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Hillary Hears Perot’s Giant Sucking Sound And Flips Against Trade Agreement (Forbes.com) October 8, 2015

Posted by daviddavenport in Op/Eds.

The North American Free Trade Agreement (NAFTA) turned 21 this year, an appropriate time to evaluate its successes and failures and to apply those lessons to the Trans-Pacific Partnership (TPP) agreement recently signed and under review by the U.S. Congress.  The 12-nation TPP has, after all, been called “NAFTA on steroids.”  To do so is to recognize that Mrs. Clinton, who recently flipped from supporting TPP to opposing it, has unfortunately reached her position for political and not sound policy reasons.

NAFTA, implemented in 1994, generated plenty of anxieties and attacks in its day.  It was not only the largest free trade agreement at the time, but also the first to tie together developed nations (Canada and the U.S.) with an underdeveloped country (Mexico) in such a treaty.  The idea of reducing tariffs and trade barriers among the countries led to fears of widespread job losses.  Remember Ross Perot’s “giant sucking sound” in the 1992 presidential debate?  That was supposed to be from the 5.9 million jobs he claimed would go south to Mexico.

In fact, NAFTA at 21 looks pretty good, in some ways really good.   Trade among the three countries is up 300% to $1.2 trillion and the three members are now each other’s largest trading partners.  Real wages are up in all three countries.  Due in large part to NAFTA, North America has become something of an economic power region, now producing one-fourth of global GDP.  North America is becoming an energy exporter and the long-needed energy independence from Middle Eastern oil is now a realistic possibility. In order to increase trade and attract foreign direct investment, Mexico has democratized, another significant benefit.  Improved political relations among the three countries is, in some ways, the biggest gain of all.

But didn’t America lose manufacturing jobs as a result of NAFTA?   The record on this is difficult to read, since there are so many other factors—especially globalization—in the picture.  The U.S. has steadily lost manufacturing jobs but the “problem” is not NAFTA but increased productivity, which rose 92% between 1993 and 2013.  American jobs have gone not just to Mexico but to China, India and elsewhere because of cheaper labor, not lower import costs.  What NAFTA did was shift jobs from lower skills and wages to higher ones.  The Congressional Budget Office studied NAFTA and concluded its effects on employment have been small.

Despite speaking in favor of TPP 45 times in recent years—even calling it “the gold standard in trade agreements”—Mrs. Clinton now says she cannot support it, citing concern about jobs and wages, national security, and specific provisions about currency manipulation and drug companies.  Objective studies about NAFTA confirm that the jobs and wages argument just doesn’t fly.  And let’s face it, you don’t change your position on an entire treaty because of two relatively minor provisions such as the ones she referenced.

Sadly, as was the case with NAFTA, opposing TPP turns out to be about politics and not policy.  Having been outflanked on the left by Obama in 2008, Hillary obviously feels a need to cover her left perimeter against Bernie Sanders, who has opposed the TPP.  And, running in states like Ohio and Michigan where manufacturing and jobs are key, you want to be able to make a lot of noise about protecting American workers.

If you read the fine print, however, what Mrs. Clinton actually said was: “What I know about it, as of today, I am not in favor of what I have learned about it.”  So watch for her position to “evolve.”  The “gold standard of trade agreements” recently, she cannot support “today,” but if she becomes president, or even the Democratic nominee, look for her to review it and reach yet a different conclusion, just as she and Obama did in 2008, opposing NAFTA as candidates but supporting it later.   The sucking sound Clinton fears turns out to be votes going left, not jobs leaving the country.

Read the column at Forbes.com:


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