Foolish supporters vastly inflate the meaning of NAFTA

Robert Kuttner

October 29, 1993|By Robert Kuttner

THE administration and its pro-NAFTA allies have been predicting a major foreign policy disaster if NAFTA is voted down. This is foolish in two respects. First, it is unconvincing as a strategy for winning support. And second, the sponsors risk setting up a self-fulfilling prophesy of exaggerated humiliation should NAFTA lose.

Here is a sampler of recent pro-NAFTA hyperbole:

The New Republic for Oct. 11 included four pro-NAFTA pieces, opening with an overheated editorial on the magazine's cover: "As much as any event since the communist collapse, the vote on NAFTA could define America's post-Cold War identity. The nation's long-run economic health, its geopolitical reach, even its moral character, are very much at stake here."

As that estimable journal's resident cynic, Michael Kinsley, might put it, "Oh, come on!"

Treasury Undersecretary Lawrence Summers, in an Oct. 14 speech in Milwaukee, declared: "If we're not prepared to make a trade agreement to which two presidents have been committed, with a country with which we share a 2,000-mile border and who has undertaken a major set of economic reforms, it will be very difficult to promote our exports anywhere in the world. The American political process took a long time asking, 'Who lost China?' Let them not have to debate, 'Who lost Latin America?'"

C. Fred Bergsten, director of the Institute for International Economics told a trade conference Oct. 12 that if NAFTA loses, "America's postwar leadership role in the global trading system would abruptly terminate, leaving the system with no effective leadership at all."

Former U.S. trade representative and power broker extraordinaire Robert Strauss warned, in the Washington Post Oct. 19: "Rejecting NAFTA would be an international economic disaster that could take generations to overcome. . . What are the stakes? They are whether the United States is going to continue its historic leadership on international economic policy . . . or whether we're going to retreat. It is whether we're going to slap our neighbor to the south in the face, or whether we are going to build on the tremendous gains in our friendship over the last decade.

It is whether we are going to expand our influence, friendship and business in Latin America or forfeit the great markets of our hemisphere to Asia and the European Community."

Consider these claims one at a time. NAFTA is hardly the defining event of the post-Cold War era. A far better candidate for that title would be the reconstruction of the former Soviet Union, or even Bosnia or Somalia.

But the Clinton administration has not offered a convincing vision of America's core national interests, or role in the world, now that the East-West conflict is no longer central. Should the West underwrite a massive recovery plan for the East? Should we and our NATO allies commit to a new form of collective security? Should the United Nations regularly intervene to uphold civil order, or only to halt aggression?

Absent a big vision, every intervention and every global economic initiative becomes merely ad hoc. It is this vacuum of foreign policy vision that invests little NAFTA with such inflated meaning.

Far from signaling the nation's "geopolitical reach" or its "moral character" as the New Republic insists, NAFTA suggests a rather parochial effort to weave tighter economic links with our immediate neighbors, based on a rather muddled theory of trade. Indeed, as candid free-traders have pointed out, NAFTA slights multilateral free trade for a preferential trading bloc.

Robert Strauss' breathless prose captures the contradiction. To Mr. Strauss, NAFTA at once involves global leadership on free trade -- and a rather mercantilist quest for national economic advantage in one hemisphere: We'd better wrap up this continent as an American sphere of economic influence, or the Asians and the European Community will beat us to it.

But free trade theory says the country with the best product, not the best special deals, should get the business. Which is it? Contrary to Mr. Strauss and Mr. Bergsten, it is special preferences such as NAFTA that compromise American leadership of the global trade system.

By the same token, Treasury Undersecretary Summers' logic gets overtaken by his rhetoric. Our efforts to promote exports elsewhere are hardly enhanced by NAFTA -- and NAFTA could set them back. If anything, NAFTA signals a world of tighter trading blocs. It virtually invites Japan and the EC to sponsor their own preferential trade areas.

How, then, is NAFTA good for U.S. export promotion elsewhere?

The real slap in Mexico's face occurred when the United States pummeled Mexico with Paul Volcker's high interest rates, followed by the draconian debt-collection policies of the 1980s.

In truth NAFTA is a rather narrow initiative, based on plainly inconsistent rationales. The louder the rhetoric grows, the more visible become the contradictions. If it is voted down or sent back for renegotiation, life and trade will go on. Its panicky supporters should lower their voices.

Robert Kuttner writes a column on economic matters.

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