-- Robert J.S. Ross Professor and Chair Department of Sociology Clark University 950 Main Street Worcester, Massachusetts 01610 Voice: 508 793 7376 Fax: 508 793 8816 Webpage: http://www.clarku.edu/~rross
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Fast-Track Falsities
November 13, 1997
Fast-Track Falsities
he refusal of House Democrats to give the leader of their party "fast track" authority to negotiate trade pacts is disturbing testimony to the power of organized labor's campaign money -- and of flagrantly false rhetoric.
Opponents declared that their action would prevent President Clinton from entering into another pact as harmful as the North American Free Trade Agreement, signed with Mexico and Canada in 1993. After all, Mexico soon sank into recession and created a trade deficit for the United States. But Nora Lustig of the Brookings Institution shows that Nafta's impact on America has been trivial.
The Mexican economic crisis, not Nafta, created the trade deficit. The revealing fact is that Mexico's recession drove exports from Europe and Japan down by about 25 percent while exports from the United States under Nafta fell only about 2 percent. Contrary to Ross Perot's jeremiad, the number of displaced American workers has been small, and most of them quickly found new jobs.
Fast-track opponents raised the fear-mongering claim that trade with developing countries creates a race to the bottom for the wages of American workers. But American wages closely mirror American productivity. Trade cannot threaten productivity in American companies, so it does not threaten wages of most American workers. Indeed, history shows that trade boosts productivity, raising wages in America and, even faster, in previously low-wage countries like South Korea and Taiwan. The race, then, is to the top.
There is a legitimate concern that imports, though driving consumer prices lower for everyone, can whittle down the wages of America's least-skilled workers. But the actual impact has been small and there are far better ways to help the few displaced workers who are forced into lower-paying jobs than to stomp on trade and thereby make the entire country substantially poorer.
