Candidates blame NAFTA for pushing American companies to close
plants here and move production south. But from 1994 through 2001, reports
the Cato Institute, U.S. manufacturers invested $200 billion a year at
home -- and only $2.2 billion a year in Mexico. After NAFTA passed, U.S.
manufacturing output soared, and it's now at the highest level ever.
American farmers have seen their exports boom.
From listening to the Democrats, you'd never guess that our
exporters got more out of the deal than Mexico's did. NAFTA actually made it
easier for U.S. companies to stay here and sell products in Mexico. How? By
phasing out tariffs on goods shipped there -- which, on average, were 2.5
times higher than ours. We gave nickels to get dimes.
Edwards and Co. hold fast to the superstition that tariffs and
other trade barriers are essential to our prosperity. Reality is that
admitting imports makes Americans more prosperous by reducing prices of
consumer and capital goods. It also strengthens American companies by
forcing them to be more efficient and innovative.
So why do so many people, including approximately 100 percent of
those who turn up at Democratic debates, hold this and other trade
agreements in such contempt? One obvious reason is they want to appeal to
labor unions, which generally prefer protectionism.
But Gary Hufbauer, an economist at the Peterson Institute for
International Economics, suspects one reason lies in a different issue:
illegal immigration. Some NAFTA supporters thought it might generate enough
growth in Mexico to keep Mexican workers at home. When the tide of illegal
immigrants grew, it bred resentment here.
That reaction partly helps to explain the Democratic retreat. By
denouncing NAFTA, the presidential candidates can appeal to Americans
alarmed about our porous borders without offending Hispanic voters.
But they should remember two crucial things: Bill Clinton
presided over an era of enviable prosperity, and he did more to expand free
trade than any president since Franklin D. Roosevelt. If they want to get
back to the land of Oz, Democrats would be advised to follow the same Yellow
Brick Road.