What Have Free-Trade Policies Meant for New Hampshire?

Apr 19, 2016

Credit Amanda Loder, StateImpact New Hampshire

It seems like a simple question: Overall, have free-trade agreements (like NAFTA) been good news or bad news for the Granite State?

The answer, according to the experts and others who weighed in during The Exchange, isn’t so straightforward.

Who are the winners and losers?

There’s no doubt that some industries — and the communities they once anchored — have been hit particularly hard in the aftermath of free-trade agreements.

“There are employees who have lost their jobs and there are also manufacturers who are no longer doing business in New Hampshire, or who are doing it on a much smaller level because they’ve taken advantage of the free trade or they’ve been hurt by international competition,” says Jeff Feingold, editor of New Hampshire Business Review.

The industries hit hardest in the decades since NAFTA was enacted have largely been in the manufacturing sector, according to data from the Bureau of Labor Statistics.

But there are others, particularly those in the technology and advanced manufacturing sectors, that are thriving thanks to the ability to more easily expand their businesses overseas.

Both Feingold and Matthew Slaughter, Dean of the Tuck Business School at Dartmouth, noted that plenty of New Hampshire businesses are eager to participate in the international market.

According to the federal government, trade agreements yielded $1.4 billion in exports for New Hampshire in 2015.

“Since 2005, exports from New Hampshire to these markets [involved in U.S. free trade agreements] grew by 46 percent, with NAFTA, CAFTA-DR, Singapore, Colombia, and Australia showing the largest dollar growth during this period,” a recent report from the International Trade Administration noted.

What’s the real-world impact for N.H. communities?

If you want a sense of how the loss of middle-class, manufacturing jobs can reverberate at the local level, Feingold says, you can look at what happened when paper mills started closing in New Hampshire’s North Country.

“That was thousands of really good paying jobs. Union jobs. Certainly middle-class jobs,” Feingold said. “And, for many reasons, especially because of trade, international trade, those mills are no longer viable.”

Once those jobs disappear, he said, many people who relied on them for a stable source of employment are left with few other options.

“The unfortunate thing is that a lot of those people have those old skills, working in paper mills, but where do those skills transfer? They’re losing, but other people may be gaining, because a company like Hypertherm has done really well. Or Albany International, over on the Seacoast, they make these aircraft components, engine components,” Feingold said. “Those are really high-value. But those are not the skills that a paper mill worker could transfer necessarily easily.”

And if a community once relied heavily on a particular industry to bolster its local economy, Slaughter added, the disappearance of those jobs also affects more than just the workers who once held them.

“Those that have a really concentrated industry mix, when those industries are hit by technological change or international trade or whatever set of forces, those can be a major hit to the tax base, which impacts the schools in particular,” Slaughter said.

What could help?

Overall, according to Slaughter, the country’s been “behind the curve” when it comes to strengthening the social safety net for communities that are affected by free-trade agreements.

For one, a more robust trade-adjustment assistance program could help, Slaughter said. It might also be worth exploring a new kind of local tax-base insurance program, he added, “where different communities could insure each other against those adverse shocks.”

Glenn Brackett, president of the New Hampshire AFL-CIO, also raised concerns about inadequate support to help soften the blow felt when middle-class jobs are lost due to free-trade.

“If we are going to sign trade agreements that are going to affect the livelihoods of millions of Americans, then we should be ahead of the curve and we should be having a much broader, much wider social safety net in place to start retraining, to offer more support for people who have been displaced,” Brackett said.

“The thing is, that takes investment on the part of taxpayers — federal, state taxpayers — and that’s another part of the discussion we haven’t even talked about,” Feingold added. “Corporations are doing what they want to do — but taxpayers, are they the ones holding the bag on this?”

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