20 years after the North American Free Trade Agreement, the positives outweigh the negatives
When President Bill Clinton was pushing the North American Free Trade Agreement in the 1990s, he had many opponents on both sides of the aisle, but history has shown the unprecedented agreement provided more growth than damage to the economies involved in the deal.
Clinton’s push was unusual and a controversial position for a Democrat. Unions howled at the notion of free trade with Mexico, arguing U.S. employers would flock to the country and build plants. To be fair, some did, but there was also no wholesale loss of U.S. jobs. In fact, the 1990s were years of unprecedented economic growth.
U.S. agricultural trade boomed to Canada and Mexico under NAFTA. Agricultural products sold to Mexico quintupled in the last two decades and tripled to Canada, according to a report by the U.S. Chamber of Commerce. That’s particularly important to the Mankato region with its hundreds of acres of corn and soybeans and thousands of hogs raised.
The Chamber reports that total trade with Canada and Mexico rose to $1.2 trillion annually, a 3.5-fold increase. A study the business group commissioned shows some 5 million U.S. jobs are tied to growing trade with the two countries. Canada and Mexico are the top destinations for exports from small and medium-sized U.S. businesses, 122,000 of which exported to those countries.
Critics of the agreement will argue it fell short on promises to reduce the rate of poverty in Mexico. The poverty rate went from 52.4 percent in 1994 to as low as 42.7 percent in 2006, according to a report by the Economic Commission of Latin America. The poverty rate has since moved up again to near 52 percent.
The wage gap between U.S. and Mexican workers also has closed some, but to critics, not nearly enough. At the start of NAFTA manufacturing wages in Mexico were about 15 percent of U.S. wages. Those wages have moved up to about 18 percent.