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American Shipper

Clinton, Obama spar over NAFTA

Clinton, Obama spar over NAFTA

Sens. Hillary Clinton and Barack Obama said in their presidential debate last night that they would withdraw from the North American Free Trade Agreement if Canada and Mexico didn’t agree to renegotiate the 15-year-old trade pact.

   NAFTA lowered cross-border tariffs and led to a huge boom in trade between the three neighbors, but critics have complained that it has encouraged U.S. corporations to relocate manufacturing plants in Mexico at the cost of hundreds of thousands of U.S. jobs.

   The trade pact has a provision that a participant can cancel participation with six months notice, and both Democratic candidates said they would use that as leverage to get a new deal with stronger labor and environmental conditions to even the playing field for foreign companies in terms of compliance costs that make U.S. goods more expensive.

   “I think we should use the hammer of a potential opt-out as leverage to ensure that we actually get labor and environmental standards that are enforced,” Obama said.

   He has claimed on the stump that Clinton has been a strong NAFTA supporter ever since her husband, former President Bill Clinton, pushed through the historic trade deal. Obama has increasingly talked about protecting workers from the negative effects of trade deals in recent weeks and stepped up attacks on NAFTA in recent days as the campaign has swung into Ohio.

   NAFTA is a big issue in Ohio, which has lost 80,000 jobs to Mexico but has also benefited from substantial export growth. Exports now have the highest share of U.S. national income ever and Ohio rates fourth in terms of exports to Canada and Mexico.

   The nationally televised debate was held in Cleveland.

   Clinton acknowledged that some parts of the country, especially southern border states, have benefited from the trade deal while others have suffered from outsourcing.

   She repeated her position that she would take a “trade timeout” before concluding any new trade deals to add tougher standards to NAFTA, beef up the enforcement mechanisms, and change provisions that allow foreign companies to sue the United States for forcing them to meet U.S. safety standards to gain market access.

   NAFTA “did not have the labor standards and the environmental standards that were required to not just be good for Wall Street but also would be good for Main Street,” Obama said.

   While taking a protectionist tone, he also signaled that he understands the need for expanding global trade. He said trade is only one part of an economic program that needs to include investing in infrastructure, science, technology, education, and a “green energy” industry to make the United States more competitive.

   Trade among NAFTA nations climbed 198 percent, from $297 billion to $883 billion, through 2006. U.S. merchandise exports to Canada and Mexico increased 157 percent to $364.6 billion compared to 108 percent to the rest of the world. Canada and Mexico are the first and second largest export markets and NAFTA partners account for 35 percent of total U.S. exports. U.S. imports under NAFTA have grown 231 percent to $501 billion, but U.S. service exports have also grown 125 percent to $62 billion. NAFTA has reduced tariffs by more than $14.2 billion per year, saving households on average $210 annually, according to the U.S. Trade Representative. ' Eric Kulisch

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