NCPA - National Center for Policy Analysis


April 25, 2008

Some presidential candidates seem to believe that a substantial part of the three million manufacturing jobs lost since 2000 resulted from the North American Free Trade Agreement (NAFTA), and that outsourcing to Mexico and Canada resulted in a huge trade deficit.  Too bad they don't know that the growth in the deficit isn't due to manufactured goods, but to oil and gas imports, says John Engler, president of the National Association of Manufacturers.

There is no question that the imbalance of trade within NAFTA has soared since 2000:

  • That deficit has almost doubled to nearly $140 billion in 2007, from $77 billion in 2000.
  • But the deficit in manufactured goods did not displace U.S. factory production.

Almost all of the increase in our NAFTA deficit since 2000 has been in increased U.S. imports of energy from Canada and Mexico:

  • In fact, $58 billion of the $62 billion increase in our NAFTA deficit has been in energy imports.
  • That's 95 percent of the total increase.

We need that oil and gas, and we would rather get it from our friendly neighbors.  Surely no one seeks to argue that America would be better off saying no to Mexican and Canadian oil and gas, advocating that we instead import that energy from less secure sources farther from our borders.

Except for energy, our trade deficit within NAFTA has hardly grown at all -- only $3.5 billion from 2000-2007.  Our agricultural and manufactured goods sales to NAFTA countries have just about kept pace with our imports.  That's a lot more than one can say about the rest of our foreign trade.

Source: John Engler, "What NAFTA Trade Deficit?" Wall Street Journal, April 21, 2008.

For text: 


Browse more articles on Economic Issues