Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



NAFTA vs PNTR

The following editorial appeared on Boston.com, a web-site related to the Boston Globe.  The author makes a good point - however, Senators Clinton and Obama would not, as President, have the authority to kick China out of the World Trade Organization and deny China MFN tariff treatment.  It is not possible for them to make any promises to turn back the clock pre-China's accession to the WTO.

That being said, the article demonstrates misdirected blame at Canada and is worth sharing ...

So negative about NAFTA

March 3, 2008

PERHAPS SENATORS Barack Obama and Hillary Clinton criticized the NAFTA trade deal with Mexico and Canada at the Democratic presidential debate last week because it tripped off the tongue more easily than PNTR -the law that established Permanent Normalized Trade Relations with China in 2000. Exports from China have a far greater impact on the economy of Ohio, where a crucial presidential primary will be held tomorrow, than the 1993 North American Free Trade Agreement.

Obama and Clinton went so far as to suggest they were ready to renegotiate NAFTA, and Clinton wants to take a "trade timeout." Reacting to such threats, Canadian Trade Minister David Emerson countered that his country might rethink the terms under which its oil and natural gas enters the United States. No doubt Mexico has objections as well.

Thousands of manufacturing jobs have vanished from Ohio since 2001, but displaced workers shouldn't look to Mexican labor as the cause. When NAFTA was ratified, few could have expected that China would so quickly dominate the manufacturing of everyday items. Mexican manufacturing, where wages are higher than in China, has been hurt as well.

If trade barriers go up on Chinese-made goods, what's to prevent companies from moving production to India, Bangladesh or Africa, or from automating their factories in the United States to reduce the workforce? The number of US manufacturing jobs has been declining in fits and starts since 1979. This erosion will continue in traditional industries no matter what the government does.

Rather than trying to renegotiate trade treaties - a complex, thankless task - the next president needs to persuade Congress to encourage the creation of good American jobs in fields insulated from foreign commerce. These would include retrofitting the nation's housing stock for energy efficiency and the reconstruction of the transportation system.

The money for these improvements ought to come from those who have profited the most from globalization. That means President Bush's tax cuts have to go. So do billions of dollars in unfair tax breaks for a small number of hedge fund and private equity managers.

Obama and Clinton surely know they are oversimplifying a complex problem, but then each is trying to appeal to the Democratic electorate in a key state. In Ohio, many voters are so burdened by manufacturing job loss that they are not representative of the rest of the country, and NAFTA-bashing is merely balm for this pain. Whoever wins the Democratic nomination should be talking better sense about the economy in the fall.

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