March 5, 2008 / 9:29 PM / 10 years ago

NAFTA reform just the start - U.S. trade critics

WASHINGTON (Reuters) - The next U.S. president needs to fundamentally redirect U.S. trade policy to preserve manufacturing jobs and reduce the huge trade deficit -- not just tinker with the North American Free Trade Agreement, critics of U.S. trade deals said on Wednesday.

“We need to change the whole discussion about investment, about subsidies, about enforcement of trade laws,” said Leo Gerard, president of the United Steelworkers union. “How does any country continue to prosper when it’s accumulating an average annual trade deficit of about $700 billion per year?”

On Tuesday, Sen. Hillary Clinton revived her chances of winning the Democratic party’s presidential nomination by beating her rival Sen. Barack Obama in three of the four states that held contests that day.

In recent weeks, both Clinton and Obama have increased their criticism of NAFTA and said they could pull the United States out of the pact if Mexico and Canada did not agree to renegotiate it.

The two candidates have talked mainly about adding enforceable labor and environmental provisions to the pact.

But Lori Wallach, director of Public Citizen’s Global Trade Watch, said it was more important in the short term to change the agreement’s investment provisions because they encourage U.S. companies to move jobs to Mexico.

Similar reforms are needed in other trade agreements, including the one that set the terms of China’s entry into the World Trade Organization in 2001, she said.

Wallach blamed NAFTA, China’s WTO accession and other trade agreements for many of the roughly 3 million manufacturing jobs the United States has lost since 2000.

The Bush administration -- noting that U.S. manufacturing output and exports set records last year -- argues that increased worker productivity and advances in manufacturing technology account for many of the lost jobs.

Also, total U.S. employment has grown 24 percent since Congress approved NAFTA in 1993, and U.S. unemployment has averaged 5.1 percent since the pact went into force compared to 7.1 percent in 1980 to 1993, the U.S. Trade Representative’s office said in a NAFTA fact sheet.

The Steelworkers’ Gerard called USTR’s statistics “bullshit” because they gloss over real job losses in key industrial sectors such as steel and autos.

NAFTA ALSO MEANS CHINA

The next president also needs to take a tougher stance on trade with China, which is responsible for a large portion of U.S. trade gap, said, Sen. Sherrod Brown, Ohio Democrat.

“In my state and in much of middle class America, NAFTA stands for trade policy generally,” Brown said.

Many lawmakers believe Beijing deliberately undervalues its currency to give its companies a trade advantage.

Brown said he and other freshmen Democratic senators would continue pushing this year for legislation aimed at forcing China to revalue its currency, and have drawn a line in the sand against approving a free trade pact with Colombia.

In a separate speech, U.S. Trade Representative Susan Schwab said NAFTA had been good for all three countries and warned reopening it could backfire on the United States.

“The notion that you can reopen an agreement like NAFTA and not expect Canada or Mexico to ask for things from us that they didn’t get last time” is unrealistic, she said.

Instead of preserving U.S. jobs, changing the pact could put at least some jobs at risk, Schwab said.

She described Clinton and Obama’s sparring over who was toughest on NAFTA as a “rhetorical race to the bottom.”

Editing by Eric Walsh

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