NCPA - National Center for Policy Analysis

NAFTA not Responsible for Most Job Losses

March 2, 2004

Some politicians and workers are blaming the 1994 North American Free Trade Agreement (NAFTA) for U.S. job losses. But NAFTA-bashing overstates the pact's impact on U.S. job losses during the 2001 recession, says USA Today. It also ignores the economic benefits to American workers provided by NAFTA and world trade generally.

NAFTA has helped create jobs in the United States:

  • Since NAFTA took effect, U.S. trade has tripled with Mexico and risen 62 percent with Canada.
  • This expanded commerce has created 1 million new U.S. jobs, estimates Gary Hufbauer of the Institute for International Economics -- nearly double the number of workers U.S. firms report have lost their jobs because of trade with Canada or Mexico.

U.S. jobs aren't going to Mexico. Our fastest-growing trading partners are Asian nations, not Canada or Mexico. As U.S. companies strive to cut costs, they are "outsourcing" service jobs to China and India, where wage rates are lower than in Mexico.

Trade isn't the main cause of job losses. A bigger factor than trade is technology, which allows employers to produce more with the same or smaller workforces.

  • Productivity gains were 4.3 percent last year and 4.8 percent in 2002, the fastest growth since the early 1960s.
  • Economists say rising efficiency helps explain why companies have expanded business at a healthy clip for two years without needing to hire workers.

A more constructive trade debate, says USA Today, would focus on ways to assist American workers who've lost their jobs to get better retraining and other help to cope in an ever-more globalized and competitive marketplace.

Source: Editorial, "Candidates' replay of NAFTA debate misleads wary voters," USA Today, March 2, 2004.

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