Why Did President Bill Clinton Support the North American Free Trade Agreement (Nafta)

A 2016 congressional research report said it was unclear whether a president could withdraw from a trade deal without congressional approval. He noted that there was no historical precedent for the unilateral withdrawal of a congress-approved president from a free trade agreement. The issue may ultimately be decided by a federal court. In light of this moment, TIME spoke with Max Cameron, co-author of The Making of NAFTA and professor of political science at the University of British Columbia, and Jefferson Cowie, labor policy expert and history professor at Vanderbilt University, about what you need to know about the history of the trade deal. The passage of NAFTA led to the elimination or elimination of barriers to trade and investment between the United States, Canada and Mexico. The impact of the agreement on issues such as employment, the environment and economic growth has been the subject of political debate. Most economic analyses have shown that NAFTA is beneficial to North American economies and the average citizen,[4][5][6] but harms a small minority of workers in industries exposed to commercial competition. [7] [8] Economists believed that withdrawing from NAFTA or renegotiating NAFTA in a way that would restore trade barriers would have hurt the U.S. economy and cost jobs. [9] [10] [11] However, Mexico would have been much more affected by job losses and declining economic growth, both in the short and long term.

[12] NAFTA, a trade agreement between the United States, Canada and Mexico, eliminated virtually all tariffs and trade restrictions between the three countries. The passage of NAFTA was one of Clinton`s first major victories as the first Democratic president in 12 years — although the free trade movement in North America began as a Republican initiative. On September 30, 2018, an agreement was reached during the renegotiations on the amendments to NAFTA. The next day, a renegotiated version of the agreement was released, dubbed the Agreement between the United States, Mexico and Canada (USMCA). In November 2018, at the G20 Summit, the USMCA was signed by President Trump, Canadian Prime Minister Justin Trudeau and then Mexican President Enrique Peña Nieto. Two fundamental additions to NAFTA – the North American Agreement on Labour Market Cooperation and the North American Agreement on Environmental Cooperation – have had a significant impact on the effectiveness of the agreement. During the planning phase, NAFTA was heavily criticized by Reform Party presidential candidate Ross Perot, who argued that if NAFTA were passed, Americans would hear a “huge sucking noise” from U.S. companies fleeing the U.S.

to Mexico, where employees would work for a lower salary and without benefits. The Pact, which entered into force on 1 January 1994, created the largest free trade area in the world. In 2008, Canadian exports to the United States and Mexico totalled $381.3 billion, while imports totalled $245.1 billion. [59] According to a 2004 article by University of Toronto economist Daniel Trefler, NAFTA brought significant net benefits to Canada in 2003, with long-term productivity increasing by up to 15% in industries that experienced the largest tariff reductions. [60] Although the decline in the number of low-productivity firms reduced employment (up to 12% of existing jobs), these job losses lasted less than a decade; Overall, unemployment in Canada has declined since the legislation was passed. Commenting on this compromise, Trefler said the crucial issue of trade policy is to understand “how freer trade can be implemented in an industrialized economy in a way that recognizes both the long-term gains and short-term adjustment costs of workers and others.” [61] In fact, the president was critical from the beginning. Despite their anti-NAFTA demagoguery, almost all independent U.S. government studies show that Perot and other anti-NAFTA leaders are completely wrong about the free trade agreement. For example, it is estimated that there will be a net increase of up to 200,000 new jobs due to increased U.S. exports to Mexico under NAFTA.

Today, trade with Mexico alone preserves at least 700,000 jobs in the United States. In addition, NAFTA will help address many of the other concerns raised by NAFTA critics. The deal will accelerate Mexican wages, address environmental concerns along the border and into Mexico, help secure Mexican President Carlos Salinas de Gortari`s free market and democratic reform programs, and reduce the flow of illegal immigrants and drugs across the U.S. border over time. A 2007 study found that NAFTA had “a significant impact on the volume of international trade, but a modest effect on prices and prosperity.” [62] The overall impact of the agricultural agreement between Mexico and the United States is controversial. Mexico has not invested in the infrastructure needed for competition, such as efficient railways and highways. This has led to more difficult living conditions for the country`s poor. Mexico`s agricultural exports grew by 9.4% per year between 1994 and 2001, while imports grew by only 6.9% per year over the same period.

[69] Part of the rationale for NAFTA was that it would reduce illegal immigration from Mexico to the United States. The number of Mexican immigrants — regardless of legal status — living in the United States nearly doubled between 1980 and 1990, when it reached an unprecedented 4.3 million. Proponents argued that the unification of the U.S. and Mexican markets would lead to a gradual convergence of wages and living standards and reduce the motivation of Mexicans to cross the Rio Grande. Then-Mexican President Carlos Salinas de Gortiari said the country would “export goods, not people.” Promote a level playing field in the free trade area. Even Clyde Prestowitz, the president of the Economic Strategy Institute, a Washington-based think tank that was once strongly opposed to NAFTA, now says the pact should be ratified. Last fall, Prestowitz claimed that NAFTA would cost up to 222,000 jobs in the United States. Today, however, he argues that “NAFTA will be a plus in the long run.” His reasoning: Many U.S. companies are likely to cease operations in Mexico and return home once Mexico lowers its trade barriers. If U.S. companies can enter the Mexican market without facing tariffs, one of the main reasons to set up shop in the first place disappears. In addition, it is likely that many U.S.

companies will relocate their Asian manufacturing facilities to Mexico once NAFTA comes into effect, making it almost certain that they will import components from the U.S., creating new jobs in the U.S. It would also weigh on export growth and employment in the United States. Political forces in Mexico would almost certainly pressure the Mexican government to retaliate by erecting new trade barriers for U.S. products. As a result, many of the 700,000 jobs that currently depend on trade with Mexico would be at risk. According to U.S. Trade Representative Mickey Kantor, that number would rise to 900,000 by 1995 if NAFTA were passed. However, it would fall to 500,000 if NAFTA were rejected. In other words, rejecting the free trade pact could cost America 200,000 jobs, hindering America`s economic recovery. Even more jobs in the U.S.

would be lost if other Latin American countries also withdrew from protectionism in response to a NAFTA defeat – a perfectly plausible scenario. .