- The Washington Times - Tuesday, April 22, 2008

Mexican President Felipe Calderon yesterday defended a trade agreement among his country, the U.S. and Canada from criticism by American presidential candidates, saying the pact has created jobs and reduced immigration to the U.S.

“Recently, NAFTA has come under criticism, and I do not believe that people are realizing how many benefits NAFTA has brought both to the United States and to Mexico,” Mr. Calderon said, referring to the North American Free Trade Agreement.

Mr. Calderon made his comments in Spanish after meeting here with President Bush on the first day of a two-day summit between the two leaders and Canadian Prime Minister Stephen Harper.

The Mexican president’s comments about NAFTA come in the midst of a heated U.S. presidential campaign that has thrust trade and NAFTA, in particular, into the spotlight.

Democratic candidates Barack Obama and Hillary Rodham Clinton have said they would consider pulling the U.S. out of the trade deal, which has tripled the amount of U.S. trade with Mexico and Canada from almost $300 billion in 1994 to almost $1 trillion this year.

Mr. Bush yesterday praised the deal and said it is “an opportune time” to address criticisms, but did not address anti-trade rhetoric from the campaign.

At a U.S. Chamber of Commerce reception last night, Mr. Bush urged Congress to approve a free-trade pact with Colombia and took a jab at House Speaker Nancy Pelosi, who has blocked it by changing congressional rules.

“It’s about time America sets aside petty politics and focuses on doing what’s right for the United States of America,” he told business leaders.

In his remarks earlier yesterday, Mr. Calderon — aware that a substantial segment of the U.S. middle class blames trade and immigration for job losses and the economy’s downturn — took on both subjects.

“I can say that hundreds of thousands of jobs have been created on both sides of the border. As far as Mexico is concerned, this increase in jobs has also led to a direct decrease in the amount of immigration from Mexico to the United States,” he said.

But some studies have said that a flood of inexpensive corn imports from the U.S. has put many small Mexican farmers out of work and increased illegal migration of workers across the border into the U.S., as rural residents left their farms seeking jobs.

NAFTA has received mixed reviews since it was adopted 14 years ago. It disappointed free-trade advocates by giving only a small boost to growth and employment in the U.S., according to a Congressional Budget Office study in 2003. By 2001, NAFTA had increased exports to Mexico by 11.3 percent while increasing Mexican imports by 7.7 percent.

But critics of NAFTA, such as former presidential candidate H. Ross Perot, also were discredited, as it did not lead to the massive “sucking sound” of jobs headed south that they anticipated.

Ross Eisenbrey, analyst for the pro-labor Economic Policy Institute, said U.S. auto workers were particularly hard hit by an estimated 363,000 exodus of jobs to Mexico as manufacturers moved to locate plants there.

But most economists say the effects of NAFTA on U.S. manufacturing overall were small and overwhelmed by the more transforming free-trade agreement negotiated with China in 2001.

“If American factory workers want to see where their jobs have gone, they’d do better to look east than south,” said Froma Harrop, analyst at Real Clear Politics. “Labor may be cheaper in Mexico, but it’s cheaper still in Asia. Chinese workers make about a quarter of what their Mexican counterparts earn.”

“When China joined the World Trade Organization in 2001, Mexico lost much of any advantage that NAFTA gave it,” she said.

By 2007, the U.S. trade deficit with China hit an unprecedented $256 billion while the deficit with Mexico was $74 billion and the deficit with Canada was $64 billion. Moreover, a substantial portion of the trade gaps with Mexico and Canada were fueled by oil imports, not manufactured goods.

NAFTA proved to be no miracle cure for Mexico’s ailing economy. The pact failed to lift long-standing restrictions on U.S. investment in Mexico’s oil sector, for example, leading to faltering oil production today. Mexico’s oil output has been falling at a 7 percent rate because it lacks the technology needed to maximize production from its aging Gulf of Mexico oil fields.

Jon Ward reported from New Orleans, and Patrice Hill reported from Washington.

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