In the long view, NAFTA makes cents

Mona Charen

November 10, 1993|By Mona Charen

HERE'S the good news for those who worry about the Clintons' plans for our health-care system: President Clinton's leadership is painfully weak, and nothing like what he (and she) have proposed is likely to pass the Congress. But for those who think Mr. Clinton is right about the North American Free Trade Agreement (even a stopped clock is right twice a day), the leadership deficit is a shame.

Instead of focusing on building public support for NAFTA, the Clintons aimed their big guns at health care. This was a strategic error. It will hurt the Clintons' health program if NAFTA goes down. Winners get momentum. So do losers.

Though President Clinton's quiet support for NAFTA never wavered and he dutifully conducted the kind of Oval Office events presidents do for their policies, he never made the national televised pitch that was required. President Clinton is a good salesman. And NAFTA is a good product. He could have sold it.

Instead, with support on Capitol Hill evaporating, the Clinton administration found itself going with a desperation play -- a "debate" between Ross Perot and Vice President Al Gore. On the Larry King show, no less. Sometimes Mr. Clinton gives the alarming impression that he is playing president the way boys play astronaut.

The debate will have taken place when you read this, but I feel confident in predicting that it will not be a debate. Ross Perot does not debate. He fantasizes. It would be difficult to find a public figure more indifferent to factual accuracy than Mr. Perot. In his anti-NAFTA book, for example, Mr. Perot states that former Labor Secretary Lynn Martin predicted that NAFTA would mean a loss of U.S. jobs. In fact, she projected some lost jobs but a net gain. That kind of dishonesty ought to rule Mr. Perot out of polite discourse.

Mr. Perot and company point fearfully to Mexico's 58 cents per hour minimum wage and warn that U.S. workers cannot compete with such wage rates. Well, in the first place, most Mexicans make a good deal more than that, just as most Americans earn above our minimum wage. But more important, wage rates are not the sole, or even the most crucial, determinant of plant location. If they were, Puerto Rico, with an average manufacturing salary of $14,700 (compared with the U.S. average of $28,250) and exemption from many U.S. taxes, would be an economic giant. In fact, Puerto Rico has an unemployment rate of 14 percent, more than twice the U.S. rate.

There are many factors a business must consider when locating its factories. Those for whom Mexico is a good bet are there already. Nothing in NAFTA makes it easier for them to flee. NAFTA only makes it easier to sell U.S. manufactured goods down there. It will boost exports and, accordingly, export-dependent jobs here.

U.S. companies will not flee after NAFTA for the same reasons they are not doing so now -- the skill and productivity of the work force, the ease of communications, transportation, financial services and infrastructure here.

Even some usually sensible types express alarm that the NAFTA treaty stretches to 1,400 pages. Why do you need all that gobbledygook just to inaugurate free trade, they demand?

One reason is that NAFTA is not really "free" trade. It's freer trade among three nations. There are pages and pages of provisions ensuring that, for example, Japan cannot open factories in Mexico and flood the United States with its products. The second reason is that in the real world of politics, it is excruciatingly difficult to remove a government benefit once granted. Tariffs will be cut by this treaty. Therefore, many pages are devoted to making that happen as gradually as possible.

The average Mexican tariff on U.S. goods is 10 percent. The average U.S. tariff on Mexican goods is 3 percent. Both will come down under NAFTA. Who benefits? We do.

Besides, this is about much more than Mexico. It is about the future of U.S. relations with Latin America and the rest of the developing world. Those markets are just beginning to develop. If we sink this treaty with shortsighted fearfulness, we will be missing the commercial opportunity of the coming century.

Mona Charen is a syndicated columnist.

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