THE OPPENHEIMER REPORT

Democrats' anti-free-trade rhetoric a mistake

By ANDRES OPPENHEIMER

Santiago, Chile -- Sens. Hillary Clinton and Barack Obama, who seem to be competing over who is the fiercest critic of the U.S. free trade deals with Mexico and other Latin American countries, should pay a visit to this South American capital. It would only take them a few minutes to realize how wrong they are.

They would only need to walk out of their hotels and look at the traffic on the streets to see the Jeep Cherokees, Ford Explorers and other U.S.-made cars that have become increasingly visible in Chile since the Jan. 1, 2004, start of the U.S.-Chile free trade agreement.

''These days, every self-respecting businessman in this country thinks he has to buy a [U.S.-imported] Jeep Cherokee for his wife,'' former President Ricardo Lagos, who negotiated the U.S.-Chile free trade agreement, joked in an interview earlier this week.

``You see a lot of American cars that you never saw before.''

You would never know that from listening to Obama and Clinton these days. In recent weeks, especially since the Democratic primary elections in economically strained Ohio, both have stepped up their criticism of free trade agreements.

Obama's official website says that ''he will stand firm'' against free trade agreements ''that undermine our economic security,'' and will seek to ''amend'' the 1994 free trade agreement with Mexico. Clinton, who voted for the free trade deal with Chile in 2003 and later criticized it, says on her website that she will ''fix'' the North American Free Trade Agreement or NAFTA, and take a ''timeout'' from new trade agreements until she comes up with a ''pro-worker, pro-American'' trade policy.

But as seen from this part of the world, that's populist baloney. NAFTA, the Central American free trade agreement and the deal with Chile, while hurting isolated industries, have been overall success stories for all countries involved.

U.S. exports to Mexico have risen by 228 percent since NAFTA's approval, opening new opportunities for dozens of U.S. industries, according to U.S. government figures.

Mexico's exports have risen by 428 percent, mostly by shipping parts that have allowed U.S. industries to be more competitive worldwide, as well as finished products that have helped bring down costs to American consumers.

Perhaps more importantly, if it hadn't been for NAFTA and the U.S. free trade deal with Central America, America's closest neighbors would have been much more vulnerable to economic crises and political chaos, which would have significantly increased illegal immigration and threats of a disruption of oil supplies to the U.S. market. And, by the way, the U.S. trade deficit with Mexico is minuscule compared to that of America with China.

In Chile's case, U.S. exports to this country have almost tripled to $7.3 billion since the trade deal went into effect four years ago, while Chilean exports to the United States more than doubled to $8.7 billion over the same period, according to Chilean and U.S. government numbers.

In fact, the U.S. trade deficit with Chile has gone down in recent years.

Judging from the type of goods the United States is exporting to Chile, it's mostly products that create well-paying jobs in the United States. U.S. exports of car parts to Chile grew by 45 percent in 2006, and U.S. exports of cars rose by 23 percent that year, according to the latest Chilean government figures.

''It has been a healthy export market, producing good quality jobs for American workers,'' says Paul Simons, U.S. ambassador to Chile.

``And if we hadn't signed this deal, probably our market share in Chile would have continued to decline. Now, it's picking up.''

Chile has signed free trade agreements with more than 50 countries, including China, Japan, South Korea and Mexico in recent years. If the United States had not signed a free trade agreement with Chile, its industries could not have competed with other countries that have preferential access to the Chilean market, Simons added.

My opinion: Clinton and Obama should know better. As former president Lagos, a lifelong Socialist Party member, told me, ``Our Democratic friends are making a big mistake. Instead of defending jobs that are destined to disappear in the United States, they should focus on training U.S. workers to do more sophisticated and better-paid jobs.''

Right now, the Democratic hopefuls are fooling voters, and themselves, with their anti-free trade rhetoric.