open question. The U.S. economy is 14 trillion dollars yearly, and it is unlikely anyone thing will on its own have a "transformational" effect. That does NOT mean it hasn't been a benefit to the economy.

2)NAFTA has NOT crushed the American worker. This is of course pure fantasy and nonsense coming from the Democrats...

Obama claims that NAFTA has destroyed a million American jobs. Suppose he's right. Total employment still rose by 27 million jobs between 1993 and 2007, to 137.6 million, and the unemployment rate has fallen. At worst, then, NAFTA has cost only a tiny minority of American workers their jobs. And even that is a one-sided view. As Mexico opened its economy to U.S. trade and investment, NAFTA created new American jobs, too.

3) Trying to renogiate NAFTA would come with all sorts of unintended consequences. The Democrats show the height of political hubris when they threaten to renegotiate long standing trade agreements. There is quite a bit of chutzpah when that is said simultaneously to becrying our standing in the world. Trying to renegotiate long standing trade pacts is a great way to lose allies all around the world, and any threats thereof are at best counter productive. Here is how Canadian Premier put it...

"Of course, if any American government ever chose to make the mistake of opening [NAFTA], we would have some things we would want to talk about as well.

4)Making labor and environmental standards stricter will NOT help the American worker in any meaningful way. This has always been a red herring to me. No free trade pact is perfect, and frankly very few things are anywhere. Of course, there could be more emphasis on working conditions and the environment, however in the big picture, opening up our market improves the quality of life of all in the third world which eventually leads to better working conditions and environmental standards. Trying to negotiate such things through a trade pact is dicey at best.

5)Renegotiating NAFTA should NOT be a priority for the next President. Instead, what should be a priority is signing new trade pacts. The most important trade pact on the table is the one with Colombia. Our best ally in the region and a country that has transformed itself remarkably is looking for more economic partnership. If we do not provide it, that will make Colombia's job tougher in acting as a counter balance to Hugo Chavez in the region.

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