Thursday, February 28, 2008

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Drezner gets results from the Financial Times

Yesterday I kindly requested that the mainstream media look into Canada and Mexico's reaction to the deplorable NAFTA exchange in Tuesday's Ohio debate.

And the Financial Times delivers, in the form of this Andrew Ward and Daniel Dombey story:

Mexico and Canada on Wednesday voiced concern about calls by Barack Obama and Hillary Clinton to renegotiate the North American Free Trade Agreement, as the Democratic presidential hopefuls compete to adopt the most sceptical stance towards free trade ahead of next week’s Ohio primary election.

In a televised debate on Tuesday night, Mr Obama and Mrs Clinton both threatened to pull out of Nafta if elected president unless Canada and Mexico agreed to strengthen labour and environmental standards.

Arturo Sarukhan, Mexico’s ambassador to the US, told the Financial Times that the US, Canada and Mexico had all benefited from Nafta and warned against reopening negotiations.

“Mexico does not support reopening Nafta,” he said. “It would be like throwing a monkey wrench into the engine of North American competitiveness.”

Mexican diplomats believe a renegotiation could resurrect the commercial disputes and barriers to trade that the agreement itself was designed to overcome.

Jim Flaherty, Canada’s finance minister, also expressed “concern” about the remarks by the Democratic candidates.

“Nafta is a tremendous benefit to Americans and perhaps the [candidates] have not had the opportunity to familiarise themselves with the benefit to Americans and the American economy of Nafta,” he said.

I've said it before and I will say it again: Democrats cannot simultaneously talk about improving America's standing abroad while acting like a belligerent unilateralist when it comes to trade policy.

In fairness, the New York Times' Michael Luo argues that both Clinton and Obama aren't out-and-out protectionists. Of course, saying that Clinton and Obama aren't as bad as Sherrod Brown or Byron Dorgan is damning with faint praise. Furthermore, just because Clinton and Obama voted for some free trade deals does not mean they're really keen on the idea.

UPDATE: Scary fact of the day: the anti-NAFTA pandering is not the worst trade rhetoric emanating from the candidates. No, for that you'd have to turn to Obama's co-sponsoring of the Patriot Employer Act -- which Willem Buiter and Anne Sibert label, "reactionary, populist, xenophobic and just plain silly."

Hat tip: Greg Mankiw.

ANOTHER UPDATE: CTV reports the following:

Within the last month, a top staff member for Obama's campaign telephoned Michael Wilson, Canada's ambassador to the United States, and warned him that Obama would speak out against NAFTA, according to Canadian sources.

The staff member reassured Wilson that the criticisms would only be campaign rhetoric, and should not be taken at face value....

Late Wednesday, a spokesperson for the Obama campaign said the staff member's warning to Wilson sounded implausible, but did not deny that contact had been made.

"Senator Obama does not make promises he doesn't intend to keep," the spokesperson said.

Low-level sources also suggested the Clinton campaign may have given a similar warning to Ottawa, but a Clinton spokesperson flatly denied the claim.

During Tuesday's debate, she said that as president she would opt out of NAFTA "unless we renegotiate it."

The Canadians have denied the specifics of the report.

posted by Dan on 02.28.08 at 08:43 AM


Its nice to see Flaherty expressing concern about the Dems stand on NAFTA,but I wouldn't qualify that as a strong reaction.

I wish someone would point out how advantageous our mutual relationship is.

Your market for everything from cars to food is more efficient than ours. More and more Canadians are shopping south of the border to take advantage of our strong dollar and your more open markets.That's led car dealers here to lower their prices.

I am sure that Canadians flocking south during the winter have helped the economy of Florida,which needs any help it can get.

At a time when EU has helped its economy by lowering internal trade barriers,and when we all are facing stiffer competition form China and India,it makes no sense to erect new trade barriers here in North America.

There should be a way for our government and the government of Mexico to make these points more forcefully without interfering in the U.S. election.

posted by: Steve Albert on 02.28.08 at 08:43 AM [permalink]

I can't believe I'm actually writing this, but Clinton and Obama have a legitimate point. Maybe they are making that point as part of a vote-whoring exercise in pandering, but it still has merit. I do some work in northern Mexico from time to time and what I've seen there in the realm of safety, working conditions, living conditions, and environmental degradation is pretty bad, to say the least. A little pressure from the dominant partner in NAFTA (US) to strengthen fundamentals there would not be such a bad thing. The old, "bring your Mexican OSHA standards up and stop poisoning the rivers or we will have to take a long, hard look at this NAFTA thing" might be the stick that's needed to see some progress in this area. The other side of that process is the pressure the government can bring to the large US corporations who are the major players, and thus the major problem, in Mexico.

posted by: Useless Sam Grant on 02.28.08 at 08:43 AM [permalink]

Though I don't necesarily disagree with this point, it doesn't address the reasons why the people Sens. Clinton and Obama are trying to appeal to dislike NAFTA so much. If Edwards were still in the race at this point we might have a discussion as to whether any of Ohio's economic problems would be improved at all by noodling around with labor and environmental standards in NAFTA specifically, or in most trade agreements in general.

posted by: Zathras on 02.28.08 at 08:43 AM [permalink]

Dan, you accuse Luo of "damming with faint praise." What is he, a beaver?

posted by: the dude on 02.28.08 at 08:43 AM [permalink]

Does Canada have weaker environmental and labor standards than we do? Or are they just included in NAFTA bashing to avoid the appearance of not liking Mexicans?

posted by: Jim Hu on 02.28.08 at 08:43 AM [permalink]

Buiter & Sibert's strongest point against the proposed penalization of US firms that expand abroad is that it won't work - it's too easy for firms to get around.

But if it won't work, it won't do any harm will it?

posted by: Luis Enrique on 02.28.08 at 08:43 AM [permalink]

This CTV report is hardly reassuring. Stirring up protectionist sentiment is a dangerous game. I don't think that people who take Obama at his word are going to change their minds just because he shifts his position.

Prime Minister Harper did come out today and say that NAFTA should be renegotiated. However, the strongest defense of Canada came for John McCain who pointed out that Canadian troops are fighting in Afghanistan and that the Democrats position on NAFTA was a slap in the face of a close ally.

i hope that the media or people in town hall meetings will confront Obama on how his position on NAFTA is affecting Canada-US relations. It might also be nice if someone asked him about the CTV report.

posted by: steve Albert on 02.28.08 at 08:43 AM [permalink]

Out here among the peasants in Ohio, we are tired of economic decay and we are tired of our government officials licking the boots of Mexican government officials and kissing the fannies of illegal aliens.

Blunt enough for you?

But not to worry, because I doubt if either Senator really means what they say, memories will fade quickly when the campaign is over.

And McCain, like Bush, will do everything possible to break the economic backs of blue collar workers, it is good for Wall Street after all.

posted by: save_the_rustbelt on 02.28.08 at 08:43 AM [permalink]

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