NAFTA at 20: One Million U.S. Jobs Lost, Higher Income Inequality

[okaawhatever]

36. No, the report dosn't get bad for NAFTA. I only picked out the parts that directly addressed

his statements, plus I added the overview.

Your information isn't correct on several points:

1. The Peso Crisis didn't have anything to do with the farmers. In fact, it happened the same year NAFTA went into effect, before there were agriculture issues. It had to do with politics, foreign investment, local strife, currency issues and the assassination of the Presidential candidate.

For more info see wiki. All the info is from legitimate sources, most from Brookings, The Economist and economics textbooks.

http://en.wikipedia.org/wiki/Mexican_peso_crisis

2. Mexican farmers were given subsidies to help with the effects on NAFTA. Some $20 Billion dollars worth. Farm jobs were lost, that was expected and provisions were made to help them. If Mexico is to decrease their poverty, they can't rely on labor intensive practices that don't allow them to compete in the market. Of course, part of the problem was the corruption in Mexico and how too much of the money went to the larger companies and to graft. Excellent report on that from the Woodrow Wilson Center for International Scholars. It's titled Subsidizing Inequality: Mexican Corn Policy Since NAFTA

http://www.wilsoncenter.org/sites/default/files/Subsidizing_Inequality_Ch_0_contents_and_summary_findings.pdf

3. Yes, the devaluation of the Peso led to companies moving there that hadn't planned to. But again, the Peso Crisis wasn't caused by NAFTA, and even without NAFTA the report finds that companies would have moved there anyway. The Peso Crisis and deep recession changed everything. The question becomes, which events occured because of the peso crisis and which occured because of NAFTA.

4. The report doesn't "bury the most significant numbers with lame excuses". The trade deficit is explained and backed up by verifiable data. The US has a boom, we added 22.5 MILLION new jobs in this country. When that happens demand increases. Demand for imports grew from every country. Not only did we have a hugely increased demand for goods, Mexico's goods were now cheaper than ever due to the Peso devaluation. Mexico had a deep recession losing almost 10% of its GDP. As a result, their imports decreased. The question is, was it a result of NAFTA? The answer is no see point #1.

NAFTA had a modest effect on U.S.-Mexico trade growth.

The CBO, World Bank, and USITC approached the problem differently, but all found that NAFTA
had a modest effect on U.S.-Mexico trade growth. The CBO model of U.S.-Mexico trade
estimated that 85% of the U.S. export growth and 91% of U.S. import growth would have
occurred without NAFTA. Although the effect was modest, it accelerated over time,
accounting for a 2% marginal growth of U.S. exports and imports in1994 up to11% and
8% marginal growth of U.S. exports and imports in 2001. As a percentage of economic
activity, the increased trade was more pronounced for Mexico than the United States.
Separately, the World Bank makes the point that NAFTA has reinforced existing trends
in trade growth and estimates that Mexico’s global exports would have been 25% lower
without NAFTA.2

So NAFTA increased imports 9% and increased EXPORTS 15%, and as noted something that has grown over time. They also found that Mexico's exports to countries other than the US has increased 25%.

5. Yes the report is 10 years old. The EPI report from 2011 deals with NAFTA up until 2006. It claims that the job losses from 2007-2010 were economy wide. (due to the recession).

As of 2010, U.S. trade deficits with Mexico totaling $97.2 billion had displaced 682,900 U.S. jobs. Of those jobs, 116,400 are likely economy-wide job losses because they were displaced between 2007 and 2010, when the U.S. labor market was severely depressed.

Note that the author of this article, Robert Scott, refers to job losses as a result of the "trade deficits with Mexico" and not NAFTA. His methodology is to take the dollar amount of trade deficit and calculate the number of jobs striclty from the amount of the trade deficit. He doesn't look for ACTUAL job losses. Based on his methodology, if a factory in Mexico makes $1 widgets to export to the US, then switches to making $10 wigets Americans have lost jobs. The number of imports hasn't changed, nor has a single American lost a job, but to him there is now a higher trade deficit and his methodology says that increased trade deficit means lost jobs. A sixth grader can see the logic fail there. Besides, why is he using that when there is ACTUAL data available?