International Business

Miami panelists try to sort out the real deal on NAFTA

This combo of file images shows U.S. presidential candidates Donald Trump and Hillary Clinton. Trump says badly negotiated free trade agreements have cost millions of manufacturing jobs and he promises to bring those jobs back by renegotiating NAFTA and withdrawing from a proposed Pacific trade pact. Clinton has promised to spend $275 billion upgrading infrastructure to create more jobs.
This combo of file images shows U.S. presidential candidates Donald Trump and Hillary Clinton. Trump says badly negotiated free trade agreements have cost millions of manufacturing jobs and he promises to bring those jobs back by renegotiating NAFTA and withdrawing from a proposed Pacific trade pact. Clinton has promised to spend $275 billion upgrading infrastructure to create more jobs. AP

Republican presidential candidate Donald Trump called the North American Free Trade Agreement “the single worst trade deal ever approved in this country” and blamed it for decimating the U.S. manufacturing industry during his debate with Democratic opponent Hillary Clinton earlier this week.

In downtown Miami Thursday, the U.S.-Mexico Chamber of Commerce Inter-American Chapter explored the issues swirling around NAFTA. Speakers suggested that NAFTA is far too important and complex to be dismissed by simply looking at U.S. trade balances. Since NAFTA went into effect, the U.S. trade deficit with Mexico has grown dramatically. But panelists said that wasn’t entirely due to the trade agreement.

A Congressional Research Service report from last year said that NAFTA hadn’t lived up to all the promises made by its supporters but it also didn’t cause the huge job losses that opponents contend.

“There’s an absence of education on NAFTA in the U.S.,” said Hector Chichoni, an immigration lawyer at the Miami office of Duane Morris, which hosted the event.

There’s an absence of education on NAFTA in the U.S.

Hector Chichoni, immigration lawyer

“Is it perfect? No. But people don’t understand it. That lack of understanding leads to fear,” said Guillermo “Willy” Gomez, a senior vice president at HSBC Bank, USA. “I have no opinion on Trump and Hillary. I’m just trying to give you the facts [on NAFTA],” he told the audience.

Antonio Zabalgoitia, the consul general of Mexico in Miami, said NAFTA has helped turn Mexico into a more open, world-class economy, making it a better neighbor for the United States. Since NAFTA, Mexico has signed 14 free trade agreements with 45 countries, he said.

“We are better at being partners of the United States,” he said. Trust and that partnership are two of the most valuable byproducts of NAFTA, the consul general said. The question that should be asked is: “Does the United States want a neighbor that is progressive and forward-looking?” Zabalgoitia said.

Trump also has said during the campaign that the free trade agreement with Canada and Mexico, the United States’ second and third most important trading partners in 2015, is a job killer and should be “entirely” renegotiated or terminated.

Zabalgoitia said he doesn’t think the trade pact should be renegotiated: “If you open up one thing in NAFTA, you can open up a Pandora’s box in the politics of the three countries.”

If you open up one thing in NAFTA, you can open up a Pandora’s box in the politics of the three countries.

Antonio Zabalgoitia, consul general of Mexico

While NAFTA, which went into effect in 1994, might be in need of some updating, he said, that could best be handled through the proposed Trans-Pacific Partnership, a far-reaching pact that includes the United States, Canada, Mexico and nine other Pacific Rim countries.

“The best path [to update NAFTA] is passing TPP,” he said.

Trump also opposes TPP and during the debate he accused Clinton of favoring it, telling her: “Then when you heard what I was saying, how bad it is, you said, I can’t win that debate.”

During the debate, Clinton offered some support for free trade, saying, “We are 5 percent of the world’s population; we have to trade with the other 95 percent, and we need to have smart, fair trade deals.” But when Trump called NAFTA the “worst trade deal ever,” Clinton mildly countered, “Well, that’s your opinion.”

Trump has suggested that a wall needs to be built along the border with Mexico to keep out migrants and that Mexico should be forced to pay for it. Mexican President Enrique Peña Nieto has said that Mexico would never pay for such a project. In a memo he sent to the Washington Post this spring, Trump said new tariffs — presumably under a new trade arrangement — might be used to pressure Mexico.

“If you impose a tariff, it increases your costs,” Gomez said. And by boosting the Mexican economy, he said, NAFTA was actually reducing Mexican migration to the United States: “If you have a healthy economy there, people don’t need to pick up and come here.”

In the last three years, Zabalgoitia said, there has been a net return of 160,000 Mexican migrants from the United States.

Opponents of NAFTA, including Trump, contend that NAFTA has resulted in huge job losses for American workers.

“I would argue quite emphatically that we would have lost those jobs anyway,” Gomez said. In the years since NAFTA was implemented, he said, technology has changed and manufacturing has become much more automated. “What has really happened is that we have displaced jobs.”

But where the U.S. economy has fallen down, Gomez said, is in placing workers who have lost their livelihood in alternative jobs.

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