Santiago: Free Trade and the U.S. Democratic Candidates

Santiago- The aspiring Democrats Barack Obama and Hillary Clinton, who seem to be competing to see which is the fiercer critic of the free trade agreements with Mexico and other Latin American countries should take a visit to this South American capital. It would take them only a couple minutes to realize how wrong they are.

They would only have to leave their hotels and look at the traffic on the streets to see the American-made Jeep Cherokee, Ford Explorer and Chevrolet that have been seen more and more in Chile since January 1, 2004, the date that the free trade agreement began between the United States and Chile.

“Today, every businessman that prides himself on this country buys his wife a Jeep Cherokee (imported from the U.S.),” the former President Richard Lagos, who negotiated the free trade agreement, told me, half serious, half joking. “You see North American cars that you didn’t see before.”

One would never imagine something like this after listening to Clinton and Obama. During the last couple weeks, especially since the Democratic primaries in Ohio, where the economic situation is tense, both have intensified their criticism toward free trade agreements.

Obama’s official website says that he “will stand firm” against free trade agreements that “undermine our economic security,” and that try to “correct” the free trade agreement with Mexico in 1994.

Clinton, who voted for the treaty with Chile but later criticized it, says on her website that she will “revise” NAFTA, and that she will take some “time” before negotiating new trade treaties until a new “pro-worker” and “pro-American” trade policy is developed.

But from the perspective of this part of the world, all of this is cheap populism. NAFTA, the free trade agreement with Central America and the treaty with Chile, although they have harmed some industries, have been in general terms highly successful for all countries involved.

American exports to Mexico have increased 228% since the approval of NAFTA, offering new opportunities for dozens of North American industries.

Mexican exports have increased 428%, thanks to the parts supply that has allowed American industries to be more competitive in the rest of the world, same as finished products have helped lower prices for American consumers.

Perhaps most importantly, if it wasn’t for NAFTA and the U.S. free trade agreement with Central America, the U.S.’s closest neighbors would have been much closer to economic crises and political upheaval that would have increased illegal immigration even more and could have threatened oil supply to the American market.

In Chile’s case, U.S. exports to the country have practically tripled, reaching $7.3 million since the trade treaty came into effect four years back, while Chilean exports to the United States have doubled to reach a value of $8.7 million during the same period. In fact, the U.S. trade deficit with Chile has been reduced in the past few years.

And judging by the type of products that the United States is exporting to Chile, it’s evident that it’s all about goods that create well-paid employees in the United States. North American exports of car parts to Chile grew 45% in 2006, and U.S. car exports grew 23% in the same year, according to the latest numbers from the Chilean government.

“Chile is a good export market, that has produced good quality jobs for U.S. workers,” Washington’s ambassador to Chile, Paul Simons, told me. “If we hadn’t signed this agreement, our presence in the Chilean market probably would have continued being reduced. Now, however, it’s increasing.

In the past few years, Chile has signed free trade agreements with more than 50 countries, including China, Japan, South Korea and Mexico. Without a trade agreement with Chile, North American companies would not have been able to compete with the other countries that have preferential access to the Chilean market, added Simons.

Wrong Approach

My opinion: the Democrats are being too populist with the topic of free trade like the Republicans with immigration. As the former President Lagos told me, “our Democratic ‘friends’ are approaching the role of the United States in the world badly. Instead of defending jobs that are bound to disappear in the United States, they should concentrate on training American workers for more sophisticated and better paying jobs.”

Obama and Clinton are both deceiving voters, and themselves, with their anti-free trade rhetoric.