Presidential candidates Sens. Hillary Clinton, D-N.Y., and Barack Obama, D-Ill. both said in a Feb. 26 debate in Cleveland, Ohio, that if they are elected the U.S. would “opt out” of NAFTA unless certain terms can be renegotiated with partners Mexico and Canada. The candidates’ stance drew strong reactions from various government and elected officials, including U.S. Trade Representative Susan Schwab, Sen. Chuck Grassley, R-Iowa, and Canada’s trade and finance ministers.
Seeking to address job losses in Ohio and other states, Clinton said that NAFTA has been disadvantageous to U.S. manufacturing and that she would change terms in the agreement that allow foreign companies to sue the U.S. government over regulations that affect their investments. Both Clinton and Obama said they would negotiate the addition of enforceable labor and environmental standards as well. If these efforts were unsuccessful, they said, they would move to pull the U.S. out of NAFTA. They therefore expressed confidence that a renegotiation of the NAFTA provisions would be successful.
The two candidates also supported a change of pace from the Bush administration in the negotiation of free trade agreements. Obama said that as president he intends “to make certain that every agreement that we sign has the labor standards, the environmental standards and the safety standards that are going to protect not just workers, but also consumers.” Clinton said she would take a “tougher position” on future agreements, which would include stronger enforcement mechanisms.
USTR Schwab publicly disagreed with the candidates’ sentiments at a conference the day after the debate, according to an International Trade Daily report. Schwab, noting the growth of U.S. exports and that NAFTA partners Canada and Mexico are the United States’ largest export markets, said it is an inopportune time to close markets or end existing agreements. Likewise, Sen. Grassley said that NAFTA is often used as a scapegoat but has actually leveled the playing field for U.S. exporters in Mexico by bringing tariffs down to zero. He noted that during NAFTA’s existence, U.S. exports to Mexico have increased about 2.5 times, supporting “a lot of good-paying jobs.” Responding to allegations that NAFTA has led to U.S. job losses, he said that even without NAFTA U.S. companies would have increasingly invested and sourced abroad because of the growing sophistication in supply chain management.
Meanwhile, Canadian trade and financial officials also expressed concern over the candidates’ “opt-out” remarks. According to a Bloomberg report, these officials said NAFTA is now “at risk” and that a discussion of the details of NAFTA would be more helpful than the rhetoric of the debates.
World Trade/Interactive
