Democrats want to be trade bullies

Wall Street Journal Editorial:

Democrats claim the world hates America because President Bush has behaved like a global bully. But we don't recall him ever ordering an ally to rewrite an existing agreement on American terms -- or else.

Yet that's exactly what both Hillary Clinton and Barack Obama are now promising to do to our closest neighbors, Mexico and Canada. At their Ohio debate on Tuesday, first Mrs. Clinton, followed ever so quickly by Mr. Obama, pledged to pull America out of the North American Free Trade Agreement if the two countries don't agree to rewrite it on Yankee terms. How's that for global "unilateralism"?

Democrats sure have come a long way from the 1990s, when Bill Clinton pushed Nafta through a Democratic Congress. And the truth is that both Mrs. Clinton and Mr. Obama have spoken favorably about Nafta in the past. Yet now they are sounding the loudest protectionist notes by a potential President in decades. More dangerous, neither is telling the truth about the role of trade in the U.S. economy. If either one makes it to the White House, he or she will carry the weight of this campaign protectionism while trying to lead the global economy.

While it is politically incorrect to say so, Nafta has been good for all of North America. By opening the continent to investment and trade, capital has found more efficient uses, with benefits to producers and consumers alike. In Nafta's first decade after 1993, trade between the U.S. and Mexico multiplied to $232 billion from $81 billion. Trade with Canada has also blossomed, with Canadian exports to the U.S. by surface transport rising 79% in a decade and U.S. exports to Canada increasing 38%.

The deal also increased U.S. productivity. U.S. firms found they could be more globally competitive by putting some manufacturing in Mexico or Canada while retaining high-end production in the U.S. This has resulted in what John Engler, president of the National Association of Manufacturers, has called "the highly integrated North American industrial base, particularly between Canada and the U.S." Such flexibility may have saved thousands of U.S. jobs from going abroad. In the first 10 years of the deal, the U.S. economy added 18 million jobs and the jobless rate sank to record lows.

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As the Democratic contest continues, it is becoming a race to the bottom on protectionism. Perhaps the best trade demagogue will win, but someone should point out that the last President who tried to govern as a protectionist was Herbert Hoover. It didn't turn out so well.

Unions are like a football team who wants the Super Bowl ring without having to compete for it. In fact protectionism is an uncompetitive practice that hurts all parties for the perceived benefit of a very few. What makes the case against NAFTA so ridiculous is when you step back and look at the big picture instead of a micro focus on a few people in Ohio. There you see that unemployment is significantly lower than it was before NAFTA and household income is up dramatically.

The only giant sucking sound coming from the agreement is the breathing of the demagogues whose predictions have been proved wrong. One of Hillary Clinton's problems in this race is she conceded ground that she should have made a stand on. Perhaps her pollsters told her that voters were too unintelligent to accept a rational response, but as McCain has demonstrated on the war, there are good reasons to stick with the right answer.

The other problem with the Democrat proposal is that it want work. Acting like the ugly American in South America would play into Chavez's hands hurting both this country and the countries of South America.