Debunking Bush's U.S. Trade Representative(USTR) Claims in Defense of NAFTA

From Public Citizen (3/27/08) :

Debunking USTR's Claims in Defense of NAFTA
The Real NAFTA Score in 2008

NAFTA is a hot-button issue in the 2008 races. Given polling shows that the vast majority of Americans think NAFTA was a damaging mistake, the George W. Bush administration and other defenders of the NAFTA status quo have been put on the defensive. In response, administration officials and pro-NAFTA pundits have gone into spin mode, recycling discredited claims about the pact, or suggesting that the facts are too complicated to make an assessment. Bush's U.S. Trade Representative (USTR) recently put out a set of talking points in this vein. But the USTR's claims are misleading, as GTW's new fact sheet shows.

Here are the summary points — see the full fact sheet for more in-depth details.

  • Bush Claim 1: "From 1993 to 2007, trade among the NAFTA nations more than tripled, from $297 billion to $930 billion."
    Fact: Increased trade flows can benefit an economy, as long as they do not lead to unsustainable deficits. The administration fails to note that much of the increased volume of trade under NAFTA was a massive surge in imports into the United States � resulting in a 691 percent increase in the U.S. NAFTA trade deficit, which puts the U.S. and North American economies at risk.
  • Bush Claim 2: "U.S. employment rose from 110.8 million people in 1993 to 137.6 million in 2007, an increase of 24 percent. The average unemployment rate was 5.1 percent in the period 1994-2007, compared to 7.1 percent during the period 1980-1993."
    Fact: Trade affects the composition of jobs, not the total number. Three million net U.S. manufacturing jobs were lost during NAFTA.
  • Bush Claim 3: "U.S. manufacturing output rose by 58 percent between 1993 and 2006, as compared to 42 percent between 1980 and 1993. Manufacturing exports in 2007 reached an all time high with a value of $982 billion."
    Fact: The proper measure is U.S. manufacturing value-added � and that increased at the same rate before and after NAFTA. The misleading figure used by the Bush administration � manufacturing output � is large because it does not measure only U.S. manufacturing value-added, but includes the value of imported parts and inputs that contribute to the trade deficit.
  • Bush Claim 4: Rising wages over 1993-2007 relative to 1979-1993 show NAFTA's success.
    Fact: Actually, U.S. median wages in inflation-controlled terms have scarcely risen in a generation, in no small part thanks to "labor arbitrage" between U.S. workers and low wage workers offshore, and the replacement of higher paying manufacturing jobs with lower paying service sector jobs. The Bush administration has manipulated the time periods it is citing to find tiny wage gains that it can generalize to be "rising wages."
  • Bush Claim 5: The agricultural sector has benefited from NAFTA.
    Fact: Nearly 300,000 U.S. family farms were lost during the NAFTA era, while these farms' income shrunk 13 percent.
  • Bush Claim 6: Mexican wages have increased under NAFTA.
    Fact: Mexican wage growth has declined under NAFTA relative to Mexico's pre-neoliberal period.
  • Bush Claim 7: NAFTA has helped the environment by creating new environmental institutions that spent $3 billion on border clean-up.
    Fact: The funds spent on environmental clean up fall far short of what was needed � and even what was promised. Moreover, an array of environmental laws has been challenged under NAFTA, weakening and chilling environmental policy innovation.

CONCLUSION: Can we evaluate the promises on NAFTA? Yes, we can!

An army of think tanks and corporations spends millions every year in an attempt to muddle even the basic facts on NAFTA. We know that under NAFTA, the U.S. trade deficit is up, manufacturing jobs are down, wages are stagnant, Mexican immigration is up, Mexican growth is down, and policy space has been seriously limited. Bush administration officials and pundits can debate whether any of these facts matter, but they cannot make up their own facts, nor serve up irrelevant ones in the hope of distracting policymakers or the public from continuing to demand trade policy change.

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