Nafta, Cafta, or Shafta - a.k.a. |Shafted|

With Secretary of Commerce and Industrial Development Jaime Serra Puche and President Carlos Salinas of Mexico, U.S. Trade Representative Carla A. Hills, and Minister of International Trade Michael Wilson and Prime Minister Brian Mulroney of Canada at the initialing ceremony for the North American Free Trade Agreement in San Antonio, TX, October 7 [1992].   Source:  National Archives and Records Administration - Public Papers of the Presidents of the United States George H.W. Bush: 1992-93, Book II, Photographic Portfolio

By Patricia L Johnson and Richard E Walrath

When we think about NAFTA, most of us automatically think about two things, Bill Clinton and lost jobs.  Most people when they hear the word NAFTA, think NAFTA, CAFTA, or SHAFTA (as in shafted), but that's because they don't know the history.  Bill Clinton has consistently received both praise and criticism for the North American Free Trade Agreement and little credit for job creation.

The fact is there were 23.1 million jobs created during Bill Clinton's eight years in office, but the increases in payrolls during his tenure have been offset by the loss of jobs in the George W. Bush [Bush 43] presidency due to foreign trade.

Is Bill Clinton responsible for these job losses?  The answer is absolutely not - for two reasons. 

The losses we are experiencing in labor markets are losses due to cheap labor rates in India, China and other overseas countries, not due to the North American Free Trade Agreement.

Second, the North American Free Trade Agreement was a twinkle in the eye of Ronald Reagan as can be determined by the following statement made during his speech announcing his candidacy for President in 1979.

"It may take the next 100 years but we can dare to dream that at some future date a map of the world might show the North American continent as one in which the people's commerce of its three strong countries flow more freely across their present borders than they do today."

The Canada-United States free trade agreement, CFTA, went into effect on January 1, 1989 and was eventually incorporated into NAFTA during negotiations by the George H.W. Bush (Bush 41) administration.

Following is an excerpt made by President George H.W. Bush during the initialing ceremony for NAFTA.  This speech was made October 7, 1992 - a month before Bill Clinton was elected to office and three months before he took office.

...Today the United States, Mexico, and Canada embark together on an extraordinary enterprise. We are creating the largest, richest, and most productive market in the entire world, a trillion market of 360 million people that stretches 5,000 miles from Alaska and the Yukon to the Yucatan Peninsula. NAFTA, the North American free trade agreement, is an achievement of three strong and proud nations. This accord expresses our confidence in economic freedom and personal freedom, in our peoples' energy and enterprise. The United States, Mexico, and Canada have already seen the powerful and beneficial impact of freer trade and more open markets. Over the past 5 years, as President Salinas reduced trade barriers under his bold reform program and as Prime Minister Mulroney and I implemented the United States-Canadian Free Trade Agreement, trade between our three countries has soared. In 1992 alone, that trade will reach an estimated 3 billion, up billion just since 1987...

His full speech may be read at the following link at the George Bush Presidential Library.

http://bushlibrary.tamu.edu/research/public_papers.php?&year=1992&m

The Clinton administration promoted the free trade agreement between Mexico and Canada and NAFTA would never have been passed without the overwhelming support of the Republican members of Congress.

Clinton was for free trade between the three countries, and NAFTA would be good for the US if the price of crude oil hadn't skyrocketed over the past seven years. 

The U.S. International Trade report released February 14, 2008 indicated a 2007 trade deficit with Canada of $64.2 billion, The increase in imports from Canada was primarily due to crude oil and pharmaceuticals. 

We're also running a 2007 trade deficit with Mexico of $74.3 billion, for probably the same reason.  Mexico and Canada are our two biggest non-OPEC oil suppliers.

However, neither of the countries in NAFTA can even begin to compare with the $256.3 billion trade deficit with China for 2007.  No crude oil was imported from China during 2007.

The question that should  be asked on NAFTA is who would benefit the most from the North American Trade Agreement IF the United States was not so dependent upon crude oil as an energy source? 

Three Presidents, Ronald Reagan, George H.W. Bush, and William J. Clinton promoted the idea over a period of almost thirty years. 

What has not been taken into consideration is the devastating effect the increased price of oil would have on trade balances between the three countries.  Just over the past 12-month period of time, imported petroleum prices have increased 66.9%.  NAFTA is good, crude oil dependence isn't.

When Bush [43] was interviewed by Lee Hochberg, PBS, he was asked if better coordination and synchronization of immigration policies between Canada and the U.S. were necessary.  President Bush replied "Border relations between Canada and Mexico have never been better".  Although the comment was obviously not what he meant, it does provide us with more of an understanding as to why trade agreements signed during the George W. Bush administration have been such dismal failures.