Free Trade Agreements:
Friend or Foe?

In the history of free trade agreements, NAFTA is only a baby. Born in 1994 with a stroke of President Bill Clinton's pen, NAFTA has been at the center of controversy almost from conception. Why?

For one thing, Clinton was a member of the Democratic Party, which traditionally has been suspicious of free trade pacts. NAFTA also represented a significant departure from U.S. trade policy. Since Franklin Delano Roosevelt secretly met with Winston Churchill off the coast of Newfoundland in 1941 to chart the course for a new world economic order, the United States has favored multilateral trade agreements; regional free trade agreements were seen as second best alternatives because they create trade diversion and inefficiencies.

The controversy surrounding NAFTA extends much further than an intellectual duel between economists, however. NAFTA elicits visceral fears: Some fear a "race to the bottom" as U.S. laws and regulations are allegedly diluted in favor of more lax Mexican standards. But the overwhelming fear is that NAFTA inevitably means the loss of good manufacturing jobs in the United States. NAFTA was to have brought with it "the giant sucking sound" of jobs stampeding out of the United States in search of low wages and non-existent regulations in Mexico. The mere mention of NAFTA creates such emotion for many Americans that in the 2008 presidential campaign, both Barack Obama and Hillary Clinton threatened to pull the United States out of the Agreement unless Canada and Mexico agreed to renegotiate its terms.

Whatever we do about NAFTA seems almost beside the point, however, as the United States negotiates a dizzying array of free trade agreements with countries as diverse as Colombia, Bahrain and Korea. The essays in this section explore the controversy surrounding regional agreements. What are the differences between regional and multilateral agreements? Are multilateral arrangements like the World Trade Organization agreement "better"? Do regional agreements pollute the environment, endanger our children and destroy American jobs?

Is NAFTA Driving Out American Jobs? Ross Perot once predicted NAFTA would bring "the giant sucking sound" of good manufacturing jobs leaving the United States in pursuit of lower wages in Mexico. Has it?