A Project of The Annenberg Public Policy Center

NAFTA/CAFTA Blame Game


A union-sponsored ad charges that Arkansas Sen. Blanche Lincoln’s support of "unfair" trade deals "made it impossible for American workers to compete." But several economic studies say trade deals, like the North American Free Trade Agreement, have had a small impact, or even a positive one, on American jobs.

As we said last week, this ad starts with a true claim about union workers at a Cooper Tire plant making wage concessions to ward off a threatened closure. But the ad, from the Service Employees International Union’s Committee on Political Education, goes too far when it blames Lincoln for the plant’s economic troubles.

A Cooper Tire employee says in the ad that workers would not have had to agree to concessions "had Ms. Lincoln not voted for all those unfair trade deals." He says, "Those deals made it impossible for American workers to compete" and cites NAFTA, the Central American Free Trade Agreement and a trade deal with China.

But the union offers scant evidence of that. 

SEIU-COPE points to a report authored by economist Robert E. Scott for the Economic Policy Institute, a think tank that is partly funded by labor unions and has union presidents on its board. Scott estimated in 2003 that NAFTA, enacted 10 years earlier, was responsible for the net loss of 879,280 jobs. But other studies have found the net impact on jobs was minor.

In a 2004 report, the Carnegie Endowment for International Peace said the net effect on jobs in the U.S. "has been minuscule, given the size of the U.S. economy and the importance of other trading partners." The report estimated a loss of jobs of 525,000, but said that was offset by other job gains. "The best models to date suggest that NAFTA has caused either no net change in employment or a very small net gain of jobs."

The nonpartisan Congressional Research Service, which looked at four reports on this issue, including the endowment’s, agreed that "NAFTA had little or no impact on aggregate employment."

SEIU-COPE also cites a 2005 report by Scott, and coauthor David Ratner, saying that since NAFTA was enacted, the U.S. trade deficit with Mexico and Canada had caused "a net decline in U.S. production that would have supported about 1 million U.S. jobs." But that report, too, has been questioned by other economists.

These claims about trade deals’ effect on Cooper Tire are speculative, and clearly these deals didn’t make it "impossible for American workers to compete" — otherwise, the plant wouldn’t be open.

Meanwhile President Bill Clinton, who has recorded several radio ads for Lincoln’s reelection campaign, claims in one that "Blanche voted for [NAFTA] because she knew it would open new markets for Arkansas rice and soy beans. And it did."

Exports for those products have gone up substantially since NAFTA was passed, and it’s true that trade barriers, such as tariffs, were reduced and eliminated under the agreement. Rice and soybeans are the top two agricultural exports for Arkansas, and between 1993 and 2008, those exports went up 135 percent and 177 percent for rice and soybeans, respectively, according to U.S. Department of Agriculture data. But it’s tough to determine to what extent NAFTA alone affected trade.

A 2009 report from USDA said: "U.S. agricultural trade with Canada and Mexico has more than tripled since the start of NAFTA’s implementation in 1994." The report also noted a "quadrupling of U.S. wheat and rice exports to Mexico" and a tripling of soybean sector exports. (Arkansas is the top state for rice exports and number nine for soybeans.) Determining how much of the export increase is attributable to NAFTA (and the Canada-U.S. Free Trade Agreement), the report noted, is "not an easy task for several reasons." For one, the details of the agreement varied by commodity. Plus, outside factors such as population, economic growth and transportation affect trade. Also, the report noted, NAFTA created "an economic policy environment" that would stimulate trade beyond what changes to tariffs and quotas would do.

An older USDA report, from 2002, said that NAFTA had "only a minor positive effect" on rice exports to Mexico and the same was said of soybeans. "NAFTA’s reduction of soybean tariffs increased U.S. soybean exports to Mexico only marginally above what would have occurred without the agreement," USDA said. The effect on exports to Canada was also small.