What do you think about the author’s statements about NAFTA?
RE: What do you think about the author’s statements about NAFTA?
I’d like the ground rules for this thread to be this -— LET’s DEBATE THE ISSUE OF TRADE AND REFRAIN FROM ATTACKING PEOPLE PERSONALLY.
So, in answer to your question...
NAFTA has winners and losers, just as Uber’s entrance to the transportation market has winners and losers.
Which is to say, it is NEITHER a miracle nor a disaster.
Let’s start with the most basic measure of economic growth: gross domestic product. Since 1993, the year before Nafta was enacted, U.S. GDP has grown about 63 percent, while Canadian and Mexican GDP have grown 66 percent and 65 percent, respectively, according to data compiled by the Organization for Economic Cooperation and Development.
Those tightly clustered growth rates are significantly better than the industrialized nations of the Organization for Economic Cooperation and Development as a whole; their composite GDP has grown about 53 percent since Nafta.
The U.S. trade deficit with Mexico has grown dramatically since Nafta—from a trade surplus of $4 billion in 1993 to a deficit of $54 billion in 2012. Yet in most industries, corporate profit margins have risen over that period. Recently, the U.S.’s deficits with Mexico and Canada have contracted as export growth has accelerated.
As with economic growth, it’s difficult to say with certainty how much of the rise in trade between the U.S. and the other nations is directly attributable to Nafta. Trade liberalization among the U.S., Canada, and Mexico was already underway, and economists say the economic cycle plays a significantly larger role in determining trade volume than Nafta does. In its 2003 report, the CBO found Nafta’s effect on trade had been positive and that had grown in each year since the agreement was enacted. The CBO also concluded that Nafta had wielded a larger effect on U.S. exports than imports.
So what about Ross Perot’s then big fear back then, the labor market?
Estimates of Nafta’s effect on U.S. payrolls vary wildly and depend on methodology. Here’s an unfavorable statistic: Today, there are 12 million manufacturing jobs in the U.S., down from about 17 million when Nafta was enacted.
Of course, to lay all the blame on Nafta would be to ignore a fundamental shift in the makeup of the global labor force. Relatively lax labor laws and lower wage requirements have moved a significant portion of the world’s factories to China and India and Southeast Asia since Nafta.
NAFTA after all, is a North Atlantic agreement, not with China, Asia or India.
Some Nafta supporters say certain job losses were inevitable but that the agreement was so broadly stimulative that the net effect on employment was either negligible or positive. (For what it’s worth, total U.S. employment is up about 22 percent since Nafta was enacted.)
What ever your views on NAFTA, let’s deal with the arguments, not the author himself.