More NAFTA Nonsense

The mailer claims that “one million jobs have been lost because of NAFTA, including nearly 50,000 … in Ohio,” but those numbers are from a disputed estimate by a liberal think tank with ties to labor unions that opposed the trade deal. We first wrote about the figure in August, when John Edwards used it in a Democratic debate.

The Economic Policy Institute’s Robert Scott, an economist, wrote in a Sept. 2006 report that “[e]xport growth since 1994 [when NAFTA went into effect] supported an additional 1 million U.S. jobs, while imports displaced domestic production that would support 2 million jobs.” That’s a net “displacement,” not an actual “loss,” of 1 million jobs. Scott refers to this as 1 million lost “opportunities” as distinct from existing jobs.

Scott’s figures also have been questioned by other economists. Gary Clyde Hufbauer and Jeffrey J. Schott of the Peter G. Peterson Institute for International Economics, which has connections to the corporate world, criticized Scott’s report for assuming that NAFTA was the cause for the total growth in the trade deficit between the U.S. and both Canada and Mexico. They said that assumption ignored other factors.

Another earlier study included an estimate of job loss that was half as high as Scott’s figure, and it also said NAFTA may have resulted in a net gain in employment when offsetting job gains are taken into account. In 2004, the Carnegie Endowment for International Peace, said 525,000 workers had lost their jobs because of NAFTA, according to the NAFTA Trade Adjustment Assistance program, a U.S. government program that gives assistance to those affected by the trade agreement. (Our fact-checking colleague at the Washington Post, Michael Dobbs, pointed to this study last fall.) The report said those jobs “were likely offset by other jobs gained,” while noting that “the impact on losers is an economic and political concern.” The report also said that there had been “widely diverging estimates” on job loss by both proponents and critics of the trade agreement, adding that such estimates “have been unpersuasive.” It concluded that the impact from NAFTA on U.S. employment had been minor:

Carnegie Endowment for International Peace: NAFTA’s net effect on jobs in the United States has been minuscule, given the size of the U.S. economy and the importance of other trading partners. The best models to date suggest that
NAFTA has caused either no net change in employment or a very small net gain of jobs.

Also in 2004, the nonpartisan Congressional Research Service evaluated four studies on the subject, including the Carnegie Endowment’s, and said that “NAFTA had little or no impact on aggregate employment.” It also concluded, contrary to Scott’s report, that “NAFTA did not cause the widening U.S. trade deficit with Mexico.”

NAFTA critics often point to the loss of manufacturing jobs, which have declined by 3.1 million between Jan. 1994, when NAFTA was implemented, and January of this year. But total nonfarm employment, meanwhile, has increased by 25.6 million in the same time period. Whatever effect NAFTA may have had on U.S. jobs, however, Obama is relying on a statistic that has been criticized, questioned and contradicted by other researchers.