Do we Need NAFTA? Would we be better off without it?

If I understand it correctly, NAFTA is a big reason so many of our jobs went overseas - resulting in the pathetic economic condition our country is is. I don't know much about NAFTA. Can anybody please explain if NAFTA is something we're stuck with forever or can it be 'undone'? Would our economy straighten out & improve if we ended NAFTA? I realize we'd end up paying higher prices for things, and I have no problem with that if it'd mean keeping jobs here. Do we really need NAFTA for good global relations & for our economy (oil, etc.).

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Ohio Voters and Candidates Take a Dim View of NAFTA

by Ross Eisenbrey

As the Democratic primary in Ohio enters its final week, Sen. Hillary Clinton and Sen. Barack Obama both agree that the North American Free Trade Agreement (NAFTA) is hollowing out America’s industrial heartland. Their criticisms of NAFTA are borne out in the Buckeye State, which has lost more than 200,000 manufacturing jobs over the last seven years.

Manufacturing cars, trucks, and auto parts is one of the most important industries in Ohio, and NAFTA has produced a large and growing trade deficit with Mexico in this crucial sector. While NAFTA has increased automotive trade between the United States and Mexico, the effects on Ohio and other industrial states have been overwhelmingly negative. U.S. exports to Mexico increased, but imports from Mexico increased much faster. In 1993—the year before NAFTA took effect—the United States had a positive trade balance in auto parts of $2.4 billion. By 2007, that balance was a trade deficit of more than $12 billion (See Chart).

Chart: U.S./Mexico trade balance in motor vehicles and parts, 1993 and 2007

Overall, including both vehicles and parts, the U.S. trade deficit with Mexico has ballooned from $2 billion in 1993 to nearly $31 billion in 2007. Nationwide, the auto trade deficit with Mexico has cost us 363,000 jobs. That is why Ohio voters want the next president to rewrite NAFTA, and that is why Senators Obama and Clinton are so critical of the trade deal as it approaches its 15th anniversary.
http://www.epi.org/content.cfm/webfeatures_snapshots_20080227

Sen. Hillary Clinton and Sen. Barack Obama both agree that the North American Free Trade Agreement (NAFTA) is hollowing out America’s industrial heartland.

Wasn't Shillary standing right there when Bill signed NAFTA into being? Maybe she should have voiced her opinion at that time. Pretty much with the rest of her campaign. She keeps bitching about the changes that need to be made, but those changes are made in congress, THEN they go to the president. As a congressman name some bills she sponsored that had any merit?

Michigan's and Ohio's economies might improve if NAFTA were done away with, but the national economy would see an overall decline. I don't think there's any question that NAFTA improves the overall US economy when you look at the numbers and firgures. However, NAFTA has hurt the manufacturing sector of the economy to some degree, and the manufacturing sector is disproportionately represented in Ohio and Michigan. Therefore, any manufacturing decline seen in the US will be felt especially hard in Ohio and Michigan. Also, the stories of NAFTA losses are always the ones that make the news. The media never reports on the increased production of certain sectors of the economy, but they will report on the plant closing 45 minutes away that is costing 150 jobs.

Starling were you referring to the national economy or the state/local economy of Ohio and Toledo when you mentioned the "pathetic" economy? The numbers are there to support that claim for Michigan and a lesser degree for Ohio, but there are no numbers that back that claim up for the nation as a whole. What numbers were you referring to that places our economy in the "pathetic" range? When speaking about the economy, you really need to refer to hard numbers. Far too often the economy is spoken of from a position of emotion. For large swaths of the United States the economy has never been stronger than it is now. While I don't think doing away with NAFTA will completely negate the growth these regions have seen, it will affect that growth to some degree, and the overall US economy will become weaker to some degree.

I just heard,(can't remember where), that BMW will shift much of its auto production to somewhere in the Southeast, USA. Why? Devaluation of the dollar, and outstanding productivity. We have to remember that productivity is measured on an annual basis, and if workers in Germany get a six week vacation, it's tough to be productive in a global economy.

Much of what we are seeing today is the result of past excess in the USA. Housing became overvalued. We're fighting a war with money we have to borrow. But, with NAFTA in place, and the weak dollar, our products will be in demand overseas. The global market is, potentially, much larger than the USA market.

Read "The World Is Flat" by Thomas Friedman.

lew

I would also say that since NAFTA has been in place the United States has experienced one small recession in the first two quarters of 2001. That's it. Compare that to the era before free trade was around (pre-80s) and see when there were more recessions. There are a number of reasons that the US economy has become much more stable in the last 20-30 years, and I believe free trade is one of those reasons. If free trade were the end of the US economy then why haven't we seen a complete collapse of the US economy since these free trade agreements were put in place?

Here's a graph that shows US recessions since 1945. The line represents real estate investmet and is not that pertinent to our discussion. Focus on the vertical gray bars that represent when the recessions occurred. Since the "World has become flat" do you notice a trend developing in regards to the frequency of recessions?

http://www.marketoracle.co.uk/images/Kasriel14_3_2.gif

HH sed: "If free trade were the end of the US economy then why haven't we seen a complete collapse of the US economy since these free trade agreements were put in place?"

HeyHey, the US economy HAS collapsed. All that cheap credit that sustained the otherwise bankrupt middle class kept things looking rosy for the entire 1990s. But all that has come to an end. Foreclosures and layoffs and inflation will continue to rise until the soup lines appear and become common. Then (and ONLY then) the middle class will finally look around and realize that it's POOR.

America is a land of deep denial. People treated their homes as ATMs and that "third income" masked the decay that the second income masked from the 1980s onward. There's no "fourth income" waiting in the wings to compensate for this continued shell game ... unless an actual Socialist government comes into power. Will you call such outright Socialism "stability" then?

So, sorry, I can't see any sense in pushing the "stability" idea as you've done. Debt is not wealth. Allowing people to engage in unpayable levels of debt was simply a matter of hiding America's "hollowing out" until some later time. Financial crashes take years to happen, and Depressions happen about every 3rd generation. It's now our time.

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