Obama, Clinton focus on NAFTA, less on trade with China

By SEAN MUSSENDEN
Media General News Service


Published: May 1, 2008

WASHINGTON—To court blue-collar workers, Sens. Hillary Clinton and Barack Obama have spent months bashing NAFTA, the landmark trade deal that dropped barriers between Canada, Mexico and the United States.

Each candidate wants to change the North American Free Trade Agreement to help American workers who have seen manufacturing jobs slip across the country’s Southern border.  And each candidate has accused the other of initially supporting NAFTA, only to flip flop after deciding to run for president.

As the economy continues to sour, trade policy – and its impact on workers – has emerged as a key issue in the Democratic contest. 

But the emotional NAFTA-focused debate has largely drowned out discussion of what economists say is a more pertinent trade issue in many states, including North Carolina, which holds its primary next week. That issue is trade with China.

Chinese imports of everything from cheap televisions to socks have skyrocketed since 2001, when the emerging economic power joined the World Trade Organization.

China’s admission to WTO was backed by both the Bush and Clinton administrations. It gave China virtually unfettered access to the U.S. market, making it easy for Americans to buy cheap Chinese products. It also hastened the decline of domestic manufacturers who once made the couches, T-shirts and other goods China now supplies.

In North Carolina, NAFTA hurt, but the blow struck by Chinese imports has been greater.  During the first seven years of NAFTA, which took effect in 1994, the state lost 26,000 manufacturing jobs.  In the first four years after China entered the WTO, the state lost 30,000 jobs in textile, apparel and furniture manufacturing alone, according to the U.S.-China Economic and Security Review Commission.

And that trend has continued.  According to the Economic Policy Institute, a non-partisan think tank, the open-door China policy has cost North Carolina 77,000 jobs since 2001, about 2 percent of the state’s total employment during that period.  That’s a higher percentage than any state but New Hampshire.

Despite the job losses, free-trade advocates maintain that the open-door policy with China has fostered international expansion of North Carolina companies, particularly biotech and software firms. 

Exports from North Carolina companies to China have grown over the last five years – but not nearly as fast as imports from China. 

The U.S. trade deficit with China has ballooned to $256 billion from $83 billion in 2001, despite early predictions that free trade would help shrink it. On balance, China’s entrance into the WTO has been bad for North Carolina, a 2007 report by the U.S.-China commission concluded.

“North Carolina appears to have realized few if any substantial benefits from China’s admission to the WTO, and the net effect of trade with China since its accession appears to be negative overall for North Carolina’s economy,” the report said.