Free trade and the North America Free Trade Agreement (NAFTA) has moved to the centre of the US presidential primaries with both remaining Democrat candidates blaming it for all the economic woes of the country.

In this Commentary, AIMS President Brian Lee Crowley sheds a more informed light on the topic. He strips away the rhetoric and shows that trade agreements are not the culprit they are made out to be. Crowley writes:

” [E]ven if you thought that “trade” was the cause of America’s domestic economic weakness, it is by and large not the trading partners with whom America has trade agreements like NAFTA who are the “culprits”. China, whose trade surplus with the US is growing apace, has no trade agreement to threaten to rip up. What it does have is an exchange rate kept artificially low by a sustained effort to keep their currency pegged to the US dollar. China and other East Asian currencies that have a similar currency management regime have seen the value of their currency rise only about 12.5% since 2002 and a mere 5.8% last year, whereas a broad cross-section of currencies, inflation adjusted and trade-weighted, has gained 28% against the dollar since 2002, and nearly 7% last year. The US trade balance has improved significantly with the latter group (including Canada), but continues to decline with the former.”

To read the complete Commentary, International Trade & the US President elections, click here.