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More NAFTA Nonsense

An Obama mailer uses dubious, disputed statistics about how much the trade deal hurt Ohio workers.


Summary

Barack Obama’s campaign is distributing a mailer in Ohio that plays upon anti-NAFTA feelings in the Buckeye State. But the flier is misleading:

  • Obama is quoted as saying that “one million jobs have been lost because of NAFTA, including nearly 50,000 jobs here in Ohio.” But those figures are highly questionable and from an anti-NAFTA source. Other economic studies have concluded the trade deal resulted in much smaller job losses or even a small net gain.
  • The mailer quotes Hillary Clinton as saying “NAFTA has been good for New York and America.” That quote, however, is taken out of context. She also said in that same news conference that NAFTA was flawed and old trade deals needed to be revisited.
Analysis

Opposition to NAFTA plays well among Democratic, blue collar voters in Ohio. But the latest salvo from Barack Obama’s campaign, a glossy, four-page mailer, uses dubious statistics and an out-of-context quote from Hillary Clinton to appeal to the electorate.

 

 One Million Lost?

The mailer claims that “one million jobs have been lost because of NAFTA, including nearly 50,000 … in Ohio,” but those numbers are from a disputed estimate by a liberal think tank with ties to labor unions that opposed the trade deal. We first wrote about the figure in August, when John Edwards used it in a Democratic debate.

The Economic Policy Institute’s Robert Scott, an economist, wrote in a Sept. 2006 report that “[e]xport growth since 1994 [when NAFTA went into effect] supported an additional 1 million U.S. jobs, while imports displaced domestic production that would support 2 million jobs.” That’s a net “displacement,” not an actual “loss,” of 1 million jobs. Scott refers to this as 1 million lost “opportunities” as distinct from existing jobs.

Scott’s figures also have been questioned by other economists. Gary Clyde Hufbauer and Jeffrey J. Schott of the Peter G. Peterson Institute for International Economics, which has connections to the corporate world, criticized Scott’s report for assuming that NAFTA was the cause for the total growth in the trade deficit between the U.S. and both Canada and Mexico. They said that assumption ignored other factors.

Another earlier study included an estimate of job loss that was half as high as Scott’s figure, and it also said NAFTA may have resulted in a net gain in employment when offsetting job gains are taken into account. In 2004, the Carnegie Endowment for International Peace, said 525,000 workers had lost their jobs because of NAFTA, according to the NAFTA Trade Adjustment Assistance program, a U.S. government program that gives assistance to those affected by the trade agreement. (Our fact-checking colleague at the Washington Post, Michael Dobbs, pointed to this study last fall.) The report said those jobs “were likely offset by other jobs gained,” while noting that “the impact on losers is an economic and political concern.” The report also said that there had been “widely diverging estimates” on job loss by both proponents and critics of the trade agreement, adding that such estimates “have been unpersuasive.” It concluded that the impact from NAFTA on U.S. employment had been minor:

Carnegie Endowment for International Peace: NAFTA’s net effect on jobs in the United States has been minuscule, given the size of the U.S. economy and the importance of other trading partners. The best models to date suggest that
NAFTA has caused either no net change in employment or a very small net gain of jobs.

Also in 2004, the nonpartisan Congressional Research Service evaluated four studies on the subject, including the Carnegie Endowment’s, and said that “NAFTA had little or no impact on aggregate employment.” It also concluded, contrary to Scott’s report, that “NAFTA did not cause the widening U.S. trade deficit with Mexico.”

NAFTA critics often point to the loss of manufacturing jobs, which have declined by 3.1 million between Jan. 1994, when NAFTA was implemented, and January of this year. But total nonfarm employment, meanwhile, has increased by 25.6 million in the same time period. Whatever effect NAFTA may have had on U.S. jobs, however, Obama is relying on a statistic that has been criticized, questioned and contradicted by other researchers.

An Incomplete Quote
Obama’s mailer goes on to ask, “Is Hillary Clinton running away from her own record on trade deals that have cost Ohio nearly 50,000 jobs?” It then lists various quotes from Clinton on NAFTA, the most recent of which is a truncated version of the senator’s remarks. The mailer quotes Clinton saying in Jan. 2004, “I think on balance NAFTA has been good for New York and America.” As we said previously, the full context of those remarks, made in response to questions in a news teleconference, shows that Clinton advocated revisiting and renegotiating trade agreements. In that teleconference, she said she “always thought” that old trade agreements should be revisited and that environmental, health and labor standards should be added. “I think that we need a re-thinking of our trade policies,” she said.
The Clinton campaign has sent out its own misleading mailer on NAFTA, trying to convince Ohio voters that Obama has praised the trade agreement in the past. Campaign rhetoric aside, the two candidates’ positions on NAFTA are virtually the same.
Sources

Sen. Barack Obama’s NAFTA mailer.

Scott, Robert E. “NAFTA’s Legacy: Rising trade deficits lead to significant job displacement and declining job quality for the United States.”(Chapter 2 of “Revisiting NAFTA Still not working for North America’s workers.”) Economic Policy Institute, 28 Sept. 2006.

Hufbauer, Gary Clyde and Schott, Jeffrey J. “NAFTA Revisited: Achievements and Challenges.” Institute for International Economics, Oct. 2005: 84.

J.F. Hornbeck. “NAFTA at Ten: Lessons from Recent Studies.” Congressional Research Service, 13 Feb. 2004.

Audley, John J., et. al. “NAFTA’s Promise and Reality: Lessons from Mexico for the Hemisphere.” Carnegie Endowment for International Peace, 2004.

Chapman, Steve. “Democratic myths collide with reality of NAFTA.” Chicago Tribune, 28 Feb. 2008.

Fact Check: Clinton, Obama and NAFTA.” Associated Press, 26 Feb. 2008.

U.S. Bureau of Labor Statistics. Total Nonfarm employment, seasonally adjusted. 1994 – 2008, 3 March 2008.

U.S. Bureau of Labor Statistics. Manufacturing employment, seasonally adjusted. 1994 – 2008, 3 March 2008.