Did NAFTA work?

Question: Does NAFTA work?


George Mitchell: Well, on balance, I think trade has been beneficial to the United States, yes. I was Majority Leader when we passed NAFTA. I supported it. I supported the creation of the World Trade Organization. One of the areas I tend to disagree with the two Democratic presidential candidates. But it’s understandable their position is that we ought to-- well, they don’t quite say we ought to repeal them, but they say we ought to re-negotiate them. And if you can re-negotiate them, fine, but you’ve got to deal with the other signatories to these treaties. I think the debate has been incomplete with respect to trade. It is true that it does produce adverse effects. Of that, there can be no doubt. It’s like most public policy issues, but it also produces very beneficial effects, which we ought to include in the debate and in the discussion. I do believe strongly that we can do a much better job in negotiating trade agreements, to deal with the very troubling issues of healthcare,environmental protection, very low wages in other societies, that is, worker protection issues to neutralize some of the difficulties that we have. We have not done a good job at that, but the answer is not to build walls of protection. The answer is to keep what’s working and trade generally is beneficial, and try to deal with the adverse effects. The reality is, of course, that there is dislocation. There’s much dislocation. But it’s very hard to identify a specific and direct cause-and-effect relationship with respect to all dislocation, because much of it comes from a dynamic free-market economy, and you want innovation. You know, there used to be a lot of people in this country employed in the manufacture of stagecoaches. There aren’t any anymore. They all-- when the motor vehicle was invented, stagecoach production ended and people made motor vehicles, and that meant dislocation for those who’d been engaged in stagecoach production and other related industries, but the country’s clearly better off. That didn’t have anything to do with any trade agreement. That was the result of innovation and a dynamic free-market economy, which we have, which we want and which we should encourage. I emphasize I’m not for just trading for the sake of trading. You have to have an objective, and we can do a much better job at mitigating the admittedly harsh effects on individuals. When I was a boy, my mother, as I mentioned earlier, was a textile mill worker, and she worked at a number of mills. I think at one time, there were about twenty textile mills of one kind or another within an hour’s drive of our home. I don’t think there’s a single one now. They’ve just gone, first to the South and then to Asia, and now there are real effects to that. Maine, in another example, was once the largest manufacturer of all of the states in production of footwear, shoes. That’s pretty much gone now. So, you get benefits, you get disadvantages, but you can’t build walls.

Question: Are organizations like the WTO prepared for the challenges of globalization?

George Mitchell: Well, of course, the WTO is a legal regime which is intended to encourage trade while creating a forum to deal with unfair practices in trade. It’s highly imperfect. All human institutions are. From the dawn of civilization, every society has sought to manipulate trade in its favor, and of course, for much of what I would call modern history, the tariff, or tax on imports, was a mechanism by which that was accomplished- so-called protecting domestic industries. But most economic historians and others believe that the protectionist response to the slowdowns of the 1920s and 1930s contributed to the Depression, which in turn contributed to the Second World War. And I think you have to be very careful to guard against that. Now, it’s a very different world now. There’s six and a half billion people on the earth. The population is now expected to grow, although population projections are notoriously unreliable because changes in human behavior can produce sharp changes in population projections, but I think the best estimates now we will peak between eight billion and nine billion. That’s an enormous number of people with a huge demand for land, for water, for food, for education. To think that you can deal with those issues-- and ninety percent of that population growth will occur in poorer areas-- thinking you can deal with that by creating protectionist walls I think is a profound error.

 

 

 

Did NAFTA work?

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