A `Yes' on NAFTA
AND now, the vote. After months of intense debate, lobbying, and political horse-trading, the North American Free Trade Agreement has its day in the US House of Representatives tomorrow.
We hope the House approves the agreement. Designed to eliminate most trade barriers between the United States and Mexico over 15 years, NAFTA has the potential to bring long-term, if modest, economic benefits to the US and to help Mexico liberalize its economy.
Unfortunately, as the vote has drawn near, the arguments from both sides have grown more shrill. A summer-long assault from NAFTA's opponents focused in large part on low-wage Mexican workers as the economic enemy. Hearing that argument resonate with US workers, pro-NAFTA forces trotted out labor's long-time nemesis, Japan, as benefiting at US expense if NAFTA fails.
Nor has the overall debate helped to clarify the pact's effects. The forecasts of the impact on jobs swing from opponents' half a million US jobs lost to proponents' nearly 200,000 jobs gained over several years. Opponents, who include several environmental groups, argue that NAFTA will force the US to lower its environmental, health, and safety standards. Proponents, who also include environmental groups, point out that not only will the agreement put the onus on Mexico to raise its environmental standards, but it also is the first trade treaty to include environmental provisions.
In the end, many economists who do not have a direct stake in the outcome of tomorrow's vote anticipate that the US will see over time a small net gain in real income. Because NAFTA will be operating in an economy where many factors affect employment simultaneously, ordinary changes in US monetary policy are likely to have more impact on US employment than NAFTA, which even under the worst job-loss or best job-gain projections would affect roughly 0.1 percent of those employed in the US over a period of several years.
Certainly some job dislocation will occur as some business activities shift to Mexico. The concerns of those whose jobs would be lost, mostly in low-skilled occupations, are valid. Hence the importance of legislation to retrain workers affected by NAFTA.
Talks to reduce global trade barriers through the General Agreement on Tariffs and Trade have entered a delicate stage. A ``no'' vote on NAFTA could undercut the US position in GATT. And it could undermine Mexico's efforts to open its economy, which the US has supported for years. Given the scarce political capital President Clinton has invested in pushing NAFTA through Congress, the agreement's defeat would be a domestic and foreign setback that the country can ill afford.