#173. Has NAFTA Been Good for America?

Posted on | The Agurban
Has NAFTA Been Good for America?

Michael A. Fletcher, Staff Writer for the Washington Post, recently wrote an article that addressed the issue of whether NAFTA was responsible for the economic downturn in America. Below is an excerpt from his article:

The North American Free Trade Agreement is once again the prime scapegoat for the nation’s growing economic troubles, drawing blame for sending jobs overseas and flattening wages for U.S. workers. That sentiment has intensified as the economy has deteriorated, a fall punctuated by the steepest job decline in five years. (Reported as of week of March 31, 2008)

It is true the United States has lost about 4 million manufacturing jobs since 1994, the year NAFTA went into effect and eliminated most hurdles to trade and investment between the United States, Mexico and Canada. Not only are items such as clothing, toys and televisions increasingly made abroad, but so are more complex goods including sophisticated magnets that help steer military smart bombs and radio frequency identification chips embedded in new U.S. passports.

But many economists blame the march of technology and the increasingly dominant manufacturing role of China, not NAFTA, for that shift.

Overall, NAFTA has been a net plus, if a modest one, for the U.S. economy. Even as the number of factory jobs dropped, manufacturing output in the United States was up 58 percent between 1993 and 2006, as U.S. plants produced more goods with fewer workers. Exports are at a record high, and trade among the three NAFTA partners has tripled since 1994.

Meanwhile, overall employment in the U.S. has grown 24 percent and average unemployment is down since NAFTA went into effect. Some cities along the border with Mexico have grown, and farm exports have gone up.

Anil Kumar, a Federal Reserve Bank of Dallas economist who studied the impact of the agreement, concluded, “NAFTA (has been) a slight positive for the U.S. as a whole.”


From my standpoint in travelling around the USA I’d have to rate the impact of NAFTA as a strong plus. Not only are we producing more goods than at anytime in history, but employment in all three countries was at record levels at year end and unemployment rates were much lower in all three than when NAFTA was first implemented.