The Heritage Foundation

Executive Memorandum #366 on Trade, Economic Freedom

September 27, 1993

September 27, 1993 | Executive Memorandum on Trade, Economic Freedom

Why Conservatives Should Support The NAFTA

After years of negotiation and repeated postponements, the North American Free Trade Agreement (NAFTA) has been completed and now awaits congressional consideration. As if on cue, a torrent of opposition has erupted.

The most surprising aspect about the NAFTA debate is the criticism by some conservatives. Opposition to the NAFTA is understandable on the part of protectionists, champions of increased government regulation, and those who unashamedly seek to advance their own fortunes at the expense of the national interest. But for conservatives, there should be little dissension. All the existing empirical data regarding U.S. trade with Mexico, as well as basic economic theory stretching back over 200 years to Adam Smith, shows that the NAFTA is good for the U.S. This is why Ronald Reagan, Margaret Thatcher, and Milton Friedman, to name only some of the most prominent conservatives, strongly support the agreement, even with its admitted flaws. As Thatcher told a U.S. audience recently, America has "nothing to fear" from the NAFTA.

Why, then, is there such strong and growing opposition among conservatives? In large part, much of this opposition can be traced to insufficient familiarity with the terms of this complex agreement. The hundreds of pages of dense text make it a formidable obstacle, and most commentators have chosen to rely on general summaries of its content, along with word of mouth, for their understanding. Thus, they are insufficiently prepared to counter the propaganda and outright fabrications put forward by opponents. As more conservatives become familiar with the actual text of the NAFTA and its side agreements on labor and environmental issues, they are likely to become more supportive. An objective reading of the text and consideration of the evidence reveals that the NAFTA will:

Create American jobs

Economists are virtually unanimous in their conclusion that the NAFTA will have a strongly positive impact on job growth throughout the U.S., with most estimates in the hundreds of thousands. Opponents' predictions of a net job loss are backed by no evidence whatsoever.

Make America more competitive abroad

America has two choices with the NAFTA: to become more competitve abroad with it, or to become less competitive without it. With the NAFTA, American companies can become more competitive in foreign markets by taking advantage of Mexico's lower-cost labor, much as the Japanese have long done through co-production arrangements in other East Asian countries.

Not endanger American sovereignty

The NAFTA's labor and environmental commissions cannot supersede U.S. or state laws nor do they have any power to compel any action. Neither do they have subpoena or independent inspection powers; they are limited to "recommendations." The U.S. retains complete control over the content and enforcement of its own laws.

Help stem the tide of illegal immigration, slow the influx of illegal drugs, and better secure America's border with Mexico. As Mexico's economy grows, fewer Mexicans will migrate to the U.S. in search of employment. Moreover, there is nothing in the NAFTA that will exacerbate the illegal drug trade; removing tariffs on tomatoes is not likely to endanger U.S. security. In fact, U.S. cooperation with Mexican border patrols will increase under the NAFTA.

Many of the concerns of conservatives about the labor and environmental side agreements stem from what the Clinton Administration originally proposed, not what was actually negotiated. In that sense, many conservative critics of the NAFTA are fighting battles that have already been won and warning against dangers which never actually materialized. For a close reading of the recently released texts of the side accords reveals that the actual damage to the NAFTA's free trade provisions was far less than feared. This does not mean that they are entirely harmless: they do set bad precedents and have the potential to be strengthened at some future date. Therefore, a high priority for the next free trade administration should be to remove them. But for now they contain little more than empty phrases and little or no enforcement power. If anyone has cause to oppose the NAFTA, it is those protectionist groups who eagerly expected a real advance toward managed trade and more government regulation. They did not get it, and that is why Ralph Nader and the AFL-CIO and their lobbyists in Congress are so bitterly opposed to the NAFTA.

Lack of Confidence
Unfortunately, outdated and inaccurate information about the NAFTA and the side accords is only one of the sources of conservative opposition. At its core is a more serious problem: a lack of confidence in the U.S. and a growing pessimism regarding its ability to compete in the world.

A lack of confidence in the U.S. is nothing new for those on the left, many of whom do not hide their distaste for American society and whose penchant for government regulation creates a bias in favor of barriers against the outside world. This negative image of America, and the accompanying national paralysis it engendered, enjoyed increasing currency until Ronald Reagan's presidency largely dispelled it.

What is new is that it has now been taken up by many conservatives, whose reading of the NAFTA is distorted by this defeatist world-view. Seen through their eyes, the U.S. needs to erect new and higher barriers to shield itself from an array of threats. They believe that the easy U.S. primacy is now over, and increasingly the U.S. will not be able to compete in the world.

In trade, protectionists on the left and right loudly proclaim the need for the U.S. to tilt the rules in its favor. For them, a fair contest is to be avoided at all costs because their assumption is that the U.S. would always lose. The government, therefore, must take control, not just of trade, but of an ever-widening array of activities to ensure an equitable outcome.

But if conservatives believe in anything, it is in human liberty and in the workings of the free market. Conservatives are pledged to remove the constraints that governments seek to impose, regardless of whether these are derived from ideological reasons or at the behest of organized interests. Conservatives know that there is no need for the U.S. to adopt a defensive crouch. All that America needs to prevail in global trade is open access to foreign markets. Protectionism, regardless of whatever imaginative rationale is put forward for it, is an admission of defeat.

America's Self-Image
The NAFTA debate is not merely an argument about a trade agreement; it is also a fight over the self-image of the U.S. and this country's role in the world. The result will be either a confident embrace of the future or the beginning of what may become an endless retreat. Liberals and protectionists may oppose the accord, and given their beliefs it is understandable that they should do so. But conservatives cannot do so without betraying their fundamental principles.

The U.S cannot hide from the world, and there is no reason conservatives should want to. Adopting a bunker mentality is the surest way to undermine America's role in the world and to sabotage her ability to pursue and defend her interests. If there is anything to fear it is those who, in the name of protecting the U.S., would erect constraining barriers and foist upon Americans a ruinous self- image of weakness and victimization. The costs it would impose cannot be measured in dollars, although these would be substantial. Far more damaging would be its corrosive effect on America's image of itself.

Conservatives should heed Ronald Reagan, who wrote recently, "When it comes to freedom and prosperity, Americans have never been content merely with the status quo or allowed limitations to be placed upon us. Today we must realize the competitive challenge of the global economy and step right up to our rightful place as leader." "The North American Free Trade Agreement," says Reagan, "can bring us that victory."

Douglas Seay, former Deputy Director of Foreign Policy and Defense Studies.

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