AWCheney’s Forum On Immigration

NAFTA, Part 1: Free Trade Agreements

I had originally planned to do my first NAFTA post on the impact upon Mexico, however, one of my sources required permission for publication, to which I applied but have not yet heard back. Therefore, I thought I would start with an examination of Free Trade Agreements in general and NAFTA in particular so that we may form a foundation for what is to come.

As a long-time advocate of Free Market economics, I am not totally averse to the concept of Free Trade Agreements. On the contrary, I can see where, if properly negotiated with countries with whom we share similar economies and cultures, bilateral agreements of that sort could be highly beneficial to both trading partners. However, an examination of our growing list of Free Trade partners shows a serious lack of economic common sense…and NAFTA is the worst of them.

Probably the least informative government site to utilize for an investigation of Free Trade Agreements is the very site which would most likely be the first traversed for information on these agreements:

The International Trade Administration of the Department of Commerce

http://trade.gov/index.asp

This site is largely devoted to the promotion of FTA’s, and tends to skew the facts toward its own end. As an example, their front page actually heralds a SURPLUS in the trade balance between the U.S. and those trading partners with whom we have implemented agreements:

For this release, manufacturing products are defined as all products that fall under NAICS classifications 31-33.  This data will differ from other sources that use a manufacturing definition based on an SITC standard.
For this release, manufacturing products are defined as all products that fall under NAICS classifications 31-33. This data will differ from other sources that use a manufacturing definition based on an SITC standard.

This couldn’t be further from the truth! Let’s take a look at the reality.

http://www.tradeagreements.gov/

According to the government site Trade Agreements.gov, to date we have ten Free Trade Agreements, including NAFTA, with two of those (Oman and Peru) pending implementation as is Costa Rica, which is actually part of the Dominican Republic-Central America-United States FTA (CAFTA-DR). It would seem logical to assume that only actual trade data from IMPLEMENTED agreements would be utilized to determine whether a surplus, in fact, exists between us and our trading partners (which is why I did not include those pending agreements in my own factoring). This doesn’t necessarily hold true when it comes to the ITA. According to the U.S. Census Bureau, Foreign Trade Statistics (which is tasked with providing the most accurate statistics possible for the U.S. government as well as its citizenry, and is actually cited as the source for THEIR information), the reality is that, for the same period in 2008 (January thru May) for which the International Trade Administration is claiming a surplus, we are actually running a NEGATIVE trade balance of $51,649,600,000 with our ACTUAL FTA partners in a single quarter:

http://www.census.gov/foreign-trade/balance/

January-May, 2008 Trade Balance Between U.S. and FTA Partners

Australia: Positive $5,238,900,000

Bahrain: Positive $133,700,000

CAFTA-DR:

  • Dominican Republic: Positive $1,170,600,000
  • El Salvador: Positive $182,300,000
  • Guatemala: Positive $412,200,000
  • Honduras: Positive $466,800,000
  • Nicaragua: Negative $315,500,000

Chile: Positive $1,096,700,000

Israel: Negative $4,217,400,000

Jordan: Negative $93,300,000

NAFTA:

  • Canada: Negative $31,502,300,000
  • Mexico: Negative $30,012,200,000

Singapore: Positive $5,789,900,000

You might also want to note that NAFTA alone represents a $61,514,500,000 negative trade balance deficit…without that, it might have been easier for them to make their case.

These numbers are based upon the ACTUAL trade figures…you know, the ones which help keep our National Debt climbing to infinity. You may have also noticed that the ITA, although they say their numbers are based upon the data provided by the Bureau of Census, also note that they are only using that portion of the data which is defined as “all products that fall under NAICS classifications 31-33.” This is a very limited number of narrowly defined manufactured products:

http://www.epa.gov/tri/lawsandregs/naic/ncodes.htm#q31

It would actually be far easier to list the products included in that classification than it would be all the exceptions. They have definitely cooked the books here. They have also included the PENDING Free Trade partners in their “facts:”

http://trade.gov/fta/Final%20FTA%20Manu%20Trade%20Balance%20Fact%20Sheet.pdf

“For the first time, the U.S. trade balance in manufactured goods with our 14 FTA partners is in a surplus. In the first five months of 2008, the trade balance in manufactured goods with our FTA partners rose to a $2.7 billion surplus, from a $12.3 billion deficit during the same period last year.”

It is hardly surprising that our current administration is bound and determined to push through as many Free Trade Agreements as possible, particularly in the Americas. As pointed out in the International Relations Center (IRC) online newsletter (Volume 6, Number 12) dated April 2001 in the article, “Free Trade Area of the Americas:”

http://www.fpif.org/briefs/vol6/v6n12ftaa.html

“As leaders of 34 Western Hemisphere countries gather in Quebec City, Canada in April 2001, President George W. Bush hopes that the third Summit of the Americas will mark a step toward fulfilling his father’s dream of creating a free trade area stretching from Alaska to Tierra del Fuego. For a variety of reasons, this goal seems increasingly out of reach.”

With the initial failure of President Bush to successfully negotiate an all-encompassing economic “NAFTA-type” partnership with the other nations of the Americas, it is rather obvious that the piecemeal approach has been taken. The ultimate goal is, of course, to build upon NAFTA to create this Free Trade Area of the Americas [the FTAA will be the subject of a future post] and establish our own “Common Market”…and precursor to the American version of the European Union.

A question which must be asked and answered is, “Who will actually benefit from this?”…which we’ll save for another time.

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August 16, 2008 7:10 am - Posted by | NAFTA | , , , ,

6 Comments »

  1. AWC, you are doing a great job here!

    Who could forget Ross Perot describing the “great big sucking sound”–warning us of the loss of U.S. jobs with NAFTA? Shoulda been President.

    Comment by Emma | August 17, 2008 8:24 pm | Reply

  2. Thanks Emma…I’m trying. Hopefully I am getting “back in the groove.” I’m working on “The Merida Initiative” right now (still waiting on that source for my next NAFTA piece).

    Although I know that this post is far from my best, and I probably published it prematurely (left out a lot of information I had intended to include), I felt I needed to break my “block” as soon as possible. I think/hope this next one will be more up to my usual standards.

    Comment by AWCheney | August 17, 2008 10:05 pm | Reply

  3. It all looks pretty good to me–solid research and thoughtful commentary. A breath of fresh air by any standard.

    Comment by Emma | August 17, 2008 10:24 pm | Reply

  4. This article was extremely interesting, especially since I was searching for thoughts on this subject last Thursday.

    Comment by download Forex Overdrive for free | February 15, 2011 6:34 am | Reply

  5. P.S.: Ich gehe davon aus, dass es Ihnen recht ist,
    dass ich Ihr Buch auf diesen Seiten unter Abdruck meines Schreibens vorstelle.

    Comment by atepelton.blogspot.co.at | July 30, 2016 7:18 pm | Reply

  6. If you mean quote me, by all means. If you use my sources you should attribute them by their links and/or authors as I did. Best of luck.

    Comment by AWCheney | July 31, 2016 5:16 am | Reply


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