Posted on 02/22/2017 5:13:32 AM PST by Kaslin
President Donald Trump has vowed to renegotiate NAFTA, which he calls “a disaster.” But before he tears up the trade deal and walls America off from the world with a manmade mountain of tariffs, let’s take a moment to take stock of why NAFTA was created, what it has achieved, and what the U.S., North America, and the world might look like after NAFTA is gone.
President Ronald Reagan sketched the outlines of NAFTA in 1979. The idea of a free-trade zone stretching from the Yukon to the Yucatan was so important to Reagan that he made it a central feature of the speech announcing his presidential candidacy. Noting how “We live on a continent whose three countries possess the assets to make it the strongest, most prosperous and self-sufficient area on earth,” Reagan proposed what he called “a North American accord” to allow the “peoples and commerce” of the United States, Mexico, and Canada to “flow more freely across their present borders.” Reagan believed such an accord “would serve notice on friend and foe alike that we were prepared for a long haul, looking outward again, and confident of our future” -- and that a U.S.-Mexico-Canada alliance of free trade and free enterprise would unleash an economic potential beyond which “any of them, strong as they are, could accomplish in the absence of such cooperation.”
Building on the foundation laid by Reagan, Presidents George H.W. Bush, Bill Clinton, and George W. Bush all enthusiastically supported NAFTA.
(Excerpt) Read more at americanthinker.com ...
Words are not deeds. Unfortunately, a look at the Reagan record leads to the question: With free traders like this, who needs
protectionists?
Consider that the administration has done the following:
— Forced Japan to accept restraints on auto exports. The agreement set total Japanese auto exports at 1.68 million
vehicles in 1981-82, 8 percent below 1980 exports. Two years later the level was permitted to rise to 1.85 million.(33)
Clifford Winston of the Brookings Institution found that the import limits have actually cost jobs in the U.S. auto
industry by making it possible for the sheltered American automakers to raise prices and limit production. In 1984,
Winston writes in Blind Intersection? Policy and the Automobile Industry, 32,000 jobs were lost, U.S. production fell
by 300,000 units, and profits for U.S. firms increased $8.9 billion. The quotas have also made the Japanese firms
potentially more formidable rivals because they have begun building assembly plants in the United States.(34) They
also shifted production to larger cars, introducing to American firms competition they did not have before the quotas
were created. In 1984, it was estimated that higher prices for domestic and imported cars cost consumers $2.2 billion a
year.(35) At the height of the dollar’s exchange rate with the yen in 1984-85, the quotas were costing American
consumers the equivalent of $11 billion a year.(36)
— Tightened up considerably the quotas on imported sugar. Imports fell from an annual average of 4.85 million tons in
1979-81 to an annual average of 2.86 million tons in 1982-86. Not only did this continued practice force Americans to
spend more than other consumers for sugar, but it created hardships for Latin American countries and the Philippines,
which depend on sugar exports for economic development. The quota program undermined President Reagan’s
Caribbean Basin Initiative and intensified the international debt crisis.(37)
— Negotiated to increase restrictiveness of the Multifiber Arrangement and extended restrictions to previously
unrestricted textiles. The administration unilaterally changed the rule of origin in order to restrict textile and apparel
imports further and imposed a special ceiling on textiles from the People’s Republic of China.(38) Finally, it pressured
Hong Kong, Taiwan, and South Korea, the largest exporters of textiles and apparel to the United States, into highly
restrictive bilateral agreements. All told, textile and apparel restrictions cost Americans more than $20 billion a
year.(39) The Reagan administration has stated several times that textile and apparel imports should grow no faster
than the domestic market.(40)
— Required 18 countries—including Brazil, Spain, South Korea, Japan, Mexico, South Africa, Finland, and Australia,
as well as the European Community—to accept “voluntary restraint agreements” to reduce steel imports, guaranteeing
domestic producers a share of the American market. When 3 countries not included in the 18—Canada, Sweden, and
Taiwan— increased steel exports to the United States, the administration demanded talks to check the increase. The
administration also imposed tariffs and quotas on specialty steel. These policies, with their resulting shortages, have
severely squeezed American steel-using firms, making them less competitive in world markets and eliminating more
than 52,000 jobs.(41)
— Imposed a five-year duty, beginning at 45 percent, on Japanese motorcycles for the benefit of Harley Davidson,
which admitted that superior Japanese management was the cause of its problems.(42)
— Raised tariffs on Canadian lumber and cedar shingles.
— Forced the Japanese into an agreement to control the price of computer memory-chip exports and increase Japanese
purchases of American-made chips. When the agreement was allegedly broken, the administration imposed a 100
percent tariff on $300 million worth of electronics goods. This episode teaches a classic lesson in how protectionism
comes back to haunt a country’s producers. The quotas established as a result of the agreement have created a severe
shortage of memory chips and higher prices for American computer makers, putting them at a disadvantage with
foreign competitors. Only two American firms are still making these chips, accounting for a small percentage of the
world market.(43)
— Removed Third World countries from the duty-free import program for developing nations on several occasions.
— Pressed Japan to force its automakers to buy more American-made parts.(44)
— Demanded that Taiwan, West Germany, Japan, and Switzerland restrain their exports of machine tools, with some
market shares rolled back to 1981 levels. Other countries were warned not to increase their shares of the U.S. market.
— Accused the Japanese of dumping roller bearings, because the price did not rise to cover a fall in the value of the
yen. The U.S. Customs Service was ordered to collect duties equal to the so-called dumping margins.(45)
— Accused the Japanese of dumping forklift trucks and color picture tubes.(46)
— Failed to ask Congress to end the ban on the export of Alaskan oil and of timber cut from federal lands, a measure
that could substantially increase U.S. exports to Japan.
— Redefined “dumping” in order “to make it easier to bring charges of unfair trade practices against certain
competitors.”(47)
— Beefed up the Export-Import Bank, an institution dedicated to promoting the exports of a handful of large
companies at the expense of everyone else.(48)
— Extended quotas on imported clothespins
The world was different 38 years ago.. NAFTA wasn’t supposed to be a way for the rest of the world to dump on the US/Can/Mex as demonstrated by the tariffs and trade “deals” mentioned.. it was to bring manufacturing back to the US. In the 1970’s Japans Yen was undervalued and it allowed their high quality goods to compete with cheapened US goods.
The US was at a severe disadvantage in textile and clothing , electronics , and steel.
In the 1970’s Mexico’s only export was Tequila, avacados and a minor amount of oil. Now they are a direct competitor as our EPA OSHA and regulations from other agencies have made them the “go to” destination within NAFTA to build plants that are far cheaper than here in the US. Mexico has done nothing to help themselves, it’s all spillover from the US.
Regulations are problem but the real magnet are the dirt cheap wages. $3.00/hr for Paco vs. $20.00/hr for Pete. If you don’t agree with me you sir are in denial.
The question is irrelevant.
We live in a democratic system, and the people have voted to trash it.
We had a 20 year test drive and it’s NO SALE.
God Bless NAFTA, and God Bless Ronald Reagan, who had the vision to make it happen.
Clifford Winston of the Brookings Institution found that the import limits have actually cost jobs in the U.S. auto industry by making it possible for the sheltered American automakers to raise prices and limit production. In 1984, Winston writes in Blind Intersection? Policy and the Automobile Industry, 32,000 jobs were lost, U.S. production fell by 300,000 units, and profits for U.S. firms increased $8.9 billion.
Awesome!!! It cost jobs, raised prices and reduced US production. We should do more of that. Tanstaafl.
I remember when the small pickups were making inroads in the U.S. (We were not making them then.)
Congress slapped a $500 tariff on all imported trucks to help out our auto industry. They immediately raised their truck prices $500.
Congress asked what the L they thought they were doing.
Auto mfrs replied “competitive pricing”.
The tariff on pickups is 25% and it’s still on, which is why there are no new small, cheap pickups in the US.
Check out the Ram 700, or the VW Amarok.
That profit margin saved the truck industry. Small price to pay to save an industry.
There are no small trucks because they are pointless. Small trucks get horrible mileage and consumers decided to just spend a little more for a full size PU. Hopefully small trucks they make now are more efficient.
Every auto market in the world disagrees with you.
Tariffs and protectionism as practiced against the USA is very sophisticated and beyond most Freeper comprehension. The total lack of understanding of what is really happening in the world market place is killing US industry. Trump gets it. Yeah.
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