ALISON STEWART, host:
When NAFTA, the North American Free Trade Agreement, was first being developed back in the early '90s, it was a big topic of discussion among the candidates running for president in 1992.
Mr. ROSS PEROT (Former U.S. Presidential Candidate): There will be a giant sucking sound going south.
STEWART: Now, that's Dallas billionaire turned third party candidate Ross Perot using his Texas twang and slang to predict what NAFTA would bring - jobs, money, being sucked south. Well, the fellow who won that particular contest passed NAFTA, and 15 years later, his wife and her rival - both of whom are running for president - are doing everything they can run away from it. And you can bet the issue will come up in tonight's Democratic debate in Cleveland, Ohio, considering that Barack Obama and Hillary Clinton spent the weekend trying to paint the other as NAFTA supporters.
So as you watch the debate and hear sound bites about the candidates' position, we thought we'd get you a little user's guide to decoding the NAFTA chatter.
We're joined on the line by Ted Alden, a fellow at the Council on Foreign Relations.
Mr. TED ALDEN (Fellow, Council on Foreign Relations): Good morning, Alison.
STEWART: So before we go into the whole politics of NAFTA, let's get a little bit of history. Who thought that the North American Free Trade Agreement was a good idea, and why?
Mr. ALDEN: Well, initially, actually, it was the Mexicans. It was Mexican President Carlos Salinas who came to the first President George Bush in 1990 and said, look. You've just negotiated a free trade agreement with Canada. We're trying to reform our economy. We want to open up to trade with the world, and we'd like an agreement that locked in those economic reforms. And the United States was, at first, a little bit skeptical but interested in doing something that more closely emulating what was happening in Europe with their closer trading relations, and it pretty quickly got enthusiastic. So it was embraced very heavily by the first Bush administration, and as you mentioned in the opening, this was something then that all of the candidates in the 1992 presidential election had to come to terms with. Were they going to support this agreement that had been negotiated by the Bush administration, or were they going to walk away from it?
STEWART: So when you say locked in economic reforms, can you give me three examples?
Mr. ALDEN: Well, basically, the Mexican's wanted to lower tariffs on agriculture. They have - they had very kind of small farms uncompetitive with the world, so they wanted to bring down protection for agriculture, and they wanted to make sure that no future Mexican government could put those tariffs back in place. They wanted to open their banking sector to the world. They had a very kind of small and protected banking sector. So they were they were interest in having American banks come in. And again, those banks weren't going to come in unless there were guarantees that their investments were safe. Similarly, in telecommunications, it's taken a long time, but gradually the Mexican's are opening up their monopoly. So, these are the kinds of things that NAFTA set in motion in Mexico.
STEWART: So, why was Ross Perot so convinced that jobs would be sucked south?
Mr. ALDEN: Well, this was the first time that the United States - and really any country, for that matter - had ever negotiated a free trade agreement with a country that was so much poorer. Typically, these had been agreements that largely involved the wealthy countries. And the so the worry was, well, you know, Mexican wages are fraction of U.S. wages, so that U.S. manufacturers rather than paying the higher U.S. wages, would move their operations to Mexico to take advantage of the well wages. And he argued that that would take a lot of jobs out of the United States.
STEWART: Does his argument come to bear?
Mr. ALDEN: Well, there's a lot of disagreement on that. I mean, some economists say yes. I mean, certainly there's no question in the manufacturing sector and, you know, now the primary is in Ohio, where that's a great focus, that there has been a significant loss of jobs in the United States. Some of that has to do with technology. Some of that has to do with trade. Other economist argue that that's been more than compensated for by additional trade with Mexico and around the world and that the net benefit has been, at least, modestly positive.
STEWART: Now, you make the leap for me that all of this, specifically - NAFTA has been floating around for a while, but it's gotten to be such a hot topic ahead of this key Ohio primary a week from today. The state's seen a loss of some 235,000 manufacturing jobs since 2000. So, this all started up over the weekend when the Clinton campaign decided to focus in on a flyer that had been out been out there for a while and saying that Senator Barack Obama had misrepresented her position on NAFTA and called her a super supporter of NAFTA, especially while she was First Lady and that she didn't change her opinion about NAFTA until she decided to run for president. Then FactCheck.org, various news organizations have parched every word and discovered that one world was attributed to her which really was the paper's characterization of her. So let's just get it straight it in the table. When she was First Lady, what was her position on NAFTA?
Mr. ALDEN: Well, the evidences is, from the various biographies that had been written about her, is that she was quite skeptical. I mean, at the time, a lot of Democrats - you look at the congressional leadership at that time was very opposed to NAFTA. Her husband, President Clinton, had decided to embrace NAFTA. I think she was skeptical, and partly it was because she had a different priority. Her priority at the time was the big health care reform package that she was working on. And there are a lot of Democrats who believe to this day that the reason that President Clinton was unable to push health care through the Congress was because he divided his own party over NAFTA. He decided to push NAFTA - that was something a lot of Democrats didn't like - and that it cost him the political capital that he needed to push health care reform through. So I think, you know, a fair reading of her record would be she was not enormously enthusiastic about her husband's embracing NAFTA.
STEWART: What Senator Obama? He has claimed from the beginning that he has been against NAFTA.
Mr. ALDEN: Well, you know, again, Obama's record, I would say, is as mixed as hers. Yes, I think he has been an outspoken opponent of NAFTA. But on the other hand, he's voted for other trade agreement that have recently come through the Senate, including the agreement that was improved in December with Peru. And really, the model of the Peru agreement is very, very similar to NAFTA. So there's a lot of parsing here, partly because NAFTA, for a majority of Democratic voters, is virtually a cuss word. It's seen as the symbol of a lot of things that have gone wrong in the economy in the last 15 years. And so, symbolically, Obama wants to be very strongly against NAFTA, even though his record on trade overall is very, very similar to Senator Clinton's. Their votes have been very close to one another.
STEWART: I want to just to make sure I'm clear, that they - did you said Senator Obama voted for the Peru?
Mr. ALDEN: For the Peru agreement…
Mr. ALDEN: …they went through that. As did Senator Clinton…
STEWART: Right. They both did.
Mr. ALDEN: …as did most of the Senate. They've got 75, 76 votes. I forgot the right number, but it was overwhelming majority.
STEWART: Yet they both voted against CAFTA…
Mr. ALDEN: That is correct.
STEWART: …which is the Central American Free Trade Agreement.
Mr. ALDEN: Yes.
STEWART: Why would they vote against that but vote for Peru or vote for an agreement with Oman?
Mr. ALDEN: Well, there are two explanations. I think the right answer is the reason they voted against CAFTA is because it sounded too much like NAFTA, and they didn't want to get tagged with that again because NAFTA symbolically is such negative in the Democratic Party. They would tell you that the reason they voted against CAFTA is that the labor and environment provisions in CAFTA were not tough enough, and the ones in Peru were better. But the differences are really very much at the margins. I mean, I can go in a little bit more details if you're interested. But really, they're marginal differences in terms of labor and environmental protections in those two agreements, and yet they voted against the one and they voted for the other.
STEWART: Now, in your assessment, how well has NAFTA achieved what it set out to do?
Mr. ALDEN: I think, only at best, modestly. I think, you know, the idea was that you would see the Mexican economy experience many years of strong growth and that Mexican living standards would start to rise towards American living standards. That's what we've seen happen in the European Union, for instance, as poorer countries like Portugal or Greece get brought into the EU. Their living standards begin to rise towards the European standard. That has not happened in the case of Mexico. Mexican growth has been modest since the NAFTA was passed. There's a still huge disparities between the United States and Mexico, and we see that, for instance, in the illegal immigration problem, the enormous attraction for Mexicans coming to the U.S. to work for higher wages.
So I think, you know, you'd have to say that in terms of Mexico, it has not succeeded in achieving its goals. What it did do, I think, was it set out a new model for trade agreements that are much more compressive and expansive, and I think that has been a good thing in much of the World Trade Agreement that followed on and took many provisions from the NAFTA. And I think it set a new model that, in terms of increasing global trade, has been relatively effective.
STEWART: All right. Ted Alden, a fellow at the Council on Foreign Relations.
Thank you so much for helping us understand this as we watch in the debate tonight.
Mr. ALDEN: Great. Thanks very much.
RACHEL MARTIN, host:
I feel more informed.
STEWART: Well, you know what's interesting? We're going back and forth. I got a little destruction in the middle of the interview because I had remembered that they both supported Peru, but not voted on it. And then Tricia and I have been madly trying to figure out exactly what the language is on that. So we're going to continue to work that. We'll find out whether they did indeed vote for or whether they're vote just as they support it and then didn't show up for the vote. That was my recollection, but Ted's the expert. So…
STEWART: We'll confirm. We'll figure that one out.
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