General Discussion
In reply to the discussion: NAFTA at 20: One Million U.S. Jobs Lost, Higher Income Inequality [View all]okaawhatever
(9,461 posts)this report.
http://fpc.state.gov/documents/organization/34486.pdf
This study doesn't look at the impact for Canadian trade. Canada is our current #1 export destination with Mexico being number 2. There were other benefits realized by NAFTA that aren't addressed here.
The CRS examined 4 studies done on NAFTA (they threw out the EPI study & the one done by Pete Peterson) and here are a couple of their conclusions:
NAFTA had little or no impact on aggregate employment.
NAFTA is at the heart of a long-standing debate over the employment effects of trade because of fears
that trade with developing countries causes U.S. job losses and that trade deficits equate
to higher unemployment. None of the reports attributed changes in aggregate U.S. or
Mexican employment levels to NAFTA, but the author of the first chapter of the Carnegie
study suggests that changing the assumptions of a USITC model would allow for a net
gain in U.S. employment over the past decade of between zero and 270,000 jobs, a small
increase. For Mexico, it concludes that the sum of the effects of the trade pact to date
has not been a strong net gain in overall employment. The second chapter (different
author) argues for zero net growth in U.S. jobs. The USITC study demonstrates, contrary
to some popular opinion, that U.S. trade deficits tend to occur during periods of low
unemployment, and vice versa. This evidence supports well-established economic
theory that would suggest both the U.S. trade deficit with Mexico and U.S. employment
levels over the past decade were responding to economic growth, not each other.9
NAFTA contributed to employment shifts among sectors. The Carnegi
NAFTA did not cause the widening U.S. trade deficit with Mexico.
From 1994 to 2002, the U.S. trade deficit with Mexico grew from -$1.4 to -$37.1 billion. These
studies found that trade deficits are largely macroeconomic phenomena, in this case
predominantly attributed to the respective business cycles in Mexico and the United
States. Strong U.S. growth in the 1990s combined with Mexicos deep recession caused
by the December 1994 peso crisis (devaluation) were the main factors cited for the large
deficits. Importantly, none of the studies attributed the peso crisis to NAFTA, but to
structural misalignments in the Mexican economy combined with political events.5
Outlook
The four studies discussed above point to three broad themes. First, by most
aggregate measurements, NAFTA has had only a modest, but positive, effect on the U.S.
and Mexican economies and tends to reinforce long-term trends already evident by its
inception. This is in keeping with what is widely understood about trade and trade
agreements; they work at the margin of economies and their effect can be easily confused
with much more powerful factors such as long-term structural change and short-term
volatility (e.g. financial crises). Such confusion is seen in the reluctance of many
supporters and opponents of NAFTA to engage in a more nuanced debate on trade.
Second, adjustment problems related to trade liberalization present the greatest
challenge to policy makers. For export firms and sectors, the adjustment is positive and
provides evidence of the winners from trade. For import competing sectors, displacement
can have devastating effects on communities and raises the question of whether to fight
freer trade or attempt to adjust to it as part of the larger global integration process. The
World Bank report argues that trade agreements can do more by improving distorting
rules of origin, taking on the hard tasks of antidumping and countervailing duty measures,
and tackling adjustment problems. The Carnegie Endowment study argues that trade
agreements should address trade-related adjustment issues through longer tariff reduction
schedules, use of special safeguards, removal of agricultural subsidies, and provision for
regionally funded trade adjustment assistance and social safety net programs.14
Third, two studies address a common call for better integration of trade policy into
a countrys overall development program by coordinating and supporting it with domestic
reforms. The Carnegie study argues for more attention to agricultural, environmental,
immigration, tax, and labor rights protection policies, among others. The World Bank
study prioritizes institutional reform (especially rule of law and anti-corruption efforts),
educational development (to promote technology transfer), other innovation supporting
policies, and labor reform that facilitates employment transition among industries and
sectors.15 In the end, these reports do not provide easy answers to trade-related policy
problems, but do attempt to explain how the gains from trade may be enhanced by
understanding and responding better to the adjustment challenges all countries face.
Remember, we're Democrats We want the truth even if it doesn't align with our current thinking.