NAFTA: the Stakes

MARK L. WASSERMAN and HAROLD L. ADAMS

November 16, 1993|By MARK L. WASSERMAN and HAROLD L. ADAMS

Tomorrow's House vote on the North American Free Trade Agreement represents a historic crossroads for the United States as well as for the state of Maryland. It will define the U.S. role within the community of trading nations and measure Maryland's commitment to its heritage as an important center for international commerce.

In evaluating this agreement, recent past experience is the best guide to the possible future. In 1930, President Herbert Hoover, presenting many of the same arguments being used today in opposition to the free-trade agreement, urged Congress to approve the Smoot-Hawley tariff bill. This protectionist legislation imposed massive tariffs on goods imported into the United States.

Over 60 of this country's trading partners promptly retaliated with tariffs of their own, and by 1933 American imports and exports had plunged by two-thirds, a contributing factor to the Great Depression of the 1930s.

By contrast, after World War II, the United States played a leadership role in negotiating the first General Agreement on Tariffs and trade, the ''GATT agreement'' which drastically reduced tariffs among the world's major trading nations.

The GATT, and a number of follow-up agreements over the years, have produced the highest level of international commerce and prosperity the world has ever seen. Movement toward free trade has clearly benefited all nations.

Today we are poised at another crossroads. Negotiators representing the United States are deadlocked with Europe and Japan in the current round of GATT talks to further liberalize the ground rules for international trade. If Congress rejects NAFTA, it clearly would signal a U.S. retreat from the principles of free trade at the very time we are asking our trading partners to open their markets.

Conversely, a successful agreement would send a strong message to the Europeans and the Japanese that the United States intends to retain its leadership in international commerce and is determined to create the world's largest free-trade area.

This is an especially significant issue for Maryland, a state thatwas founded as a trading colony and grew wealthy through international commerce.

Today, the Port of Baltimore is the third-largest Atlantic Coast port and Maryland is a major shipping and distribution center for goods produced and sold throughout the Eastern United States. The seafaring traders of Maryland's clipper-ship days have direct descendants in the many Maryland companies that today do business all over the world.

But there is more than history to commend the North American Free Trade Agreement to Maryland citizens. Countless independent studies show the positive economic impact of NAFTA.

Since 1987, Maryland's exports to Mexico have nearly trebled. And there is room for much greater growth in high-wage manufacturing jobs in Maryland when exporting to Mexico is made easier with the passage of the free-trade agreement. An analysis conducted by KPMG Peat Marwick, an international accounting firm, estimates that over 10 years, NAFTA will provide an additional $21.3 million in business for Maryland exporters and create more than 500 new jobs.

As a trade agreement, NAFTA is unique in providing a framework for solving real environmental and social problems that in recent years have spilled across the border from Mexico to the U.S. The agreement is supported by six major national environmental groups -- not because it is flawless, but because it creates for the first time a forum to address the problems of pollution and environmental protection.

As Congress takes up final consideration of this historic agreement, we urge the citizens of Maryland to recognize Maryland's proud traditions in international commerce as well as its present-day reliance on trade. Maryland's representatives in the Congress also must recognize the importance of trade to our state and renew our commitment to the future by voting in favor of this agreement.

Mark L. Wasserman is Maryland Secretary of Economic and Employment Development. Harold L. Adams is chairman of the board of the architectural firm RTKL and chairman of the World Trade Center Institute.

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