The Myth About NAFTA and Jobs – By Frank Lavin November 14, 2017

REBECCA COOK / REUTERS United Auto Workers union member works on a Chevrolet Volt electric vehicle at General Motors Detroit-Hamtramck assembly plant in Hamtramck, Michigan, July 27, 2011.


The administration of Donald Trump seems committed to weakening, if not ending, the North American Free Trade Agreement (NAFTA), citing the decline in the auto industry as an example of the deal’s supposed failure. As U.S. Secretary of Commerce Wilbur Ross noted in The Washington Post, the percentage of auto imports from Mexico that used inputs from the United States had actually dropped post-NAFTA, and therefore, he argued, the free-trade agreement is broken. The Trump administration has now proposed raising the “rules of origin” for vehicles under NAFTA from 62.5 to 85 percent. In other words, at least 85 percent of a car must be made in a NAFTA country for that car to qualify as duty-free.

This argument prompted no small debate about Ross’ methodology and data selection, but putting that aside, there are three fundamental reasons why Secretary Ross’ thesis is simply bad for the economy.

First, a focus on trade balance and the performance of one sector means the United States evaluates a trade deal based not on rules but on results. A rules-based approach allows governments to focus on standards, transparency, and enforcement to keep the trading environment fair. A results-based approach, on the other hand, signals that even if trade is fair, a government will thwart competition if it is not happy with the results. This is not a defense of the U.S. economy but a surrender. Instead of telling the world that the United States is interested in the best technology and ideas from around the world, a results-based approach announces an interest in purchasing foreign products and ideas only to the extent that it can sell the same value of goods elsewhere. The United States’ ability to grow its economy would be capped not by its aspiration or appetite, but by other countries’ appetites. It can only be smart to the degree that its trading partners are smart.

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How U.S. Settles Sugar Dispute With Mexico Could Signal Nafta Intent – By Anthony Harrup in Mexico City and Julie Wernau in New York May 19, 2017 5:30 a.m. ET

U.S. is looking to reinstate anti-dumping and antisubsidy duties on imports of Mexican sugar

The U.S. and Mexico have to reach an agreement by June 5 on a longstanding dispute over sugar.

The U.S. and Mexico have to reach an agreement by June 5 on a longstanding dispute over sugar. Photo: Agence France-Presse/Getty Image

As the Trump administration sets the clock running for a renegotiation of the North American Free Trade Agreement, a deadline is fast approaching in a longstanding dispute with Mexico over sugar that some see as a harbinger of how those broader talks could play out.

Unless the two sides reach agreement by June 5, the U.S. Department of Commerce will reinstate anti-dumping and antisubsidy duties on imports of Mexican sugar, risking a backlash from Mexico which denies that it subsidizes or dumps sugar in the U.S.

The duties were suspended in 2014 under agreements that limited imports and set minimum prices, but U.S. sugar producers say Mexican sugar is continuing to hurt their industry.

Mexican Economy Minister Ildefonso Guajardo discussed the matter this week with U.S. Commerce Secretary Wilbur Ross, but declined to give details of the talks. “We’re advancing in that process and we think if we continue like that we’ll be able, before two weeks are up, to narrow our differences,” he told reporters.

Freight trucks from Mexico go through customs at Otay Mesa port of entry, in San Diego.

Freight trucks from Mexico go through customs at Otay Mesa port of entry, in San Diego. Photo: John Moore/Getty Images

U.S. President Donald Trump’s administration on Thursday notified Congress that it intends to renegotiate Nafta with Mexico and Canada, setting in motion a 90-day consultation period for the negotiations to begin. Some see the handling of the sugar dispute as a dress rehearsal.

“I think the sugar situation is like a preamble, a starting point for entering the Nafta negotiations,” said Carlos Blackaller, head of Mexico’s sugar cane growers’ union which represents some 180,000 cane producers in 15 Mexican states. “If our government accepts conditions, it would lose ability in those negotiations.”

Mexican producers say that if they are locked out of the U.S. market, they will seek actions against imports of U.S. high fructose corn syrup. U.S. corn refiners, who battled for years in the late 1990s and early 2000s over access to the Mexican market for HFCS, are concerned about fallout from a renewed trade spat in sweeteners.

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Nafta’s Net U.S. Impact Is Modest – By  Jacob M. Schlesinger,  Andrew Tangel and  Valerie Bauerlein Updated Jan. 26, 2017 7:19 p.m. ET

Pact leaves winners and losers, but its overall impact is more complex than the trade balance suggests

Trucks lining up to cross to the U.S. near Tijuana, Mexico on Wednesday.

Trucks lining up to cross to the U.S. near Tijuana, Mexico on Wednesday. Photo: Guillermo Arias/Agence France-Presse/Getty Images

For all of the debate sparked by the North American Free Trade Agreement, most economists say its concrete impact on the U.S. economy has been modest—a small gain in growth and efficiency, and a small loss in jobs and lower wages for certain factory workers.

But as with most free-trade agreements, the gains over 23 years have been diffuse and the pains more concentrated, helping stoke the intense political backlash that powered Donald Trump’s presidential campaign, and now his White House move to rip up the agreement.

“Nafta produced large changes in trade volumes, tiny efficiency gains overall, and some very significant impacts on adversely affected communities,” Harvard economist Dani Rodrik said on his blog this week. Mr. Trump exaggerated the pact’s cost on manufacturing jobs, he said, but was “able to capitalize on the very real losses…in certain parts of the country in a way that Democrats were unable to…”

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20 years on, NAFTA still stings in Ypsilanti, Mich. by Jason Margolis – November 29, 2013 5:00AM ET

Pact not entirely to blame, but many onetime autoworkers say it symbolizes ‘misguided loyalty to free-market capitalism’

Ypsilanti factory
President Bill Clinton touted NAFTA as a surefire way of securing a future for American jobs.
Bill Pugliano/Getty Images

YPSILANTI, Mich. — Some 20,000 people once worked in the auto industry in and around this city 35 miles west of Detroit. Today perhaps 2,000 people do.

The impact of that change is obvious to even the casual visitor. Downtown businesses are boarded up, the parks and recreation department has a budget of zero dollars, and empty, decrepit factory buildings stand as monuments to another time.

Retired Ypsilanti autoworker Bob Bowen is from that era, and even now he and others like him are fiercely proud of the car industry that once defined the town. They don’t take kindly to foreign cars on their turf.

“I don’t dislike the Mexican workers,” he said as he glanced at a parked Ford Fiesta, a car made in Mexico. “But why can’t we make them here?”

Bowen, of course, knows the answer to this question: The economics simply don’t work. Michigan autoworkers are much more expensive then those in Mexico.

But it was not meant to be this way.

The North American Free Trade Agreement, or NAFTA, made its way through the U.S. political system 20 years ago on its way to becoming law. It took effect on Jan. 1, 1994. At the time, President Bill Clinton touted the agreement as a surefire way of securing a future for American jobs and American industry in key manufacturing states like Michigan and one-industry towns like Ypsilanti.

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