Facts on trade tax the common sense of politicians
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It makes no “cents” for the United States to withdraw from trade agreements during an economic downturn.
America needs more trade, not less.
Yet, U.S. Rep. Gene Taylor, D-Miss., wrote a bill that would withdraw the U.S. from the successful North American Free Trade Agreement with Canada and Mexico.
Taylor claims that since President Bill Clinton signed NAFTA into law in 1994, the nation lost 5 million manufacturing jobs.
I won’t argue about the numbers. But Taylor’s trading-policy illiteracy level rivals that of Kentucky’s below-proficiency reading rates in too many of its public schools.
His conclusions plus the numbers do not add up.
At best, Taylor offers an incomplete assessment.
- Manufacturing employment in this country declined due to a combination of increased investment and productivity in plants nationwide. Producers now create more with less.
- The latest “Economic Report of the President” shows that U.S. factories produced 37 percent more in 2009 than in 1993 — the year before NAFTA kicked in.
- Taylor’s take: “NAFTA discourages investment in U.S.-manufacturing facilities and accelerates the erosion of our industrial base.” My take: Actually, it’s the opposite. A 9-percent increase in manufacturing investment since 1993 meant more money for modernizing operations and training fewer workers to produce more.
Shouldn’t we encourage that kind of investment?
But Mississippi does not hold the franchise on trade-policy-challenged politicians.
Kentucky politicos subscribe to Taylor’s tilted economic treatises — despite NAFTA’s huge impact on the commonwealth’s exports, especially to Canada. Senator wannabe Lt. Gov. Dan Mongiardo issued a press release claiming agreements such as NAFTA have “failed to require other countries to give open access to American goods.”
Such factually challenged statements may make for strong applause from the labor bosses down at Union Hall but should cause genuine concern among American manufacturers of tractors and computers.
- On Jan. 1, 1994 — NAFTA’s first day — Mexico eliminated all tariffs on most American-made computer products, which averaged 17.3 percent. As a result of their duty-free status, American computer exports grew from 4.1 percent in 1993 — the year before NAFTA — to a whopping 39.5 percent and from $370 million in 1990 to $1.8 billion a decade later.
- U.S. tractor exports grew from $86 million to nearly $137 million during that same time.
- And Kentucky’s Gross Domestic Product-adjusted exports increased by 100 percent. Fourteen other states also enjoyed a NAFTA trading bonanza by growing their exports by more than 48 percent.
- The U.S. Chamber of Commerce reported that Canada and Mexico account for a 37-percent increase in U.S. agricultural exports since 1993 and “bring revenue of $25,000 per U.S. manufacturing worker,” making a vital contribution to their wages, which average $37,000.
Much of this economic activity resulted from NAFTA’s stipulations for tariffs — just the opposite of what we have seen from the current administration. Chinese tires, anyone?
And what was that about other countries failing to “give open access to American goods,” Mr. Mongiardo?
Perhaps those who represent us in Congress — or want to — should avoid acting like their brains and common sense have been exported and find out what’s really happening as a result of trade agreements.
They might run across this U.S. Chamber of Commerce gem: More free trade agreements with countries such as Colombia and South Korea likely would eliminate the 11-percent average tariffs those countries levy on U.S. goods — compared with the 2 percent U.S. tariffs on theirs — and boost exports by $25 billion.
More agreements give our producers more access to huge untapped markets. More trade offers future generations access to the kind of prosperity that finances the American Dream.
And if we could put a tariff on political pandering, we could pay off the national debt tomorrow.