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Silly Season of NAFTA Bashing

By Susan Segal

In the Calgary Herald, AS/COA President and CEO Susan Segal explains how, despite candidates' anti-NAFTA talk, the pact has proven a crucial investment and trade tool. "In a campaign about optimism and the promise of America, anti-NAFTA rhetoric simply doesn't fit," writes Segal.

As labor delegates prepare to convene in Philadelphia on April 1 for the biennial convention of the Pennsylvania American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), it is virtually certain that we are in for another round of NAFTA bashing. But before the Democratic candidates box themselves in to a position on trade they may later regret, it is important to take a step backward and understand that NAFTA has been a success.

NAFTA, in fact, has proven to be the most effective tool we have to increase trade and investment among the United States, Canada and Mexico, which in fact the agreement was designed to do. It has directly increased our competitiveness in a global economy where the primary economic challenge is coming not from Mexico or Canada, but from China and India. And it has provided stability and certainty during a time of economic uncertainty for those who might otherwise be tempted to take actions that would create a strategic challenge on our borders.

Our relations with our neighbors are both broad and deep. Canada and Mexico are the United States' two largest export markets. According to the U.S. Department of Commerce, U.S. goods exports to these countries have grown from $142 billion in 1993 to $365 billion in 2006, 35 per cent of our total exports to the world. As such, the production of goods exported to NAFTA countries employs a significant number of people in the U.S., and jobs in export industries historically pay higher wages than those in industries with domestic-only markets.

More broadly, the Office of the United States Trade Representative estimates that U.S. employment rose from 112 million the year before NAFTA was signed to 137 million in 2006, an increase of 25 million jobs. Likewise, at five per cent, the average unemployment rate was two points lower between 1994 and 2006 than during the period from 1981 to 1993, when it stood at seven percent.

With this in mind, it's hard to make the case NAFTA has cost millions of U.S. jobs, or that our economy is a shambles because of it.

Further, the USTR estimates that the average American family of four earns $150 to $700 more annually as a result of NAFTA and receives just over $200 in tax cuts as a result of reduced tariffs on products from Mexico and Canada.

The next U.S. president can't afford to turn his or her back on our allies in the region. It's a matter of both economic and national security. Mexico and Canada are not only our neighbors, but they have also been some of our most reliable partners in the hemisphere.

During the recent Ohio presidential primary, the potential negative consequences of reopening NAFTA were quickly revealed when Prime Minister Stephen Harper warned that Canada would have its own demands should the agreement be revisited. Canada is the United States' largest supplier of oil, and renegotiation could jeopardize privileged U.S. access to that country's energy resources. And Mexico has so far resisted repeated calls by rural farmers to renegotiate the pact to limit access for subsidized U.S. crops to Mexico's market.

Similarly, it isn't difficult to imagine that the already vexing immigration problems facing the United States would worsen should the U.S. opt out of NAFTA, leaving additional Mexican workers out of a job. It would also further weaken an already slowing U.S. economy and job market.

Although U.S. critics of NAFTA tend to fault the pact for U.S. economic woes, trade liberalization alone cannot be blamed for the changing face of the American workforce. Improvements in technology have played as large, if not the largest, part in the loss and gain of jobs. However, it is impossible to imagine that any candidate would argue that the United States should stop encouraging technological innovation in order to keep workers employed.

Clearly, Americans are responding positively to the messages of change and hope in this year's race for the White House. The message to Americans about the effects of trade and NAFTA should be direct. No one should assert that everyone will win. Opening markets results in displacements, and we need to do a better job of addressing these concerns. Perhaps the energy expended debating who dislikes NAFTA more would be better spent on coming up with new ideas to allow the most competitive nation in the world to remain so. In a campaign about optimism and the promise of America, anti-NAFTA rhetoric simply doesn't fit.

Susan Segal is president and CEO of the Americas Society and Council of the Americas in New York. This article first appeared in the Calgary Herald.

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