Candidates' protectionism is poor economic policy

Posted: April 17, 2008

The NAFTA-bashing that defined Ohio's presidential primary has made its way to the Keystone State. With Pennsylvania's crucial primary next week, Hillary Rodham Clinton and Barack Obama are locked in a fierce competition to prove their anti-free-trade bona fides in the state's heavily unionized territories.

In their speeches at the Pennsylvania AFL-CIO's annual convention earlier this month, both vowed to oppose the Colombia trade agreement President Bush is pushing. In the same speeches, both reiterated their opposition to NAFTA, with Clinton promising to "fix" it. In stark contrast, Bill Clinton spoke at the same annual convention in 1997, offering a sincere defense of free trade: "About one-third of the economic growth that's produced 13 million new jobs over the last 4 1/2 years," he said, "has come from selling more American products overseas."

With all the NAFTA-bashing, it is easy to forget that there was a time when the Democratic Party was not reflexively protectionist. Conservatives are loath to praise Bill Clinton, but the former president deserves credit for shepherding the largest free-trade agreement in the Western Hemisphere through Congress. The passage of the North American Free Trade Act in 1993 immediately eliminated a majority of tariffs on products traded among the United States, Canada, and Mexico and phased out others over time. The resulting economic boon was not lost on President Clinton, who heralded NAFTA's passage as "a defining moment for America."

Bill Clinton was right. Over the 14 years since NAFTA's inception, bilateral commerce among the United States, Mexico and Canada has more than tripled, from $297 billion to $930 billion. In a single day, the NAFTA countries conduct more than $2 billion in trilateral trade.

Let's look at Pennsylvania specifically. The Keystone State is one of the country's top exporters to Canada and Mexico. In 2007, Pennsylvania exports to Canada totaled $9.2 billion, a 112 percent increase from the 1994 figure. Exports to Mexico in 2007 were valued at $2.2 billion, an increase of 160 percent since NAFTA's inception.

While Hillary Clinton and Obama blame NAFTA for a new wave of job losses, U.S. employment rose from 110.8 million people in 1993 to 137.6 million in 2007, an increase of 26.8 million jobs, or 24 percent. Or consider this enlightening statistic: In 1993, the unemployment rate was 7.3 percent; today, it is 5.1 percent. Do we really want to go back to the days of less commerce, fewer jobs, and higher unemployment? For some reason, Clinton and Obama are determined to take us there.

There is no question that some industries have experienced a loss in jobs as a result of freer trade, but this is an inevitable consequence of dynamic economies. In fact, far more job losses are the result of automation, new technologies, and changing consumer tastes - the very same vitality that is creating new jobs at the same time. Just as we wouldn't stifle new inventions to protect certain workers, neither should we stifle expanding trade and force higher prices on consumers for the same purpose. The net effect of our dynamic and relatively free-trading economy has been job growth and a reduction in the unemployment rate.

Even the manufacturing industry is doing much better than Clinton and Obama would have us believe. In 2006, real U.S. manufacturing output reached an all-time high, as did the value of U.S. manufacturing exports. This occurred not despite free trade, but, in part, because of it. U.S. factories are the most productive in the world, making up more than a fifth of the world's manufacturing output.

Closing our doors to world trade would not translate into the utopia Clinton and Obama are painting. Instead, their protectionist policies would mean higher prices for products Americans are now able to purchase from Mexico and Canada; higher costs for U.S. businesses that rely on importing raw materials from our southern and northern neighbors; and fewer U.S. jobs as prices rise and businesses are saddled with higher costs. U.S. protectionism also would invite retaliation. As a result, export markets would close, and businesses would see their sales and profit decline, forcing layoffs.

The new Democratic protectionism also betrays an underlying audacity that should be offensive to anyone who believes in the basic tenets of personal freedom. Hillary Clinton has no more right to force me to shop at Home Depot over Lowe's than she does to force me to buy products from Tennessee instead of Toronto or BogotĀ. If I want to build a house, why does Barack Obama have the right to tell me from whom I must buy my lumber?

Some may chalk up the new Democratic protectionism to campaign talking points, but if Ohio's and Pennsylvania's primaries are any indication, a President Hillary Clinton or a President Barack Obama will surely attempt to reverse the successful trade policies of the last 30 years. In that case, even Republicans may remember Bill Clinton wistfully.

Pat Toomey is president of the Club for Growth.

Pat Toomey is the former congressman from the 15th District in Pennsylvania. Contact him at pattoomey@clubforgrowth.org.

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