Annapolis Institute Overview


NAFTA’s promise is in the numbers

by Phil Burgess, Unabridged from the Rocky Mountain News, September 21, 1993

NAFTA is in trouble in Congress. There is no question about that. But, to put all this in perspective, since Secretary of State Cordell Hull’s reciprocal trade agreements in the 1930s, trade pacts have almost always had problems when they first hit Capitol Hill.

Last week, The Wall Street Journal said that “Clinton’s task in selling NAFTA is to convince Americans that more jobs will be gained than lost.” According to the Journal, its poll with NBC News shows that Americans would back NAFTA by more than 3-to-1 — 69% for to only 21% opposed — if they believed the accord would result in net job gains for American workers.

But how do you convince people that NAFTA is a win-win issue– for U.S., Canadian and Mexican workers?

You can use numbers to help people think it through themselves. Example: When $1 billion of exports produces more than 19,000 jobs, it should count for something that Mexico is a $40 billion export market, our third largest overall and our second largest market for manufactured goods.

Mexico is also one of our few top trading partners with whom we enjoy a balance of payments surplus — $5.7 billion in 1992.

You also can refer to history, where trends are in the right direction: U.S. exports to Mexico have skyrocketed since 1986, when Mexico started down the path of economic reform. Result: Exports to Mexico have supported 700,000 new jobs in the U.S. since 1986 and more than 400,000 new U.S. jobs during the past five years. And most analysts expect rising exports to Mexico to support another 200,000 U.S. jobs between now and 1995.

And, don’t forget merchandise exports to Canada, our first-ranking trade partner, which support an additional 1.5 million U.S. jobs.

You can refer to studies, too. There are literally hundreds. NAFTA has been studied to death, but if you take the top 20 or so most comprehensive studies by major national organizations, nearly every one shows that NAFTA will boost job creation and economic growth in all three nations.

Example: One of the most comprehensive and authoritative of these studies — conducted by the U.S. International Trade Commission and submitted to Congress in January, 1993 — concludes that NAFTA will boost long-term growth in real gross domestic product in Canada and the United States by about 0.5%, while GDP in Mexico could rise as much as 11.4%. That’s good for the U.S. because as living standards rise, imports rise — and 70¢ of every dollar Mexico spends on foreign products is spent in U.S.

The ITC study also found that NAFTA-spurred employment growth could be as much as 16.2% for Mexico and would result in positive job creation in both the U.S. and Canada. The difference in proportionate impact of NAFTA between the United States and Mexico is chiefly the result of the huge difference in the sizes of the two economies. A 0.5% increase in America’s $5.2 trillion economy is about $26 billion.

All things considered, NAFTA is a job producer. The task for the president and his people: To show Americans that growing prosperity in North America means more jobs and more prosperity for all Americans.

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