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WASHINGTON — Presidential candidate Ross Perot once famously predicted a "giant sucking sound" as jobs moved from the United States to Mexico if the U.S. passed the North American Free Trade Agreement, better known as NAFTA.
The statement "sort of electrified the world," recalled former Rep. Bill Frenzel, a moderate Republican from Minnesota who at the time was part of a Clinton administration team charged with getting the House and Senate to bless the pact.
Frenzel and his colleagues fought hard and eventually got NAFTA approved, opening the way for other free trade deals throughout the next two decades.
The Economic Club of Minnesota recently honored Frenzel with its newly created "Champion of Free Trade Award" for his relentless advocacy for open markets.
Frenzel sat down recently to discuss why so many people and politicians still fear free trade, including new agreements now being negotiated with Europe and several countries bordering the Pacific Ocean.
Q: How hard was it to get NAFTA passed?
A: Trade unions were very much opposed to it and were preaching that all jobs would move south of the border and that we would have terrible unemployment or reduction in salaries. That was a little hard to overcome.
Free traders in general tend to be economic types who don't make their case very well in the [media] and who think everyone understands as they do the economic effects of these things. The labor unions who have been the chief spokesmen in opposition are more colorful, more persuasive.
Q: What did you do specifically?
A: I took a position up in the Rayburn Building and I think I met with every member of the Republican caucus. … The idea was to get the vote nailed down before you bring the bill to the floor. Some of the members were difficult and slippery. We evolved all sorts of devices.
For instance, some of the members said, "We don't think the Mexicans know anything." We flew them to Mexico City and had them meet with President [Carlos] Salinas and his cabinet, who, of course, were all University of Chicago Ph.D.s and who bowled them over. That was very effective.
We had another group of Republicans who said, "My mail is running against NAFTA. I have a hard time voting for it." So we went out and made some mail and rebalanced the mail bags. There were working with us a number of coalitions — one of American businesses. So we got that group together and said, "OK, here are Congressmen W, X, Y and Z. Their mail is out of kilter. Do you have some people who can send some messages about how good NAFTA is?"
They did, and by the time the vote came around, there were no unbalanced mailbags, at least among the group that we thought we had a pretty good chance to get.
Q: Why are Americans and politicians so leery of free trade?
A: It isn't just Americans. It's everybody, all the countries. First of all, they want to protect what they have. They think whatever they got is better than whatever anybody else has. … Secondly, they fear the loss of something else as trade expands and globalization takes over — that we will lose our culture or our way of life. [They ask:] "Why do we have to change things?" Well, we have to change things because we need consumers to have better choices and better prices.
Q: How much of the free trade debate is a PR match as opposed to the actual numbers?
A: In my judgment, there is no merit in the complaint that we're losing jobs or that we're losing security to foreign countries or foreign employees. The trouble is the gains are not uniform and equal across the economy and across the geography of the United States. So if you have a pocket of workers who get displaced and you lose 100 or 200 jobs in a community, that's going to sear your brain.
Q: Sometimes the business cultures of the foreign countries where American companies want to have free trade don't have codes of ethics or consistent regulations. How do we get around that?
A: What we always do is write into the [trade] agreements the standards of corruption in the Foreign Corrupt Practices Act and now the Europeans are getting acts that are tougher than ours. That's beginning to stabilize around the world. It doesn't mean that the problems are over. They are never going to be over. But it is getting much better. And people are less afraid of globalization now than they were 10 years ago.
Q: Do you think NAFTA contributed to that?
A: I think NAFTA has been a powerhouse. It was the gold standard of trade treaties and it showed people you could have very rich nations and rather poor nations cooperate and both be successful.