NAFTA is very good for the US

But you wouldn't know it by listening to Clinton and Obama

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The Gazette, Monday, March 24, 2008

NAFTA, we don't hafta. It's been a recurring slogan of the race for the Democratic nomination in the U.S. presidential campaign, with both Hillary Clinton and Barack Obama saying they would re-open the North American Free Trade Agreement with Canada and Mexico, and would even cancel it if America's partners didn't agree to renegotiate it.

Never mind that NAFTA is one of the principal legacies of Clinton's husband's presidency, and never mind that Obama has pledged to tell the American people "what they need to hear, not what they want to hear."

This is about trimming principles in favour of campaign posturing, in search of votes in rust- belt states like Ohio and Pennsylvania. It's about jobs, not jobs going north to Canada, or even south to Mexico. It's not about NAFTA, it's about China and India, it's about off-shoring and Lou Dobbs, who regularly rants against free trade on his nightly CNN show.

And it's all nonsense, intellectual nonsense that doesn't pass a statistical smell test. For 36 out of 50 states, Canada is their No. 1 export market, and buys 22 per cent of all U.S. exports. The U.S. sells more to Canada than to all 27 countries of the European Union combined. Exports to Canada support more than 7 million U.S. jobs. And total two-way trade in 2006 was nearly $500 billion.

The website of the Canadian embassy in Washington does an excellent job of following the money, state by state. While most states had a merchandise trade deficit with Canada in 2006, that was before the loonie appreciated by more than 20 per cent in 2007, which is certain to shrink our surplus.

And a few states, like Ohio, even enjoy a surplus in trade with Canada. That's right, Ohio, where all this fuss started three weeks ago, exported $18 billion of goods to Canada in 2006, against $15.3 billion of imports, for a surplus of $2.7 billion. More than 275,000 Ohio jobs were supported by exports to Canada. Blame Canada? I don't think so.

The next stop on the road to the White House is the Pennsylvania primary on April 22. The Keystone state sold $8 billion to Canada, for 34 per cent of all its exports, more than its next seven foreign customers, including Mexico, combined. Duh.

And what about the remaining primary states?

Well, there North Carolina and Indiana on May 5.

As it happens, Canada is the largest export market for both. North Carolina is one of the states in surplus with Canada, with exports of $4.4 billion as against imports of $3.7 billion in 2006. More than 200,000 jobs in the state are supported by exports to Canada.

Indiana sends 43 per cent of all its exports to Canada, more than the next 12 countries combined. And in the key auto parts industry, Indiana enjoyed a big surplus with Canada, exporting $3 billion worth to Canada, while importing $1.3 billion.

From there, it's on to West Virginia on May 12. Let's see. West Virginia sold more to Canada in 2006 than to the next five countries combined.

Next, Orgeon and Kentucky on May 20. Well, Kentucky sends 34 per cent of its exports to Canada, while Oregon ships 18 per cent of all exports to Canada, and in each case Canada is the state's No.1 customer.

Which leaves South Dakota and Montana to close the primary schedule on June 3. In each case, Canada is again the state's No. 1 customer.

And in the event of a primary do-over in Michigan, please note that Canada is by far its largest market, receiving nearly 60 per cent of all the state's exports, nearly $23 billion in 2006, Michigan imports about twice that amount from Canada.

In other words, in every primary state remaining on the calendar, Canada is by far the No. 1 customer. Oh, and by the way, in New York and Illinois, the home states of Clinton and Obama, Canada is by far the biggest export market.

New York exported nearly $13 billion of goods to Canada in 2006, and nearly half a million jobs were directly or indirectly supported by Canada-U.S. trade. As for Illinois, exports to Canada were $12 billion, and 300,000 jobs are supported by it. Both states do have significant trade deficits with Canada, but have clearly not lost jobs to Canada.

Memo to the Clinton and Obama campaigns. Stop lying about NAFTA. You don't hafta.

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