USTR - Stop the Complaints: With NAFTA, Everyone Wins
                 
The Office of the United States Trade Representative

Stop the Complaints: With NAFTA, Everyone Wins
07/31/2001
Los Angeles Times
Commentary

Lower-income Americans have especially benefited form NAFTA
By Robert B. Zoellick

It should be no surprise that the opponents of openness have targeted the North American Free Trade Agreement, which seven years ago created the largest free-trade area in the world. What is a surprise is that the proponents of an internationally engaged United States have so often abandoned the debate to the economic isolationists and the purveyors of fright and retreat.

The American people must know the truth about the benefits of trade and openness before we attempt to launch a new global round of trade negotiations this November. They must also know the truth if we are going to extend free trade to all the Americas and persuade Congress to give President Bush the trade negotiating authority granted to the previous five presidents. And in telling the truth, we must dispel the many myths about NAFTA.

NAFTA offers the high ground on which to plant the standards of free trade, democracy and support for developing nations. Consider three questions: Has NAFTA served the American public? As a test case over a 2,000-mile border of free trade between developed and developing countries, is NAFTA a model for the future? What has NAFTA accomplished for the people of Mexico?

On the question of U.S. interests, NAFTA and the removal of global trade barriers through global trade negotiations have resulted in higher incomes and lower prices for goods, with annual benefits amounting to $1,300 to $2,000 for a family of four. The biggest beneficiaries are lower-income Americans who bear a disproportionate burden when goods are priced artificially high because of trade barriers. It is no coincidence that the longest period of economic growth in U.S. history came in the aftermath of NAFTA. Ross Perot claimed that NAFTA would lead to "a great sucking sound" that would swallow U.S. jobs. He was right about a great sucking sound, but wrong about the effect: U.S. exports to Mexico and Canada have boomed under NAFTA and now support 2.9 million American jobs--900,000 more than in 1993. Such jobs pay 13% to 18% more than the average American wage.

U.S. exports to our NAFTA partners increased 104% between 1993 and 2000; U.S. exports to the rest of the world grew half as fast. Today, our trade with Mexico is nearly half a million dollars a minute, and we export more to Mexico than to the combination of the four European members of the G-7: Britain, France, Germany and Italy.

As a model for north-south relations, NAFTA represents a commitment by Mexico to modernize--politically and economically--and a commitment by the U.S. and Canada to support this great change so we can realize the full potential of a new, larger North America. NAFTA was a key to the political transformation of a modernizing Mexico. Last year, in the freest and most open presidential election in the country's history, Mexico elected a new president, Vicente Fox, from an opposition party for the first time since that nation's revolution.

NAFTA's opponents outside Mexico often claim they are defending the Mexican people against an agreement that has led to exploitation. But when Mexicans had the opportunity to speak for themselves, 80% voted for major-party candidates who endorsed North American free trade.

NAFTA has fueled Mexico's economic growth; more than half of the 3.5 million jobs created in Mexico since 1995 are connected to trade. NAFTA has also promoted cooperation between the U.S. and Mexico. Today, we are working together on issues from the environment and drugs to law enforcement and immigration. Earlier this year, as California faced an energy crisis, the Mexican state of Baja California stepped in to sell the San Diego area enough electricity to power 50,000 homes.

NAFTA also helped Mexico's resilience amid the challenges of globalization. Following the 1982 peso crisis, it took Mexico seven years to be able to borrow again in international financial markets; after the financial shock of 1994-95, with the help of NAFTA, it took just seven months. Following the 1982 crisis, it took seven years for U.S. exports to Mexico to reach their crisis levels; after the 1994-95 downturn, it took just 17 months.

NAFTA illustrates one of the fundamental truths about trade: It is not a "you win, we lose" proposition. By generating growth, trade multiplies the purchasing power of our trading partners, which in turn benefits our businesses, farmers, workers and consumers.

We should strive for more NAFTAs to help build a world that trades in freedom-opening new markets for producers, new choices for consumers and new avenues for political and economic cooperation between governments. In the 21st century, strong countries will benefit from free trade and prosperous, democratic, peaceful neighbors that can help create regions of vitality and shared values.