I’ve had some interesting conversations going through customs in the US and landing in Atlanta two weeks ago was no exception. I was travelling on to Little Rock, Arkansas and got the obligatory ‘why are you going there?’ question. “To visit the Clinton Presidential Library”, I said. It turned out Clinton was the officer’s “favourite president,” but he’d made one “big mistake”… No, not that mistake. “NAFTA.”
NAFTA – the North American Free Trade Agreement, signed into law by President Clinton in December 1993 – has been headline news in the US. The agreement is currently being renegotiated, as promised by Candidate Trump. In August, President Trump reiterated his view that NAFTA is the “worst trade deal ever made”, and with negotiations seemingly at an impasse, his threat to terminate the deal looks like a real possibility.
We are in the NAFTA (worst trade deal ever made) renegotiation process with Mexico & Canada.Both being very difficult,may have to terminate?
— Donald J. Trump (@realDonaldTrump) August 27, 2017
There has been much debate on the pros and cons of NAFTA, but on balance the evidence suggests it’s been beneficial – the problem is, that’s not really the point. Focus on retooling NAFTA is dangerously distracting from the more powerful forces that threaten US jobs.
Jobs, jobs, jobs
Trump’s stance is based on his view that NAFTA has destroyed American manufacturing jobs. For once, the President is factually correct… just. The deal is estimated to have resulted in a net loss of around 100,000 manufacturing jobs.1
That, however, is just part of the story. Research has shown that for each job lost as a result of NAFTA there have been “several hundred thousand dollars of gains to the economy” as a result of increased productivity and lower prices. The cheap consumer goods, which help reduce the cost of living for millions of Americans, are overlooked by Trump. As are the export benefits of NAFTA and the deeply integrated nature of manufacturing supply chains across the three nations. ‘Intermediate goods’, like plastic and steel, are imported tariff-free, which in turn makes American products more globally competitive. Advanced manufacturing and energy are particularly dependent on these goods.2
All of which, of course, is little comfort to those Americans whose solid, well-paid manufacturing jobs have disappeared, and who haven’t benefited from the new, higher paid jobs that have been created.3 To them it’s simple: NAFTA equals job-killer. That was the view of my Atlanta customs officer, and it’s widely shared – Americans show the lowest support for NAFTA of all three nations, just 51% see the deal as a good thing (compared to 74% of Canadians and 60% of Mexicans).4
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