NAFTA Benefits the US And North-South Neighbors
Free-trade pact's proponents cna and should make a much stronger case for how well it will serve US economic needs
THE North American Free Trade Agreement (NAFTA), the ambitious trilateral pact designed to reduce trade barriers between the United States, Canada, and Mexico, is under attack.
According to Ross Perot and critics hoping to block congressional approval, NAFTA fails to bridge differences between the US and Mexico on wages and other worker rights - differences they insist will lead to a massive migration of American jobs to Mexico if NAFTA is implemented.
This argument is both factually wrong and dangerous. NAFTA's real problem is that its proponents need to make a better case on how the agreement fundamentally serves the US national interest. To set the record straight, there are three overriding reasons why Americans should support and the Congress should approve NAFTA:
* It is essential to US economic growth.
* America will gain, not lose jobs.
* Broader economic, political, and security benefits flow from the accord.
NAFTA's biggest selling point is the key role it can play in any domestic economic stimulus program. Increased exports have accounted for roughly 70 percent of US economic growth since 1989. And sales to Mexico and the rest of Latin America have grown faster than to any other regional grouping.
US-Mexican bilateral trade has doubled since 1988. Shipments to Mexico now comprise 10 percent of total US exports, and the the US enjoyed a $5.5 billion trade surplus with Mexico last year.
Under NAFTA, already-low US tariffs will remain at essentially the same levels while Mexican tariffs, 25 percent higher than the US's on average, will be reduced substantially. The result? Projected increases in US exports to Mexico ranging from 5.2 percent to 27.1 percent, and a gain in gross domestic product of roughly $30 billion a year once the agreement is fully phased in.
The second reason to support NAFTA is that the export-led growth it will stimulate will result in an overall increase in US jobs. The assertion that NAFTA will cause huge American job losses to Mexico is as false as it is emotionally charged.
The salient fact is that NAFTA will result in a net employment gain, not drain, of about 1 percent for the US. More than 20 studies have examined NAFTA's economic effects, and all of the independent investigations show a "win-win-win" jobs scenario for the US, Canada, and Mexico.
Our trade with Mexico already accounts for 600,000 American jobs, and the number could reach 1.5 million before the end of the decade.
As an insurance measure, the US, Canada, and Mexico are currently negotiating supplemental agreements on labor and environmental standards, as well as on protection from import "surges," that should allay any lingering fears about southward job migration as a result of NAFTA.
Finally, broader economic, political, and security considerations make NAFTA's approval by Congress imperative. The consequences reach far beyond North America.
On the positive side, NAFTA's approval would provide a fillip for America's other efforts to liberalize trade, especially in the multilateral trade negotiations known as the Uruguay Round. Its success would flag US willingness to treat our southern neighbors on an equal basis, reinforcing the growing trade relationships that are crucial for our economies and vital to continuing political stability in Latin America. Through the centuries, political friendships have tended to follow the trade lanes.
Congress's rejection of NAFTA would, on the other hand, generate tremendous negative spill-over.
NAFTA's failure would send the dangerous signal to our trading partners around the globe that the US prefers to pursue a unilateral trade policy rather than one based on cooperation and mutual benefit.
The negative security effects would be equally devastating, threatening continued economic liberalization and political stability in Mexico and possibly leading to greater illegal immigration.
Politically, a US rejection of NAFTA would damage relations with the whole of Latin America, undercutting our efforts to foster closer ties with and bolster the regions' still fragile democracies.
With the anti-NAFTA campaign in full swing, it is crucial that Americans fully understand how and why the agreement advances our national interest.
To paraphrase Mr. Perot, what's at stake for the American people is indeed that "giant sucking sound" - not from losing US jobs to Mexico, but rather from the economic gains and American leadership that would go down the drain if NAFTA fails to be approved.