NAFTA Living Up To Its Promise

Mon, 05/23/2011 - 23:01 — admin

Don't believe the bad reviews of NAFTA. The North American Free Trade Agreement, which joined more than 380 million people in the U.S., Canada and Mexico, went into force on Jan. 1, 1994 -- about three and a half years ago. NAFTA received broad bipartisan support when it was ratified (especially in the West), though enthusiasm for the agreement waned as Mexico's economy tanked and increasing numbers of Americans became disenchanted with the slow pace of political reform in Mexico's authoritarian democracy.

Though you hear a lot of hand-wringing about NAFTA by leadership groups -- including most Democrats (led by House Minority Leader Dick Gephardt and the AFL-CIO), Perotistas and increasing numbers of Republicans led by presidential hopeful Pat Buchanan -- the public policy and trade achievements of NAFTA are important to recognize. Examples from recent studies compiled and released by the White House last week:

  • North American trade is growing. Even though the U.S. is the world's largest trading nation, fully one-third (totaling $421 billion ) of America's two-way trade is with its North American neighbors, Canada and Mexico. Two-way trade with our NAFTA partners -- Canada is our first-ranking trading partner overall and Mexico is third -- has grown 44 percent since NAFTA was signed. This 44 percent increase in NAFTA trade compares very favorably with the 33 percent growth in our trade with the rest of the world.

  • U.S. exports are growing. U.S. exports to Mexico grew more than one-third (36.5 percent -- or $15.2 billion) from 1993 to a record high in 1996. These increases occurred despite a 3.3 percent contraction in Mexican domestic demand over the same period. This year, for example, Mexico and Canada accounted for more than half (53 percent) of the growth in total U.S. exports in the first four months of 1997. U.S. exports to Mexico alone were up by more than 54 percent compared with the same four months in 1993. Indeed, U.S. exports to Mexico virtually equaled U.S. exports to Japan, our second largest trading partner.

  • U.S. jobs are growing. U.S. exports to Canada and Mexico supported an estimated 2.3 million jobs in 1996 -- an increase of 311,000 since 1993. Of these, 189,000 are supported by exports to Canada and 122,000 by exports to Mexico.

  • High-wage jobs are growing. Export jobs are good jobs. According to the U.S. Department of Commerce, jobs supported by exports generally pay 13-16 percent more than the national average for nonsupervisory production positions feeding domestic markets.

    • There are other positive developments, beyond those measured by dollars and cents. There are structural changes. Example: Many U.S. companies with offshore operations in Asia are now moving to Mexico, as predicted during the NAFTA debate. There have been dramatic improvements in the health and safety of the Mexican workplace. And there have been significant improvements in infrastructure and environmental quality along the border.

    Though some leaders in the U.S. and Mexico express growing apprehension about NAFTA and its expansion to include much of Latin America, the evidence clearly shows that moving in the direction of the free movement of goods across national borders brings many benefits -- and not just to the pocketbook but also to the quality of life. In NAFTA we see, once again, that trade-related economic development is the best environmental policy, the best human rights policy and the best way to combat illegal immigration along a porous 2,000 mile border. By these measures, NAFTA is a good deal.

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