Exports' Clout Begs The Question: Was NAFTA Good Or Bad?
The North American Free Trade Act was enacted 20 years ago.
President Clinton endorsed NAFTA as a way for U.S. businesses to sell abroad, while Ross Perot famously referred to the “giant sucking sound” of jobs headed south…namely the country’s manufacturing sector going to Mexico.
Arun Raha is Chief Economist with Eaton Corporation. He says NAFTA has proven beneficial, overall.
“From 1994 to 2007, except for a little recession in 2001 which had nothing to do with NAFTA, we had a very robust growth track record," says Raha. "Anytime you open up trade, all the parties benefit. its because you allocate resources more efficiently, customers have more choices, the overall welfare of all the nations involved, goes up.”
U.S exports to Mexico and Canada have nearly tripled since 1994, and imports from those nations have also climbed. The countries are also Ohio’s two biggest exports customers. Cleveland and Cincinnati ranked among the top 33 metro areas that exceeded $10 billion in goods exports last year.
But critics remain.
Harriet Applegate is Executive Secretary of the North Shore AFL-CIO. While she sees the growth in exports as a positive trend, she says NAFTA’s effects have been more about whittling down the American labor force than contributing to the exports surge.
“Some of this is small businesses growing to the point where they become medium size, and then in some cases, large businesses. They could have started off as cottage industries," says Applegate. "So I don’t think it has a lot to do with trade policy. I just think that our economy’s getting better, and when the economy gets better, people have more money to spend, they’re more willing to take risks, they’re more willing to invest.”
A 2013 Bloomberg analysis showed 12 million manufacturing jobs in the U.S., compared to 17 million when NAFTA took effect.
But at the same time, GDP growth for the U.S, Canada, and Mexico all averaged 65 percent.