`Free Trade' Brings High Tax
UNTIL now, the debate in Congress over the North American Free Trade Agreement (NAFTA) has focused on the impact the proposed treaty would have on United States jobs. Both sides have marshaled impressive evidence to support their arguments.
Proponents claim that NAFTA, by lowering tariff barriers in Mexico, would open up a giant new market for American products and thus stimulate US production and create jobs. Opponents contend that the treaty would simply permit huge multinational corporations to take advantage of cheap labor in Mexico and export American jobs south of the border.
Meanwhile, the possible deciding factor in the NAFTA debate has been all but overlooked. That is, where would the federal government find the money to pay the enormous costs of implementing the treaty even if Congress were to approve it?
Given the budget-cutting mood now prevalent in Washington, the prospect of shelling out billions of dollars to make NAFTA a reality should be enough to unsettle even the most ardent free trader.
Officials from the state of Texas recently visited Capitol Hill to make the case for an estimated $10 billion in federal aid to finance NAFTA's implementation.
The Texas contingent's request for federal aid included at least $4 billion from Washington for water treatment projects alone, another $2 billion to $3 billion for transportation infrastructure projects (including highways, railroads, and waterways), several hundred million dollars for improved educational facilities along the Mexican border, and millions more for hospitals and clinics.
And that's just for Texas. Other border states, including New Mexico, Arizona, and California, have not completed their wish lists.
These requests are above and beyond the approximately $5 billion that the Clinton administration estimates would be necessary in trade-adjustment assistance (retraining and other programs) to workers who lose their jobs because of NAFTA.
If the administration's estimates are too optimistic - and, indeed, some experts predict that NAFTA would throw half a million or more Americans out of work - then the cash outlay for trade-adjustment assistance could rise significantly.
For many representatives and senators from northern industrial states, this scenario is a classic case of adding insult to injury.
Our economies are still being drained by the aftereffects of the recession during the 1980s, and our job bases are seriously threatened by the low-wage strategy that lies at the heart of NAFTA. Yet the border states, which according to the International Trade Commission likely will "benefit substantially under NAFTA," now seem intent on our subsidizing their start-up costs.
It is sadly ironic that the free traders who support NAFTA on philosophical grounds, on their strong belief in the free marketplace, would be the first in line for federal handouts to implement the agreement.
Purely by coincidence, the Texas state delegation arrived in Washington just as President Clinton was locked in partisan combat with Phil Gramm and other Senate Republicans over an economic stimulus package, the cost of which was only slightly more than the amount that the Texans claim they need to make their state NAFTA-ready.
Mr. Clinton's opponents claimed that his stimulus program would increase the budget deficit. Maybe this same group could now explain why the costs of implementing the North American Free Trade Agreement will not.