WORLD

TRADING FOR VOTES

Where do the Democratic contenders really stand on NAFTA?

LUIZA CH. SAVAGE December 17 2007
WORLD

TRADING FOR VOTES

Where do the Democratic contenders really stand on NAFTA?

LUIZA CH. SAVAGE December 17 2007

TRADING FOR VOTES

WORLD

Where do the Democratic contenders really stand on NAFTA?

LUIZA CH. SAVAGE

Since launching her campaign for the White House, Democratic front-runner Hillary Clinton has discovered “serious shortcomings” with a signature achievement of her husband’s presidency: the North American Free Trade Agreement with Canada and Mexico. “NAFTA and the way it’s been implemented has hurt a lot of American workers,” she told the AFL-CIO in August, and called for a “broad reform in how we approach trade.” To another union audience in June, she complained that factories were moving to Mexico for cheaper labour and to Canada for cheaper health care. She has promised to declare a “time out” on the signing of new trade agreements if elected, and has pledged to set up a five-year “review” of existing trade agreements beginning, of course, with NAFTA, which she has said should be “adjusted.” On the campaign trail, she touts a report she wrote in the Senate about how NAFTA is hurting her adopted home state of New York. And riding her “Middle Class Express” bus around the key primary state of Iowa, she called for taking a “deep breath” and holding a “serious conversation” on trade.

Much ink has been spilled about how her views are “evolving” away from those of her husband. But as with many things in Hillaryland, the policies are finely calibrated and the rhetoric even more finely calculated on this issue that divides Democrats (the leading Republican contenders are free traders—except the suddenly surging dark horse Mike Huckabee, who has criticized trade deals). Only one Democratic candidate, Ohio congressman Dennis Kucinich, is actually calling for immediate withdrawal from NAFTA—but between his far-left platform and his claimed sighting of a UFO, his chances of becoming president are about as good as the current occupant of the White House suddenly announcing that the Supreme Court made a mistake back in 2000 and handing things off to Al Gore.

Clinton’s more immediate threat is John Edwards, the millionaire trial lawyer who never tires of pointing out that he is the son of a millworker back in the day when Americans still worked in things called mills. Edwards has made the failures of trade agreements a

centrepiece of his populist message about the beleaguered middle class. Edwards has promised to “revise” NAFTA to strengthen protections for the environment and unions. And he is now in a three-way tie with Clinton and Illinois Senator Barack Obama in Iowa, where the primary season kicks off on Jan. 3Obama also told a union audience that “I would immediately call the president of Mexico, the president [sic] of Canada, to try to amend NAFTA because I think that we can get labour agreements in that agreement right now.” Just exactly how a “revision” of the 1993 treaty would work is unclear. It is possible

that a U.S. president might simply open up one part of the agreement—say, the side agreements on labour and the environment—and invite (or bribe or threaten) both Mexico and Canada to rewrite it to his liking. But it’s more likely Mexico and Canada would come to any negotiation with their own wish lists, too.

Mexico could begin with a provision that

was supposed to allow Mexican truckers to operate in the U.S., but has been blocked by howls of outrage in Congress. Next, Mexico might raise the small matter of 12 million undocumented workers in the U.S. Soon the leaders could face an inconvenient discussion on the future of North America, the World Trade Organization, and globalization. It’s the kind of box that, once opened, might prove very hard to close. “It would be a question of whether Canada and Mexico thought it was in their interests to reopen just a small section of the agreement,” says Jeffrey Schott, a senior fellow at the Peterson Institute for

International Economics, a think tank in a Washington. “The answer would be no.” But if Clinton keeps a grip on her front2 runner status, and then manages to win the presidency, it probably won’t come to that, g Behind her “me-too”-ism on trade is a prag¡2 matic approach. Take her report on NAFTA. £ “I did a study last year in New York looking 5

at the impact of NAFTA on our business people, our workers and our farmers,” she said in an economic speech on Oct. 8. Yet the finished product does not deal with workers who lose their jobs to factories that move out of the country. Rather, the Sept. 28, 2006, 11-page report is focused on one thing: im-

proving access to Canadian markets for New York state agriculture.

Entitled “Barriers faced by New York state agricultural producers to trade with Canada,” it complains that Canada unfairly limits imports of New York state apples (we import less than the U.K.!), wines, onions, cabbage, potatoes, flowers, and “cheese snack foods.” Clinton writes, “The Canadian government must address these costly and time-consuming barriers to trade with New York, which are unfairly disadvantaging New York producers.”

This is the kind of painstaking attention to local gripes that helped the New York senator get breezily reelected to her seat last year. But it’s hardly a protectionist clarion call. In fact, it’s the reverse. “She’s saying, ‘I want to expand NAFTA to cover areas that aren’t covered.’ The problem is that NAFTA didn’t liberalize enough in agriculture,” says Schott. (For the record, Canadian Ambassador Michael Wilson has rejected her complaints. In a polite letter, he noted, among other things, that Canada takes in 72 per cent of New York state’s agricultural exports, and that apple imports have quintupled in recent years.)

And for all her bluster, Clinton’s proposed NAFTA “review” also poses little threat to the agreement. On Oct. 24, she detailed her

plan in proposed legislation to review every trade agreement entered into by the U.S., two years after it goes into effect and every five years after that, sector by sector. The reviews would be required to analyze how each agreement is fostering growth, improving living standards and creating U.S. jobs, and would report whether the partner country had changed its labour and environmental laws. Clinton has said NAFTA would be first up.

But trade specialists say such a process is unlikely to lead to major changes. Why? Because under her bill the body that would review the agreements would not be a labourunion-funded think tank, or some group of politically motivated members of Congress, but an already existing independent government agency called the International Trade Commission. This is a body that undertakes

ONLY ONE DEMOCRAT HAS CALLED FOR SCRAPPING NAFTA

technical investigations into violations of trade law. It makes pronouncements such as, “there is a reasonable indication that a U.S. industry is materially injured by reason of imports of polyethylene terephthalate (PET) film, sheet, and strip from Brazil, China, Thailand, and the United Arab Emirates that are allegedly sold in the United States at less than fair value.” Not exactly a bumper sticker.

Could the commission actually conclude that NAFTA is bad for U.S. workers? “It would be very hard using any of their economic techniques to reach that conclusion,” says Schott. Coupled with Clinton’s pledge to “vigorously enforce our trade agreements,” and a promise to appoint a “trade enforcement office” and double the staff at the office of the U.S. Trade Representative, her policies should be music to the ears of U.S. companies who want to put the squeeze on foreign competitors. She wants to play hardball on trade, but unlike Edwards isn’t seriously aiming at changing the rules.

And what about the environmental and labour concerns that have Edwards worried that the U.S. middle class has been sold out?

A litmus test on this issue played out earlier this month, and it too showed Clinton firmly in the pragmatic camp. The House of Representatives voted on a new trade agreement with Peru. The volume of trade involved was small, but the vote was a watershed because the agreement included for the first time an agreement on labour and environmental standards in the core text of the agreement. The language on upholding “fundamental” labour rights and enforcement of labour laws reflected a compromise agreement reached by Democrats on the House ways and means committee and the Bush administration. It would set the new standard for U.S. trade agreements.

Advocates for tough labour and environmental protection hated it. “The standards are vague and very difficult to enforce,” Robert Scott, a senior international economist at the Economic Policy Institute, a pro-labour think tank in Washington, told Maclean’s. John Edwards denounced the Peru initiative as another “NAFTA-like trade agreement that will needlessly cost America more jobs and hurt middleclass working families.”

But after a lengthy silence, Clinton finally endorsed the deal, calling the labour and environmental provisions “meaningful progress on advancing workers’ rights.” She said she would oppose other pending treaties with South Korea and Colombia for various reasons, but the Peru agreement’s standards were apparently adequate. It passed the Senate on Tuesday.

That’s not to say Clinton is all talk when it comes to helping workers. She has proposed expanding a federal program that gives money and benefits to workers who lose their jobs due to trade agreements—to cover workers who become unemployed not only if a plant moves abroad but if their jobs are “outsourced” abroad, and for the provisions to include countries that do not have trade agreements with the U.S.—such as China and India.

“There is a strong commitment to helping people hurt by trade and spreading the benefits of trade,” says Mac Destler, a trade and politics specialist at the University of Maryland, “But Bush says the same thing—though she may be more serious about it.” In Clinton’s plans Destler sees “nothing that is a serious reversal of current policy.” So if Clinton holds on to her front-runner status, Ottawa need not worry about renegotiating NAFTA. But it might want to review the rules on apples from New York state. M