Home
 
 What's New?
 
 This Site
 
 Organizational Basics
 
 About
 
 Systems Thoughts
 
 Business Applications
 
 Working Papers
 
 Social Issues
 
 Systems Links
 
 Consulting Links
 
 ST Class
 
 Politics
 Libertarian Objections
 Liberal Moments(SM)
 Political & Economic Links
 
 Health
 
 Music
 
 Pics


Get our Bulletin

Home > Social Issues
Trade Truth #1: The NAFTA Nemesis
by Bob Powell, 4/18/08
Printer-friendly page Printer page
Email Page Email article

Summary (jump to article)

"Free trade" fundamentalists note "export growth" is essential to economic well-being. But, after NAFTA, exports have suffered relative to imports no matter how one looks at the data. They totally ignore how imports have slammed exports on all counts: absolute level, growth, and acceleration.

It seems they simply don't care that current policies have dug the nation into a "trade" debt hole or that it's doing so more and more rapidly. They constantly call for more of the same. Trade debt, it seems, like Dick Cheney's view of fiscal debt, doesn't matter as long as profits can be privatized and the costs socialized.

These "free market," "free trade" fundamentalists apply "deficits don't matter" thinking to all deficits. That mentality and greed has wrecked the U.S. economy, undermined the wages and economic well-being of the vast majority of Americans, crushed national sovereignty, and even subverted military security.

This from Trading Away Our Future: How to Fix Our Government-Driven Trade Deficits and Faulty Tax System Before it's Too Late by Raymond L. Richman, et al., 3/15/08 [1] :

As advocates of free markets, we generally approve of relying on the free play of market forces to provide the highest level of welfare for Americans. … But we discovered that free trade, normally beneficial, had become an ideology blinding the United States establishment from seeing key causes of the trade deficits and their disastrous consequences. The trade deficits are sustained by government policies, both U.S. government tax policies and foreign government mercantilist policies, not by the free play of market forces.

For what's happening and what to do about it, see The Trade Deficit and the Fallacy of Composition. But first, look at what proponents don't say and what's really happening.

Pro-NAFTA Propaganda promoting "lawless trade" and the undermining of the U.S. economy

Found on the Denver Post and New York Times
Historical failure on Colombia trade pact, The Denver Post, 04/11/2008 
Bush says US not headed into a recession, Associated Press Writers, 
Obama: Clinton fudges on NAFTA, David Espo, Associated Press, 02/24/2008 
Enforce trucking safety rules under NAFTA plan, Denver Post Editorial Board, 09/05/2007 
Pandering on trade policy bad for business, workers, Denver Post Editorial Board, 08/20/2007
Time for the Colombian Trade Pact, New York Times Editorial, 4/12/08

The NAFTA Nemesis

"Free trade" propaganda
Distortion 1. Only talk about the rising level of exports 
Distortion 2. Don't mention imports are rising faster than exports
Distortion 3. Don't mention that exports were rising faster than imports before NAFTA and that after NAFTA it's the opposite
Distortion 4. Don't notice that imports are accelerating and exports are decelerating
Summary Facts
Conclusion

Here are pdf and doc formats for printout; right click to "Save Link as" to your computer. 7/3/08: added 1st graph below and renumbered the graphs following ... pdf & doc files not yet updated.

[Missing: Our Trade Strategy By Harold Meyerson, 4/10/08, makes many of the points as in this article.]

The NAFTA Nemesis by Bob Powell
Posted 4/18/08
Nemesis: A source of harm or ruin.

"Free trade" propaganda

"Free trade" advocates include "conservatives," Republicans, Libertarians, DLC Democrats, and so-called "liberal media" like the Denver Post and the New York Times. They tell us how great agreements such as NAFTA have been for the U.S. economy.

It's all false. There's no other way to put it: The NAFTA model is an economic failure for the U.S. Actually, it's worse; the goal is to canabalize the U.S. economy for profit. Yet they continue to promote extending such agreements to other countries pretending they benefit us.

How do they get away with so much "free trade" misinformation? For example, relative to NAFTA?

1. Only talk about the rising level of exports and export-related job gains and don't talk about imports at all, especially not import-related job losses or the undermining of U.S. wages.

2. Don't mention that after NAFTA imports are rising much, much faster than exports.

3. Especially don't mention -- it would be a major shock -- that exports were rising faster than imports before NAFTA and that after NAFTA it's the opposite.

4. Don't notice that imports are accelerating and exports are decelerating.

You say all this can't be true, because that's not what we hear from them? But it is true as this article documents, with graphs from, and analysis based on, official government data.

Note 4/7/14: Many blame Clinton and the Democrats for NAFTA. They're half right. Clinton is to blame, but not the Democrats as a whole. Here are the votes for and against NAFTA: it only passed despite massive Democratic opposition and only thanks to massive Republican support, with whom Clinton colluded.

Summary For Republicans Democrats
Senate 34 27
House 132 102
Total 166 129
Summary Against
Republicans Democrats
Senate 10 28
House 43 156
Total 53 184

As an example of the pro-"free trade" propaganda, The Denver Post Editorial Board (DP) has a long history of distorting the reality of the effects of "free trade." It's long argued that NAFTA is a benefit to the U.S. It's used selective facts and ignored trends to distort the very real impact of NAFTA and other NAFTA-like "free trade" agreements.

One might say they are deluded, where delusion is a false belief sustained despite clear evidence to the contrary. But the evidence is so clear that I can only believe they are knowingly lying to promote their financial special interests. This is typical of the corporate media with major revenue from corporate advertisers (primarily import, Wal-Mart-like corporations) and of other "free trade" ideologues in denial of reality.

The Denver Post argued in their 9/05/07 "Enforce trucking safety rules under NAFTA plan" that "the ongoing controversy over NAFTA and a fierce campaign for protectionist measures ... may imperil any future steps toward further easing restrictions on international trade." It argued for "allowing the kind of free trade in services that NAFTA has long fostered in manufactured goods, leading to $330 billion in trade between the U.S. and Mexico last year" and objects to a "protectionist lobby.... anti-trade campaign." The DP doesn't explain that the $330B in 2006 was $134B in exports and a whopping $198B in imports.

An 8/20/07 editorial on "Pandering on trade policy bad for business, workers" touted that "U.S. exports to Mexico tripled after [NAFTA] went into effect [in 1994]." It maintained that future NAFTA-like "trade pacts now pending before Congress are designed to knock down existing barriers to U.S. exports" but fails to mention that the major effect of NAFTA has been to increase imports by a factor of five (see the graph below). It fails to mention that before NAFTA exports were increasing 46% faster than imports, but currently imports are increasing 85% faster than exports.

From 1993 to 2007 imports overwhelmed exports. Exports increased by a factor of 3.28, but imports increased by a factor of 5.28.

The latter editorial also argued against "a return to protectionist policies that will force American consumers to pay higher prices while costing U.S. workers thousands of export-related jobs." This concern would be touching, but it expresses no similar concern that even greater imports, by similar reasoning, have already resulted in an even greater number of lost, good-paying jobs.

As for prices, they're set by what the market will bear, not by the cost of low wage labor. The use of "offshore" labor to reduce costs has increased corporate profits and CEO pay at the expense of those who work for a wage. What's happening is actually the "transfer of the factors of production," mainly labor. It's not "trade"; it's labor arbitrage.

Besides, compensation would have been 68% higher in 2004 had it continued to track productivity instead of being undermined by low-wage offshore labor (in Mexico and China) and high real unemployment (also more like 12% than 5%). We wouldn't need all those supposedly-cheap imports had wages continued to increase. We should say "supposedly-cheap" because inflation has been more like 12% than the "official" 3 – 5% (also see Numbers racket: Why the economy is worse than we know by Kevin Phillips, Harper's, May08).

The Denver Post promotes the Columbia Free Trade Agreement in its 4/11/08 editorial, Historical failure on Colombia trade pact. It calls the pact "mutually beneficial." It berates those who oppose it as "spineless" and pursuing "anti-trade demagoguery." But it's not "exploiting fears" to oppose agreements that damage the U.S.; it's rational.

It says those who oppose it are "shamefully misleading voters about the long-term economic effects of NAFTA." But the opposite is true. It's the Denver Post that's shamelessly misrepresenting the long-term economic impacts of NAFTA and, unfortunately, shows the opposite of "common sense." Agreements such as NAFTA are not beneficial for the U.S. and those who oppose them are, thankfully, the ones showing some spine.

The Denver Post and others can only make these arguments by presenting selective data to distort the true picture of the impact of what's called "free trade." Let's go through the distortions, one-by-one.


Distortion 1 . Only talk about the rising level of exports and export-related job gains and don't talk about imports at all, especially not import-related job losses or the undermining of U.S wages.

Graph 1 above shows that from 1993 to 2007 imports overwhelmed exports. Exports increased by a factor of 3.28, but imports increased by a factor of 5.28.

Graph 2 below shows imports tracked exports pretty closely before NAFTA. Since NAFTA imports have grown much faster than exports. By 2007 imports have overwhelmed exports $210.8B to $136.5B, a factor of 1.54.

G1: Mexico - Imports, Exports, Balance

Graph 3 shows that on average from 1985 to 2007 imports increased by $8.85B/yr and exports by $5.93B/yr, that's a factor of 1.5. The major beneficiary of "trade" with Mexico has been imports, not exports.

Distortion 1 Recap: Imports overwhelm exports by 54% in 2007. From 1985 – 2007 imports have risen on average 1.5 times faster than exports.


Distortion 2 Don't mention that after NAFTA imports are rising much, much faster than exports.

Graph 3 understates just how much imports have increased relative to exports.

G2: Mexico - Import & Export average growth 1985 - 2007

For a better picture, let's look at the behavior of exports and imports both before and after NAFTA was passed in November of 1993. That will show how much effect NAFTA had on the growth of imports and exports.

Imports: Graph 4 shows that the growth of imports from Mexico increased from $2.76B/yr before NAFTA to $11.50B/yr after NAFTA, a factor of 4.16X.

G3: Mexico - Import average growth before & after NAFTA

Exports: Graph 5 shows that the export-rate increase to Mexico was from $4.02B/yr before NAFTA to $6.68B/yr after NAFTA. That's a factor of 1.66X, not all that much faster compared to the 4.16X increased rate of imports.

G4: Mexico - Export average growth before & after NAFTA

But the earlier Graph 4 also understates how fast imports are growing. To see why, we need to look both before and after the year 2002.

Taking into account 2002 economic slowdown effects

Imports: As noted above, Graph 4 shows that imports are growing faster after NAFTA than before. It would appear from the graph that imports were growing at $2.76B/yr before NAFTA and $11.50B/yr after NAFTA.

But this understates how much the import rate is increasing because of the pause in economic activity in 2002. We can better see what's happened by breaking the "after NAFTA" timeframe into two regions: 1994-2001 and 2003-2007 (the 2002 point is omitted to avoid the 2002 pause).

Graph 6 shows that, like total imports to the U.S., imports from Mexico are growing even more rapidly after 2002. Over two decades import growth has rapidly accelerated with the import growth rate increasing from $2.76B/yr to $12.6B/yr to $18.8B/yr. 

G5: Mexico - with linear fits over 3 periods showing the import growth rate after NAFTA has increased over all 3 periods

Currently imports are rising 6.8 times as fast as before NAFTA.

Exports: What about the growth rate of exports before and after 2002? Graph 7 shows that after 2003, though there was from an export "step down," export growth continued at approximately the same rate as over the 1994-2001 timeframe, instead of exploding as imports have.

G6: Mexico - Exports with linear fits over 3 periods showing the export growth rate after NAFTA is a fraction of import growth rate

Exports are currently growing 2.5 times as fast as before NAFTA (10.14 / 4.0238).

Imports are currently growing at a rate of $18.783B/yr and exports at 10.14B/yr. Therefore, not only does the level of imports far exceed exports, $210.8B vs. $136.5B, a factor of 1.54, imports are growing 1.85 times faster than exports.

On the 2002 economic slowdown The "step down" or pause in both imports and exports during 2002 may be because of an economic slowdown that started in early 2001, because of the effects of 9/11/2001, and because of the rapid increase in manufacturing moving out of Mexico to places with even lower wages, like China.

Graph 8 shows the rapid rise of imports from China. In 2007 imports from China swamped exports to China by a factor of almost 5 ($321.5B/$65.2B).

G7: "Trade" with China - Showing imports overwhelming exports

Imports from China now overwhelm imports from Mexico. In 1993 imports from Mexico exceeded imports from China: $39.9B to $31.5B (27%). In 2007 it's by far the reverse: imports from Mexico lag far behind imports from China: $210.8B to $321.5B (53%). 

Distortion 2 Recap. From 2003 to 2007, imports have been growing on average 6.8 times as fast as before NAFTA whereas exports have been growing only 2.5 times as fast as before NAFTA. From 2003 to 2007 imports have been growing 85% faster than exports. That's much, much faster, but don't mention any of this.


Distortion 3. Especially don't mention -- it would be a major shock -- that exports were rising faster than imports before NAFTA and that after NAFTA it's the opposite

What's shocking is to look at the relative rates of increase of imports and exports before and after NAFTA.

Graph 9 shows that before NAFTA, exports were increasing at a rate 1.46 faster than imports (4.0238 / 2.7581).

G8: Mexico - Import & export average growth before NAFTA

Graph 10 shows that after NAFTA the opposite is true! After NAFTA imports have been increasing faster than exports ... 1.72 times faster (11.50 / 6.68).

G9: Mexico - Import & export average growth after NAFTA

But Graphs 6 and 7 above show that imports are currently growing at a rate of $18.78B/yr and exports are growing at a rate of $10.14B/yr. That means imports are really growing 1.85 times faster than exports, rather than 1.72 times faster.

Distortion 3 Recap. Exports were increasing 1.46 times faster than exports before NAFTA and now imports are increasing 1.85 times faster than exports.


Distortion 4. Don't notice that imports are accelerating and exports are decelerating

What about the acceleration of imports and exports before and after NAFTA? In other words, how fast are the "growth rates" changing for imports and exports?

Imports: Graph 11 would lead one to believe that the acceleration of imports after NAFTA is less than before NAFTA (by a factor of 0.137 / 0.1715 = 0.8).

G10: Mexico - Export growth with 2nd order polynomial fit to show import acceleration before and after NAFTA

But this is misleading because of the pause in economic activity in 2002. We can see why by breaking the "after NAFTA" timeframe into two regions, 1994-2001, and 2003-2007.

Graph 12 shows that, after NAFTA, imports are currently accelerating faster over the (blue) 2003-2007 period than over either the (green) "before NAFTA" period or the (red) 1994-2001 period.

G11: Mexico - Ixport growth with 2nd order polynomial fit within 3 periods to show ixport acceleration

Exports: Graph 13 shows that during the (blue) 2003-2007 timeframe exports are actually decelerating! That is, the rate of increase of exports is falling ... negative curvature. This is the case even though imports during the same period are accelerating (Graph 11). If NAFTA were good for exports, the export trend would be curving upward.

G12: Mexico - Export growth with 2nd order polynomial fit within 3 periods to show export acceleration

Also, note that before NAFTA exports were accelerating faster than imports by a factor of 1.28 (0.2197 / 0.1715 from the green lines on Graphs 12 and 11).

Distortion 4 Recap. Before NAFTA exports were accelerating 28% faster than imports. Currently, exports are decelerating while imports continue to accelerate. 


Summary Facts

Fact 1. Import vs. export levels and average relative rates of increase.
Since NAFTA, exports increased by a factor of 3.28, but imports increased by a factor of 5.28. Imports have risen on average 1.5 times faster than exports which has led imports in 2007 to overwhelm exports by $210.8B to $136.5B, that's by 54%.

Fact 2. Import & export growth rates: before & after NAFTA
From 2003 to 2007, imports have been growing on average 6.8 times as fast as before NAFTA whereas exports have been growing only 2.5 times as fast as before NAFTA. From 2003 to 2007 imports have been growing 85% faster than exports: $18.783B/yr vs. $10.14B/yr.

Fact 3. Relative import vs. export growth rates, before & after NAFTA
Before NAFTA exports increased 46% faster than imports. Since NAFTA it's the opposite; from 2003 to 2007 imports have been increasing 85% faster than exports.

Fact 4. Acceleration of imports and exports
Before NAFTA exports were accelerating 28% faster than imports. Currently, exports are decelerating while imports continue to accelerate. 

Conclusion

"Free trade" advocate talking points are about the benefits of such agreements for increasing exports. Yes, exports are increasing. But NAFTA, no matter how one looks at the data, has been primarily to the benefit of imports and to the relative detriment of exports.

  • The absolute level of imports in 2007 is 54% greater than the level of exports.
  • From 2003 to 2007 imports grew 85% faster than exports.
  • Most damning of all, before NAFTA exports were increasing 46% faster than imports! Now it's the reverse with a vengeance: imports increasing 85% faster than exports!
  • Imports continue to grow faster, but export growth is slowing. Before NAFTA the growth rate of exports was increasing 28% faster than the growth rate of imports.

 

Who knew?

Pro-"free trade" propaganda in the Denver Post and other mainstream media would never convey any of this. If NAFTA were good for exports, all these measures would be the reverse.

Now I've become quite skeptical about anything "free trade" advocates say, but it's shocking even to me that they would retain a pro-NAFTA stance in the face of these facts.

What's the effect of this and other "trade" pacts?

Since March 1998, the U.S. has lost 4 million manufacturing jobs (22.6%) and since March 2001 707,000 IT jobs (19%). The percentages for Colorado are much greater; losing since April 1998 49,900 manufacturing jobs (25.9%) and since January 2001 37,400 IT jobs (33%) – see the graphs at Jobs & 'Trade' Data Update Apr08. In addition, as of Feb 2008 Colorado needs another 167,011 jobs to keep up with population growth (Graph 13).

G13: Colorado Non-farm jobs showing gap between number of jobs needed to keep up with population growth and the actual number of jobs

Yet, despite these trends, on 8/20/07 in Pandering on trade policy bad for business, workers the Denver Post Editorial Board has the audacity to maintain that "Colorado businesses and workers have thrived in the climate of liberalized trade fostered by NAFTA and other trade agreements." That's false on the face of it.

Manufacturing and information technology are specific job categories that the U.S. is losing. The problem is not simply the loss of jobs in these categories, but more fundamentally the erosion of the pay and quality of jobs – see The Death of the Middle Class.

"Free trade" advocates don't promote "free trade," they promote "lawless trade" and subsidizing the transfer of high-paying jobs to other countries.

They rail against "protectionism;" but if the economy, the economic security of citizens, and even the military security of the nation aren't worth protecting, what is?

 

Denver Post and New York Times editorials promoting "lawless trade"
and the undermining of the
U.S. economy

1. Historical failure on Colombia trade pact By The Denver Post, Last Updated: 04/11/2008

President Bush sent the mutually beneficial U.S.-Colombia Free Trade Agreement to Congress last week after more than a year of negotiations.

But rather than allow a vote, Democratic Speaker of the House Nancy Pelosi, in a remarkable display of spinelessness, changed 30 years of procedure, and for the first time in history of Congress effectively rejected an international trade agreement.

By shielding members of her party from recording a vote, Pelosi sold out American consumers, farmers and businesses to unions and political expediency. This development, sadly, is a manifestation of a year of anti-trade demagoguery coming from the Democratic Party on the campaign trail.

Since World War II, Congress, whichever party ruled, has embraced the benefits and prosperity of international free trade. Yet, with the recent economic downturn, opponents have increasingly exploited the fears of Americans.

It is an abrupt and inexplicable departure by leading Democratic Party presidential hopefuls and their party. 

When Hillary Clinton demoted her top adviser, Mark Penn, recently, for having the audacity to lobby for more trade, she sent a clear message that protectionism had overtaken the enlightened policies of her husband's administration.

Barack Obama, too, has featured abrasive criticisms of international agreements like the North American Free Trade Agreement in his stump speeches. Both have consistently linked recent downturns to trade pacts while campaigning in industrial states like Pennsylvania and Ohio.

But they are shamefully misleading voters about the long-term economic effects of NAFTA. From 1993 to 2007, NAFTA member nations tripled their trade with the United States. Investments by NAFTA member nations in the United States have grown more than 100 percent since ratification, while our manufacturing output has grown 58 percent. Exports reached an all-time high in 2007.

And jobs? Since NAFTA's ratification, employment has increased 24 percent. Unemployment, which was at 6.9 percent in 1993, is now around 4.9 percent — only that high after a recent bump. Those economic indicators far exceed the 15 years preceding NAFTA.

In the case of Colombia, the shelving of the agreement is particularly perplexing. Colombia is our only ally in the area. The nation's human- rights record is steadily improving, even as it fights drug trade, corruption and terror organizations — egged on by its hostile neighbors.

Moreover, Colombia exports to the United States already are duty-free, so this agreement would only make trade fairer. The agreement is also virtually identical to one Congress recently approved with Peru.

So there can be no other explanation. In the midst of a potential recession, Democratic Party leaders are being led by political calculation, special interests and the fringe of their party, rather than common sense on trade.

 

2. Bush says US not headed into a recession (only cached available … The Denver Post has removed this article from their website) By TERENCE HUNT and JENNIFER LOVEN Associated Press Writers, Updated: 02/28/2008

WASHINGTON—President Bush said Thursday the country is not recession-bound and, despite expressing concern about slowing economic growth, rejected for now any additional stimulus efforts. "We acted robustly," he said.

"We'll see the effects of this pro-growth package," Bush told reporters at a White House news conference, acknowledging that some lawmakers already are talking about a second stimulus package. "Why don't we let stimulus package 1, which seemed like a good idea at the time, have a chance to kick in?"

Bush's view of the economy was decidedly rosier than that of many economists, who say the country is nearing recession territory or may already be there. "I'm concerned about the economy," he said. "I don't think we're headed to recession. But no question, we're in a slowdown."

The centerpiece of government efforts to brace the wobbly economy is a package Congress passed and Bush signed last month. It will rush rebates ranging from $300 to $1,200 to millions of people and give tax incentives to businesses.

On one issue particularly worrisome to American consumers, there are indications that paying $4 for a gallon of gasoline is not out of the question once the summer driving season arrives. Asked about that, Bush said "That's interesting. I hadn't heard that. ... I know it's high now."

Bush also telegraphed optimism about the U.S. dollar, which has been declining in value.

"I believe that our economy has got the fundamentals in place for us to ... grow and continue growing, more robustly hopefully than we're growing now," he said. "So we're still for a strong dollar."

Bush also used his news conference to press Congress to give telecommunications companies legal immunity for helping the government eavesdrop after the Sept. 11 terrorist attacks.

He continued a near-daily effort to prod lawmakers into passing his version of a law to make it easier for the government to conduct domestic eavesdropping on suspected terrorists' phone calls and e-mails. He says the country is in more danger now that a temporary surveillance law has expired.

The president and Congress are in a showdown over Bush's demand on the immunity issue.

Bush said the companies helped the government after being told "that their assistance was legal and vital to national security." "Allowing these lawsuits to proceed would be unfair," he said.

More important, Bush added, "the litigation process could lead to the disclosure of information about how we conduct surveillance and it would give al-Qaida and others a roadmap as to how to avoid the surveillance."

The Senate passed its version of the surveillance bill earlier this month, and it provides retroactive legal protection for telecommunications companies that wiretapped U.S. phone and computer lines at the government's request and without court permission. The House version, approved in October, does not include telecom immunity.

Telecom companies face around 40 lawsuits for their alleged role in wiretapping their American customers.

Senate Democrats appeared unwilling to budge.

As Bush began speaking, Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., cast the president's position as a "tiresome campaign...to avoid accountability for the unlawful surveillance of Americans."

"The president once again is misusing his bully pulpit," Leahy said. "Once again they are showing they are not above fear-mongering if that's what it takes to get their way."

Bush criticized the Democratic presidential candidates over their attempts to disassociate themselves from the North American Free Trade Agreement, a free-trade pact between the U.S., Canada and Mexico. Bush said the deal is contributing to more and better-paying jobs for Americans.

"The idea of just unilaterally withdrawing from a trade treaty because of, you know, trying to score political points is not good policy," he said. "It's not good policy on the merits and it's not good policy as a message to send to people who have in good faith signed a treaty and worked with us on a treaty."

Democratic Sens. Hillary Rodham Clinton and Barack Obama are feuding over NAFTA as they compete for their party's presidential nomination, as the pact is deeply unpopular with blue-collar workers. Though neither has said they were ready to pull the United States out of the agreement, both say they would use the threat of doing so to pressure Mexico to renegotiate tougher labor, environmental and enforcement provisions.

Bush fended off a question about why he has yet to replace Fran Townsend, his White House-based terrorism adviser, who announced her resignation more than three months ago. He said the job is being ably filled by her former deputy, Joel Bagnal.

On another issue, Bush said that Turkey's offensive against Kurdish rebels in northern Iraq should be limited—and should end as soon as possible. The ongoing fighting has put the United States in a touchy position, as it is close allies with both Iraq and Turkey. A long offensive along their border could jeopardize security in Iraq just as the U.S. is trying to stabilize the war-wracked country.

"The Turks need to move, move quickly, achieve their objective and get out," he said.

On Russia, Bush said he does not know much about Dmitry Medvedev, the handpicked successor to President Vladimir Putin who is coasting to the job. Bush said it will be interesting to see who represents Russia—presumably either Medvedev or Putin—at the Group of Eight meeting later this year in Japan.

The president advised his own successor to develop a personal relationship with whomever is in charge in Moscow.

"As you know, Putin's a straightforward, pretty tough character when it comes to his interests—well so am I," Bush said. He said that he and Putin have "had some diplomatic head butts."

Bush also said, however, that the pair have "a cordial enough relationship to be able to deal with common threats and opportunities, and that's going to be important for the next president to maintain."

Bush also defended his stance of not talking directly with leaders of adversaries such as Iran and Cuba without setting preconditions. In doing so, he offered some of his strongest criticism yet of Raul Castro, who assumed Cuba's presidency on Sunday after his ailing brother Fidel, who ruled for decades, stepped aside.

"Sitting down at the table, having your picture taken with a tyrant such as Raul Castro, for example, lends the status of the office and the status of our country to him," Bush said.

He said that Raul Castro is "nothing more than an extension of what his brother did, which is ruin an island."

Following his news conference, Bush traveled to the Labor Department to meet with his economic advisers.

Afterward, he expressed confidence in the nation's ability to weather the economic downturn.

"We'll make it through this period just like we made it through other periods of uncertainty during my presidency," Bush said.

 

3. Obama: Clinton fudges on NAFTA By David Espo, The Associated Press, Article Last Updated: 02/24/2008

LORAIN, OHIO — Barack Obama accused Democratic presidential rival Hillary Rodham Clinton on Sunday of trying to walk away from a long record of support for NAFTA, the free trade agreement that he said has cost 50,000 jobs in Ohio, site of next week's primary.

At the same time, he said attempts to repeal the trade deal "would probably result in more job losses than job gains in the United States." One day after Clinton angrily accused him of distorting her record on the North American Free Trade Agreement in mass mailings, the Illinois senator was eager to rekindle the long-distance debate, using passages from the former first lady's book as well as her own words.

"Ten years after NAFTA passed, Senator Clinton said it was good for America," Obama said. "Well, I don't think NAFTA has been good for America — and I never have." "The fact is, she was saying great things about NAFTA until she started running for president," Obama told an audience at a factory that makes wall board, located in a working class community west of Cleveland.

Later, at a rally in Toledo, he rebutted the former first lady's statement that her husband had merely inherited NAFTA when he won the White House from former President George H.W Bush.

President Clinton "championed NAFTA," passed it through Congress and signed it into law, Obama said.

A spokesman for Clinton, Phil Singer, said the former first lady was critical of NAFTA long before she ran for president. He cited remarks from March 2000 in which she said, "What happened to NAFTA I think was we inherited an agreement that we didn't get everything we should have got out of it in my opinion. I think the NAFTA agreement was flawed." Singer also said that in 2004 in Illinois, Obama spoke positively of the trade agreement, saying the United States had "benefited enormously" from exports under NAFTA.

The trade agreement has long been unpopular in the industrial Midwest, where critics blame it for lost jobs and shuttered factories, many of which once employed union workers who tend to vote Democratic.

Ohio and Texas both hold primaries next week, with 334 delegates combined, and former President Clinton has said publicly his wife probably needs to win both of them if she is to win the Democratic presidential nomination.

Vermont and Rhode Island also hold primaries on March 4, but have far fewer delegates and have not attracted nearly as much attention.

On another issue, Obama said he was not concerned that Republicans might attempt to depict him as unpatriotic if he becomes the Democratic nominee.

Asked about a series of events, such as not placing his hand over his heart during the national anthem, he said, "The way I will respond to it is with the truth. That I owe everything I am to this country." He also said patriotism had more than one definition, and that Republicans had presided over a war "in which our troops did not get the body armor they needed" or were sent into the war zone without enough training.

Polls show Clinton with a narrowing lead in Ohio, where trade has long been a sensitive issue.

Its political impact has long been obvious in the state, since Democratic Rep. Tom Sawyer voted for the agreement and then lost his seat a few years later in an election in which trade was the key issue.

Sawyer supports Obama and attended his public rally in Akron on Saturday. He declined a request for an interview.

Given that backdrop, the issue is the core of Obama's drive to win the Ohio primary and possibly force Clinton from the race.

At the news conference, he said Clinton has "essentially presented herself as co-president during the Clinton years. Every good thing that happened she says she was a part of and so the notion that you can selectively pick what you take credit for and then run away from what isn't politically convenient, that doesn't make sense." On Saturday, Clinton called attention to her plan to fix problems with NAFTA and a commitment against any future trade deals "unless they are positive for American workers." To an audience of Boilermakers Union members and their families, Obama promised the same thing, with particular attention paid to labor and environmental concerns.

"Now, if we're honest with ourselves, we'll acknowledge that we can't stop globalization in its tracks and that some of these jobs aren't coming back," he said. "But what I refuse to accept is that we have to stand idly by while workers watch their jobs get shipped overseas."

 

4. Enforce trucking safety rules under NAFTA plan - The Denver Post Denver Post Editorial Board, Article Last Updated: 09/05/2007

A dozen years after passage of the North American Free Trade Agreement, the U.S. and Mexican governments are at last poised to implement, at least on a pilot basis, one of its key provisions — across-the-border trucking. But the ongoing controversy over NAFTA and a fierce campaign for protectionist measures by the AFL-CIO may imperil any future steps toward further easing restrictions on international trade.

Cross-border trucking was supposed to begin as part of NAFTA, a three-way agreement between the U.S., Canada and Mexico. But while Canadian trucking companies and their drivers have full access to U.S. highways — and U.S. companies enjoy reciprocal rights in Canada — then-President Bill Clinton in 1995 blocked Mexican trucks from carrying cargo beyond a commercial zone of about 25 miles at certain border crossings, such as San Diego and El Paso — where their cargos must be reloaded onto U.S. trucks driven by U.S. drivers.

Clinton said he acted out of fear that unsafe Mexican trucks would become a hazard on U.S. highways. But the action was a clear victory for the Teamsters Union, whose members feared they might have to compete with Mexican drivers who receive lower pay and fewer benefits than their U.S. counterparts.

In an attempt to break the resulting 12-year deadlock, the Bush administration and the Mexican government negotiated a pilot program to allow as many as 100 Mexican trucking companies to freely haul their cargo anywhere within the U.S. for the next year, while U.S. firms receive similar rights in Mexico.

Under the plan, Mexican trucks and drivers would be required to meet regulations at least as strict as, and sometimes stricter than, those imposed on U.S. firms operating in this country. It's an important provision.

Besides inspection of the vehicles themselves, Mexican drivers are subject to the same drug and alcohol tests as U.S. drivers. Meanwhile, law enforcement officials have stepped up nationwide enforcement of a law on the books since the 1970s requiring interstate truck and bus drivers to have a basic understanding of written and spoken English. There must be no mistaking our traffic signs.

We hope those rules are adequate to address whatever legitimate safety concerns prompted Clinton's 1995 freeze. But just as clearly, they don't address the economic concerns of U.S. Teamsters and independent drivers. Thus the Teamsters, backed by the Sierra Club and the liberal group Public Citizen, sued to block the pilot program from going into effect. The 9th U.S. Circuit Court of Appeals in San Francisco on Friday denied their request for an injunction, clearing the way for trucks to roll as early as today.

The move is an important step toward allowing the kind of free trade in services that NAFTA has long fostered in manufactured goods, leading to $330 billion in trade between the U.S. and Mexico last year — 70 percent of which was moved by truck. But it comes at a time of mounting opposition, led by the AFL-CIO, to trade liberalization policies.

We urge the Bush administration to vigorously enforce the trucking safety rules, both to protect American motorists and to avoid giving the protectionist lobby further fuel for its anti-trade campaign.

 

5. Pandering on trade policy bad for business, workers By The Denver Post Editorial Board Article Last Updated: 08/20/2007

One of the more harmful results of this early presidential contest has been the introduction of election-year political pandering to the trade debate in Congress. The result may be a return to protectionist policies that will force American consumers to pay higher prices while costing U.S. workers thousands of export-related jobs.

Every U.S. president since World War II, Republican or Democrat, has fought to reduce the kind of trade barriers that triggered the Great Depression of the 1930s. For its part, the Bush administration has followed the fine example set by its Democratic predecessor, Bill Clinton, by seeking approval of free trade agreements with South Korea, Panama, Peru and Colombia.

But the Democrat-controlled Congress has so far balked - in part because of the desire of presidential hopefuls to curry favor with small but noisy special interests opposed to expanding trade. Even Sen. Hillary Clinton banged the protectionist drum in a recent appearance before the AFL-CIO by assailing the landmark North American Free Trade Agreement.

"NAFTA and the way it's been implemented has hurt a lot of American workers," Sen. Clinton said, adding she has been a critic of NAFTA "for many years."

That's a curious thing for the wife of Bill Clinton to say, since NAFTA was approved by Congress on Clinton's presidential watch and with his strong support.

U.S. exports to Mexico tripled after the landmark trade agreement went into effect.

Colorado businesses and workers have thrived in the climate of liberalized trade fostered by NAFTA and other trade agreements. In 2006, businesses in Colorado exported $8 billion worth of manufactured goods to foreign customers, according to the U.S. Chamber of Commerce.

Colorado also has benefited from foreign investment that has followed in the wake of freer international trade. Some 71,400 workers in Colorado are employed by foreign companies that have invested in the U.S. And foreign customers bought $675 million worth of Colorado agricultural products in 2005.

Protectionists seem to believe that foreign customers will go on buying U.S. products even if we erect barriers against the goods they try to sell to us. The truth is exactly the opposite: The trade pacts now pending before Congress are designed to knock down existing barriers to U.S. exports.

As The Detroit News noted on Aug. 12, "The U.S.-South Korea Free Trade Agreement, along with agreements proposed for Colombia, Peru and Panama, would give American companies access to markets that were previously mostly off-limits. The Korean pact eliminates the 8 percent tariff on passenger cars that South Korea imposed (compared with 2.5 percent in the United States) and removes 95 percent of tariffs on consumer and industrial products. Nearly all other tariffs will be wiped out within 10 years. Despite the rhetoric against such opportunities, those are good things for Michigan."

In this case, what's good for Michigan is also good for Colorado - and for America. Congress should approve these job-creating trade pacts when it returns from its August vacation.

 

6. Time for the Colombian Trade Pact,
New York Times Editorial, April 12, 2008

American workers are understandably anxious. Their incomes went nowhere through six years of economic growth. Many are losing their jobs as the economy slips into recession. Yet concern about workers’ plight should not lead Congressional Democrats to reject the trade agreement with Colombia. This deal would benefit the American economy and further the nation’s broader interests in Latin America.

It is time for Congress to ratify it.

The trade pact would produce clear benefits for American businesses and their workers. Most Colombian exports are exempt from United States’ tariffs. American exports, however, face high Colombian tariffs and would benefit as the so-called trade promotion agreement brought them down to zero.

The deal also would strengthen the institutional bonds tying the United States to Colombia, one of America’s few allies in an important region that has become increasingly hostile to the United States’ interests. Perhaps most important, the deal would provide a tool for Colombia’s development, drawing investment and helping the nation extricate itself from the mire of poverty that provides sustenance to drug trafficking and a bloody insurgency.

Violence in Colombia is way too high. We remain very concerned over the killing of trade unionists by right-wing paramilitary groups. Last year, we advised Congress not to ratify the trade agreement until Colombia demonstrated progress in investigating the murders and prosecuting and convicting their perpetrators.

Though by no means ideal, the situation today has improved. Thirty-nine trade unionists were killed last year, down from 197 in 2001, the year before the government of Álvaro Uribe came to office. Prosecutors obtained 36 convictions for the murder of trade unionists — up from 11 in 2006 and only one in 2001. The budget of the prosecutor general’s office has increased every year. Last year, it created a special unit to prosecute labor murders that has obtained 13 sentences.

Pressure from the United States Congress has contributed to this progress, nudging the Colombian government with its offer that gains on the human rights front would lead to ratification of the trade agreement. Washington must sustain the pressure to ensure the energetic prosecution of crimes by paramilitary thugs and further reduce violence against union members. It has a powerful tool to do so: about $600 million a year in mostly military aid for Colombia to combat drug trafficking. The money must be approved by Congress every year.

Rejecting or putting on ice the trade agreement would reduce the United States’ credibility and leverage in Colombia and beyond. In a letter last year to Congressional Democrats, a group of Democratic heavyweights from the Clinton administration and previous Congresses wrote: “Walking away from the Colombia trade agreement or postponing it until conditions are perfect would send an unambiguous signal to our friends and opponents alike that the United States is an unreliable partner without a vision for cooperation in our hemisphere.” It would serve human rights in Colombia no good.

Unfortunately, the agreement has become entangled in political jockeying between the White House and Democrats. The Democrats are right to demand assistance for American workers, and the Bush administration should work with Congress to expand the safety net for workers displaced by globalization. But this should not stop the Colombian trade pact from coming to fruition.

 


[1] The authors are correct on in these quotes, but their promotion of the The 'Fair Tax' as a fix is a really bad idea. The "Fair Tax" isn't. It would require a 56% sales tax to be revenue neutral. Even with a universal cash grant it would be regressive and promote economic inequality. It would create a very active black market. It's class warfare with the primary goal of eliminating taxes on dividends and capital gains.

 


URL: http://www.exponentialimprovement.com/cms/naftanem.shtml

Top of Page Top of Page Email this Article Email Article Printer

© 2003 Continuous Improvement Associates
Articles
US Oil Exports Soar
'Free Market' Fundamentalism
Colorado Springs: A Broken Region
Smoot-Hawley Hogwash
The Growth Trap
Growth Facts of Life
The Trouble with TABOR
Taxes: 2C or Not 2C?
Single-Payer Health Insurance
There's no 'free market' for Labor