NAFTA and Idaho: Winners and Losers

Donald Trump called NAFTA the ‘worst deal in U.S. history.’ How has it played out in the Gem State?

By Zach Hagadone
For Boise Weekly
(used by permission)

Within the span of 1 minute, 54 seconds of the first 2016 presidential debate, Republican nominee Donald Trump attacked the North American Free Trade Agreement four times, calling the U.S.-Canada-Mexico pact, “the single worst trade deal ever approved in this country” and “one of the worst things that ever happened to the manufacturing industry.”

“NAFTA is the worst trade deal maybe ever signed anywhere, but certainly ever signed in this country,” he said. “Nothing will ever top NAFTA.”

Shortly after the Sept. 26 debate, The New York Times described Trump’s salvos on trade as the candidate’s “best moments” in the face off. During the following two debates, he also landed blows against NAFTA and vowed to “terminate” the deal should he gain office—it’s fair to say Trump never stuck any talking points better.nafta

That the real-estate-mogul-turned-reality-TV-star-turned-GOP-presidential-candidate would perform best on trade is perhaps unsurprising, considering his long business career. That he would zero in a 22-year-old trade deal approved by former President Bill Clinton, husband of his Democratic opponent Hillary Clinton, may have caused most—especially younger—voters to scratch their heads. If so, it bears noting that for big chunks of the electorate, including in Idaho, Trump was right. Or, at least, it seems that way. Anyway, it’s complicated.

‘Small Pockets’

The stretch of U.S. 95 south of the Idaho-Canada border is sparsely populated. Heading north from Bonners Ferry, in aptly named Boundary County, the road runs parallel to the Kootenay River as it flows through a narrow glacial valley dotted with small farms. The highway branches about 12 miles south of the border, with ID-1 heading to the crossing at Porthill and 95 continuing to Eastport. Skirted by dense forests, the peaks of the Selkirk Mountains rise up in the west and the Cabinets in the east.

Changes at the border were immediate following the passage of NAFTA in January 1994. Trucks bearing logs from British Columbia rumbled south into Boundary and Bonner counties, taking advantage of loosened trade restrictions between the U.S. and Canada.

Soon, the Eastport-Kingsgate station on U.S. 95 became the sixth most trafficked along the western U.S.-Canada border, with 194 crossings per day in 1995. According to a Federal Highway Administration analysis published that year, of the 5,100 two-way truck movements across the western border in 1994, 90 percent of the trucks moving south were full and 33 percent of those heading north were empty.

As Canadian logging trucks rolled through towns like Bonners Ferry, Sandpoint, Hayden and Coeur d’Alene, locals who had traditionally subsisted off timber jobs started to worry. Unlike in the U.S., Canadian lumber companies enjoyed subsidies from their government. The result was a wave of below-market priced timber that U.S. producers couldn’t compete with. In August 1995, then-U.S. Sen. Larry Craig (R-Idaho) railed on the floor of the U.S. Senate against the trade deal for exposing the domestic market to “cheap, subsidized Canadian timber.”

“When [NAFTA] launched, it had an immediate negative impact on our timber industry and we lost jobs,” said Shawn Keough, who in addition to serving as senator for Idaho District 1 since 1996, is also executive director of Associated Logging Contractors, Inc.

“I also remember President Clinton on the TV talking about how NAFTA was good for most of the USA ‘except for small pockets here and there,’ and thinking that our little area of Idaho was dead center in one of those ‘small pockets,’” she added.

By 1997, three years after the trade deal was implemented, nine of the 14 Idaho companies that had taken advantage of the Transitional Adjustment Assistance Act, meant to provide support for workers laid off or forced to take part-time shifts because of NAFTA, were lumber mills or in the wood products industry. Since 2003, which is as far back as U.S. Department of Labor records go, 8,063 Idaho businesses have been certified TAAA eligible with 3,475 participants having received some kind of financial assistance, be it training, job search or relocation allowance, or wage subsidies. The total amount paid out to Idaho TAAA recipients since 2003: $34 million.

“For some of our other companies, however, it opened trade opportunities that had not existed prior, but I’ll be darned if I can remember which ones those were now,” Keough said.

‘Winners and Losers’

While NAFTA coincided with dislocation to the economies of timber-reliant communities in Idaho, the deal as a whole generated—and continues to generate—a lot of money across the state. Since 1994, exports to Canada and Mexico from Idaho companies have risen 800 percent. According to a 2015 report from the International Trade Administration, 202,200 Idaho jobs rely on exports or imports, representing a 98 percent increase from 1992. In that time, Idaho exports to Canada and Mexico have risen $1.6 billion, with export trade to Canada—Idaho’s No. 1 trading partner—worth more than $1.5 billion.

What’s more, trade-related jobs in Idaho grew 2.8 times faster than total employment from 2004 to 2014 and Idaho goods exports have grown almost twice as fast as the state’s gross domestic product since 2004.

“The research that I’ve seen on NAFTA as a whole for the U.S., Canada and Mexico is that it’s been a help to the economy and definitely has spurred international trade,” said University of Idaho Economics Professor Eric Stuen.

Writing for the Zion’s Bank Idaho Politics Weekly website, contributor Steve Taggart criticized Trump’s trade policies in July 2016.

“Like all trade agreements, there were winners and losers from NAFTA,” he wrote. “Idaho was one of the big winners.”

U.S. Sen. Mike Crapo (R-Idaho) begs to differ.

Among the first major votes Crapo cast in the U.S. Congress was a “nay” to NAFTA. Elected to the U.S. House of Representatives from Idaho’s second congressional district in 1992, the now-U.S. senator joined with his three colleagues in the Idaho congressional delegation (including Democratic Rep. Larry LaRocco) in withholding his support when the trade deal went before lawmakers in 1993.

“As now, with regards to [the Trans-Pacific Partnership], there was strong opposition from both wings of the political spectrum: from labor on the left and from very strong conservatives on the right. And for different reasons,” Crapo said. “For labor, the concern was on interference with jobs. For conservatives, the opposition was largely the same kind of opposition that you see today: A concern about yielding United States sovereignty to other nations with regard to issues like environmental policy or labor policy or what have you.”

Nonetheless, NAFTA was widely supported in Idaho at the time—particularly among small business owners and the agricultural industry. In a survey of 1,300 farmers and ranchers conducted by the University of Idaho in October 1994, 2/3rds of respondents said not only were trade deals like NAFTA beneficial, they didn’t go far enough.

Speaking to the Lewiston Morning Tribune at the time, U of I Extension Agricultural Economist Neil Meyer, who worked on the survey, said, “I think most farmers realize that their markets are dependent on exports. Therefore, they view multilateral and bilateral trade agreements as generally enhancing their ability to sell overseas.”

According to Crapo, those farmers were in for a rude awakening when markets they thought would suddenly be thrown open turned out to be less than accommodating.

“We’ve had very difficult times with Mexico in getting them to agree to let our Idaho potatoes into their markets,” Crapo said, adding sugar, a major southern Idaho industry, has also run into significant barriers with Mexican trade officials.

In its 2016 “Trade Issues Report,” the Idaho Department of Agriculture provided an update on conflicts with Mexico regarding Idaho exports.

Mexico jacked up tariffs on a number of agricultural products in 2009 and 2010 in retaliation for Congress cutting off funds to a program that made it easier to move trucks across the border. While processed potatoes from the U.S. carried a 5 percent tariff (reduced from an initial 20 percent), Canada—the primary competitor in the market—enjoyed a 0 percent tariff, making Canadian potatoes far cheaper for consumers.

In 2008, NAFTA rules eliminated tariffs on sugar between the the U.S. and Mexico, resulting in a glut of cheap Mexican sugar. In March 2014, the U.S. sugar industry filed antidumping and countervailing duty petitions against Mexico, which the International Trade Commission found valid, writing that U.S. sugar producers—including those in Idaho—were “materially threatened” by low-cost imports of subsidized Mexican sugar.

“It would be different across different parts of the economy, but I believe, overall, it has turned out that NAFTA has been a bad deal for Idaho,” Crapo said. “I think that most of the agriculture community—not all—but most of the agriculture community who at the time supported it … has over time expressed a lot of concern over the way NAFTA has been implemented or the way in which protections against non-tariff trade barriers have not been enforced adequately or not been realized. In the whole, NAFTA has been a bad agreement for the U.S.”

Vivid Information

The problem with hemispheric trade deals like NAFTA, economists say, is often with public relations. The economy is complicated, and people often conflate their personal experiences with job loss or shrinking bank accounts with the system as a whole. Social scientists call it “vivid information”—you see a fiery plane crash and think, “I’m never getting on a plane again.” Meanwhile, statistics show you are orders of magnitude more likely to die in a car collision, yet you happily strap in for your morning commute. The image of the plane crash is so much more intense, it feeds a fear impulse that has little to do with logic.

“In a very general sense, if you’ve got a trade deal that’s raising output GDP [gross domestic product] in all of the affected countries, total employment is likely going to be rising as well,” said U of I Economics Professor Steven Peterson. “Within each country, there’s going to be winners and losers, and the losers are often concentrated in specific industries. The winners are often more diffused. … It’s harder to see the job gains, but it’s easier to see the job losses.”

That’s cold comfort to the losers. Yet, when it comes to shaping policy, a longer view is necessary to assign blame for perceived economic injustices.

“Prior to NAFTA, you’ve got several things going on at the same time. You’ve got an increase in technological advance, which causes a fair amount of job loss. As worker productivity goes up, the number of workers goes down,” Peterson said.

Stuen added: “Automation within the saw mills, in particular, has reduced the number of workers needed to produce the same amount of board feet. So not all the job losses can be blamed on NAFTA. In fact, only a small portion can be attributed to the trade deal, with those other factors playing a larger part.”

Put another way, the decline of timber industry employment, specifically, was going to happen regardless, but, Peterson said, trade deals like NAFTA speeded up the process.

“Then trade takes the blame for it,” he said.

In the war of perception, rhetoric like Trump’s—and that of former Democratic presidential candidate Bernie Sanders, whose campaign also took a dim view of free trade policies—can have as much effect as tariffs, duties and other barriers.

Speaking to Trump’s attacks on NAFTA, Stuen said, “It’s obviously been threatening to trading partners such as Mexico. I think Trump has proved to be wildly unpopular in Mexico.”

Meanwhile, Peterson said, “If you look at Bernie Sanders and some of the rhetoric on the left, I’m concerned about a new rise of protectionism across the board. I think we may be in some rough waters going ahead, given the rhetoric that’s coming out of the politicians. I’m hoping it dies down and becomes more sensible, more cerebral, more deliberative, than what we’ve heard in this campaign.”

The Dark Heart

At the dark heart of Idaho politics is negation. Nothing wins in Gem State governance like rejecting governance, and international trade has long operated as a dog whistle to awaken voters’ lesser angels. The Southern Poverty Law Center, which tracks extremism across the nation, ranks the passage of NAFTA among the events that led to the so-called “Patriot Movement.”

In one of its reports, titled “The Militia Movement Takes Off,” SPLC wrote, “In a bid to spur trade and economic growth, the North American Free Trade Agreement (NAFTA) is implemented. One result is a loss of American jobs to Mexico and other countries as manufacturers shift production to lower-wage markets.

“Within three years, a study by the advocacy group Public Citizen will find, some 500,000 U.S. jobs have been lost and downward wage pressure is affecting millions more.

“NAFTA and other international economic pacts are deeply resented by radical rightists … who see them as evidence of the growing power of a global elite, or ‘New World Order.’”

For extremists—both on the left- and right-wings, though the latter has always been better at mobilizing its numbers—free trade policies confirm a long-held belief: The world economy is controlled by a fill-in-the-blank list of enemies of the “traditional American worker.”

In North Idaho in the early 1990s, groups like the Aryan Nations could be found—literally—on the side of the road. At the Sagle, Idaho, flea market on U.S. 95, the AN parked its repurposed school bus alongside rows of tables piled with tracts like The Turner Diaries and various “survivalist” literature; their skin-headed acolytes, dressed in robin’s-egg-blue short-sleeved uniforms, lounging on the steps of the bus as kids like yours truly accidentally wandered into their space looking for mystery novels (true story).

Randy Weaver, a small-time arms dealer to white nationalist groups in the Northwest, was besieged by federal agents in 1992. Late-Aryan Nations leader Richard Butler was peddling his stump preacher act in a backwoods church in Hayden. There were billboards on U.S. 95 between Sandpoint and Coeur d’Alene demanding “Get U.S. out of U.N.” The mills were closing and kids went without. At the same time, late-Idaho Congresswoman Helen “Canned Salmon” Chenoweth was shooting a film with also-late-conservative rabble rouser Phyllis Schlafly decrying the coming New World Order.

The video, titled “Global Governance: The Quiet War Against American Independence,” features Chenoweth in the first eight seconds, followed by late-U.S. Congressman Jesse Helms, granddaddy of the alt-right Pat Buchanan and former lawmaker-turned George W. Bush-era Attorney General John Ashcroft. The theme of the video, which can be found on YouTube, is self-explanatory: A stew of conspiracies—including the Convention on the Rights of Children and UN Treaty on Women overthrowing the American family and the UN trying to filch American historical landmarks—fill the film. According to Buchanan, an effort was afoot “to subordinate national decisions to global decisions.”

No less than the National Socialist Movement, long riven with internal conflict, in April 2016 signed an historic accord with fellow groups to stop fighting amongst themselves and join together to fight their perceived common enemy:

“The drive for profit and control led by the banks, corporations, and Jewish interests have wrecked our economy and nation, but are doing the same thing to nations around the world. Free Trade agreements such as NAFTA ruined the American manufacturing economy, but also destroyed the Mexican agricultural economy,” the NSM mission statement reads, going on to state the goal of NAFTA and other such deals was to lay “the groundwork for a North American Union.” As Buchanan, in Blood and Politics: The History of the White Nationalist Movement, is quoted: “The battle over NAFTA is … a struggle about what it means to be a conservative.”

Anyway, It’s Complicated

NAFTA was, and remains, to a large number of Americans, the first in a series of abdications of sovereignty. There’s truth to it, but maybe not exactly the truth that animates the fever dreams of Idaho’s most overheated patriots.

“What the U.S. has historically done… is we have frankly been out-negotiated and we agree to very bad deals just with regard to tariffs. We have also put into the agreements a lot of policy pressures on the United States government and a lot of individual states in the country with regard to non-trade related policies,” Crapo said. “I do believe NAFTA and the failure of NAFTA to achieve the benefits it was touted to have achieved, and the actual reality that there were changes forced on the United States government in terms of our compliance with NAFTA that was mandated in a number of circumstances, has contributed to the concerns that the United States—unjustifiably and too frequently—yields sovereignty, and I do agree with that.”

Asked if NAFTA is the “worst deal” ever, Crapo said the deal President Barack Obama signed with Iran to limit that country’s nuclear arsenal was worse. “But I do have to say, the concern I have—and I’m speaking more broadly than NAFTA—with trade agreements that the U.S. has entered is not with the notion of trade agreements themselves,” he said. “I believe we need trade agreements.”

Regarding the “worst deal,” Stuen said, “I think that’s a mischaracterization. … Although it’s undeniable it’s had a negative effect on some sectors … overall, it’s been a good thing.”

However, it’s complicated.

“It’s easy to justify things based on perceptions of such-and-such happened and I lost my job, and that’s the culprit,” said Stuen. “They’re not thinking about the economy as a complex system.”

Zach Hagadone is editor of the Boise Weekly and former editor/co-owner of the Sandpoint Reader.

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