A new report from the Third Way, a centrist research group, finds that modern U.S. trade deals that addressed the flaws in the NAFTA agreement have been very beneficial to the American economy.
Third Way essentially argues that NAFTA was a mediocre agreement crafted nearly a quarter century ago and the outdated provisions of the pact with Canada and Mexico should not dominate our nation’s trade debate. Modern agreements offer far stronger protections to allow fair competition between countries.
Since NAFTA, the U.S. has made deals – free trade agreements, or FTAs — with 17 countries and here is the outcome, according to the report:
- The U.S. trade balance in goods improved in 14 of the 17 countries.
- U.S. goods exported to these 17 countries grew twice as fast as imports, increasing by 42%.
- Our trade balance in goods yielded a combined $85.5 billion surplus in those countries, compared to a $3.7 billion deficit before the FTA—a nearly $90 billion improvement.
Take a look at the big picture and the research points out two glaring problems with the anti-trade tendencies in the U.S. First, the United States ranks near the bottom of the world’s industrialized countries in exports. And second, by 2030, about 2/3 of the world’s middle class will live in Asia. Will that expanding middle class buy American goods?
Here’s the conclusion reached by the Third Way report:
You wouldn’t buy a 1994 car, but our trade debate is stuck on a 1994 trade deal. Since the implementation of the NAFTA in 1994, the United States has concluded trade deals with 17 countries. Just as the quality of automobiles or computers has vastly improved since 1994, so have our trade deals. Modern deals, all concluded post 2000, have improved as a result of the lessons we learned from NAFTA. These new deals have strong labor standards that benefit U.S. workers, while NAFTA did not. These new deals have environmental protections in the agreements, while NAFTA did not. Enforcement measures have been strengthened as has access to foreign markets. We’ve come a very long way since NAFTA.
By 2030, the world economy is expected to grow by roughly $60 trillion, with almost 90% of that growth occurring outside the United States.1 Meanwhile, the United States derives a smaller share of its GDP from exports than 38 of 40 of the largest world economies. There is not path to middle-class prosperity without increasing exports.
The Trans-Pacific Partnership (TPP), the largest trade deal in history, will soon be before Congress. Policymakers will rightly be asking: How does this deal help America, and how does it help the middle class? There will be attempts to compare it to NAFTA, but TPP is a far cry from NAFTA. The labor, environmental, and human rights provisions are considered the strongest ever. Tariffs are reduced on over 18,000 goods. And for the first time in any trade deal, there are standards for the internet economy, protections against state-owned enterprises, and rules to stop currency manipulation …
You wouldn’t buy a 1994 car, but our trade debate is stuck on a 1994 trade deal. Since the implementation of the NAFTA in 1994, the United States has concluded trade deals with 17 countries. Just as the quality of automobiles or computers has vastly improved since 1994, so have our trade deals. Modern deals, all concluded post 2000, have improved as a result of the lessons we learned from NAFTA. These new deals have strong labor standards that benefit U.S. workers, while NAFTA did not. These new deals have environmental protections in the agreements, while NAFTA did not. Enforcement measures have been strengthened as has access to foreign markets. We’ve come a very long way since NAFTA.
Photo/U.S. Customs and Border Protection
