Obama attacks NAFTA

Delivering his victory speech last night, Barack Obama gave his usual spiel about the “Washington game,” and then took aim at U.S. trade policies:

It’s a game where trade deals like NAFTA ship jobs overseas and force parents to compete with their teenagers to work for minimum wage at Wal-Mart.

This is the highest-profile attack Obama has launched on this issue, and it comes ahead of primaries in Wisconsin and Ohio, two states where the Democratic base is very angry about trade. Obama’s remarks are a preview of the critique he’ll be launching against Hillary Clinton, whose husband pushed hard for NAFTA’s passage over the objections of many in his own party. (Hillary has called for taking a second look at the treaty, and voted against a number of free-trade agreements in recent years.)

Ronaldo Schemidt/AFP/Getty Images

So, what about the factual claim? Has NAFTA shipped U.S. jobs overseas? Well, it doesn’t make a lot of sense, since Mexico and Canada share land borders with the United States. But in the United States, there was never the “giant sucking sound” of jobs heading south that Ross Perot railed against. Most economists will tell you in general that technology has a lot more to do with lost manufacturing jobs than trade does.

As for NAFTA, it was intended primarily to help Mexico, and on that score it has been a mixed bag. The Mexican business community loves it; small farmers hate it (see the above photo). Berkeley economist Brad DeLong, a big NAFTA booster in the Clinton Treasury Department, discusses some of went wrong in this YouTube video from October 2006:

Mexico is now further behind the United States in relative terms than it was in 1992, and the distribution of income within Mexico has become much more unequal…. Perhaps we would have been better off advising Mexico in the 1990s to focus its attention on fixing its education system and cleaning up its public-sector corruption than in going for free trade with America. I’m still a believer in NAFTA, yes, but my belief is relatively shaky now.

Tyler Cowen, who strongly supports NAFTA, adds:

The more globalized parts of Mexico — most of all the north — have done extremely well since NAFTA passed. The biggest problems remain in the least globalized parts, most of all the south and big chunks of the interior.