When, how Edwards opposed NAFTA unclear; so is its effect

Posted: February 21, 2004

NEW YORK — Sen. John Edwards boasts to nearly every audience that he opposed the North American Free Trade Agreement. What he does not say is when or how, and what he does not acknowledge is that NAFTA's economic impact on the United States is a mix of good and bad.

Edwards, who hammers Sen. John Kerry over his vote for NAFTA and similar treaties, was not in the Senate when NAFTA passed in 1993. He said earlier this week that he was not sure whether he talked about the treaty in his 1998 Senate campaign, except in response to questions.

In his campaign for the Democratic presidential nomination, he uses NAFTA and other trade agreements as the centerpiece of his speeches. This week Edwards amplified a charge also leveled by many unions: Those treaties have drained jobs out of the United States.

"We've got to put our trade policy back in line with our values," the North Carolina senator said at Clark Atlanta University.

Edwards needs to highlight differences with Kerry now that the race has narrowed to two senators with similar voting records. But while there are differences, the two candidates are broadly alike on trade. Edwards and Kerry voted to grant China favorable trade treatment, for example, and both call for including terms to protect labor and the environment in all future trade deals.

Economists question whether either candidate's ideas would have any significant effect, as less developed countries would be unlikely to sign a trade pact that would bind them to meet U.S. wage and environment standards.

Also, NAFTA's impact on the U.S. economy is mixed. Trade grew for NAFTA's three partners - the United States, Canada and Mexico - doubling from $306 billion in 1993 to about $621 billion last year. U.S. exports were up 95 percent to Mexico and 41 percent to Canada. Mexico's exports to the United States grew 195 percent, Canada's 61 percent.

Whether U.S. job losses are because of NAFTA, though, is hard to determine.

"Textiles in the United States is a loser, but not necessarily because of NAFTA," said James R. Giermanski, an international-business professor at Belmont-Abbey College in North Carolina, a state where the textile industry is suffering.

Many U.S. apparel-makers moved to Mexico - but many since have moved on to Central America and Asia. "The problem is you cannot say it's NAFTA," Giermanski said. "It is globalization that is doing this."

In November 2002, the Labor Department's Employment and Training Administration gave up calculating jobs lost because of NAFTA; instead, it calculates jobs lost to international trade. Between October 1993 and September 2002, it certified 3,931 cases in which a U.S. company lost jobs because of NAFTA. The losses totaled 507,358 jobs.

A separate 2002 Labor Department study calculated that Americans had lost 37,000 jobs a year on average because of Mexican imports and 57,000 because of Canadian imports. Those effects, said the study, are minimal on a U.S. economy that in a good year typically creates 200,000 jobs a month.

The union-backed Economic Policy Institute, in a recent study, estimated that 879,280 jobs were lost after NAFTA, after adjusting for jobs gained. But the institute acknowledged: "Job losses are modest relative to the size of the economy."

"I was opposed to NAFTA," Edwards told a reporter Thursday. "Sen. Kerry voted for it."

When the treaty passed, Edwards was practicing law; his limited political involvement was reflected in a record of voting in about half the elections. Asked last weekend whether, in his 1998 Senate campaign, he talked about NAFTA only in response to questions, he said: "That's fair."

He cautions that lost manufacturing jobs cannot be recaptured but says their outflow can be slowed. He proposes that trade treaties include strong regulations that would prevent companies from using child labor in foreign countries and require them to abide by environmental standards comparable to those in the United States.

He also advocates repealing tax breaks for corporations that move overseas and creating tax incentives for companies that create jobs in economically depressed communities.

Kerry proposes tax incentives to retain manufacturing jobs in the United States, including a payroll-tax break for manufacturers that add jobs and a capital-gains tax cut for investing in small businesses.

Many jobs are moving overseas to countries where labor is cheaper and other business costs are lower. A recent study by the National Association of Manufacturers found that environmental regulations, health care, litigation and other costs make the United States less competitive compared with major trading partners. Cutting such costs would encourage companies to keep workers here, said an association spokesman, Hank Cox.

Cutting taxes to encourage companies to keep jobs here would probably be ineffective because they would likely be too small to even out foreign wage advantages; in some cases, pay is 80 percent less than U.S. wages, said Martin Regalia, chief economist with the U.S. Chamber of Commerce.

"Getting a drowning patient from 6 feet below the surface to 6 inches below the surface is a very shallow victory," he said. "They still drown."

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