Chapter 6. Opposing Viewpoints on the Effect of NAFTA, 20 Years Later

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Written on the twentieth anniversary of NAFTA, these two articles give starkly different accounts of the impact of NAFTA on American workers. The first article argues that NAFTA caused large job losses in the United States as firms moved to Mexico. The second article argues that American consumers benefitted, and that U.S. companies added jobs in the United States even while transferring some jobs to Mexico.

This month is the 20th anniversary of the North American Free Trade Agreement, which significantly eliminated tariffs and other trade barriers across the continent.... At NAFTA’s core...are investor rights and privileges that eliminate many of the risks that make firms think twice about moving production to low-wage countries. Today, goods once made here are being produced in Mexico and exported here for sale....The companies that took the most advantage of NAFTA—big manufacturers like G.E., Caterpillar and Chrysler—promised they would create more jobs at their American factories if NAFTA passed. Instead, they fired American workers and shifted production to Mexico.

The Labor Department’s Trade Adjustment Assistance Program, which documents this trade, reads like a funeral program for the middle class. More than 845,000 workers have been certified under this one narrow and hard-to-qualify-for program as having lost their jobs because of offshoring of factories to, and growing imports from, Mexico and Canada since NAFTA.

Two decades after President Bill Clinton signed the North American Free Trade Agreement, its very name chills the spines of US voters and congressmen alike. Even advocates of new regional trade agreements insist that they are not countenancing “another NAFTA.” Yet NAFTA-phobia is irrational. None of the terrible things that were, according to its opponents, supposed to result from its implementation have in fact occurred. Members of the free trade area—Canada, Mexico, and the US—enjoy a large joint market and a common supply chain. Consumers in all three countries have gained....

Econometric studies have established that when US companies invest abroad, the net result is increased employment, stronger demand, and more investment at home. That makes sense, since it should on average be the more competitive businesses that have the resources and opportunities to expand abroad, and investing should increase their productivity. This conclusion applies specifically to US companies that have invested in Mexico. Recent research has found that, on average, for every 100 jobs US manufacturers created in Mexican manufacturing, they added nearly 250 jobs at their larger US home operations, and increased their US research and development spending by 3 percent.