Thursday, March 17, 2016

NAFTA Exports a U.S. Growth Driver: Presidential Candidates Spout Trade Untruths

Economic truths are usually the first casualty of any presidential election season and 2016 is no exception. For example, several candidates are using trade agreements such as the North American Free Trade Agreement (NAFTA) as a foil for their economic tunnel vision that argues NAFTA signatories, Canada and Mexico, are stealing U.S. manufacturing jobs.

Since NAFTA was passed in 1993, the U.S. lost 26.6% of its manufacturing jobs, but manufacturing production soared by 142.3%. In other words, coveted productivity growth, not trade with Mexico or Canada, was the prime factor reducing U.S. manufacturing jobs. In fact over the past 15 years, exports to Canada and Mexico, have grown by 108.3% as imports from the same nations expanded by a smaller 94.4%.

For 2015, NAFTA exports supported 2.2 million U.S. jobs with the top job gains for Texas with 517,000, California with 189,000, Michigan with 149,000, Ohio with 115,000 and Illinois with 114,000. By industry, the biggest beneficiaries of NAFTA exports for 2015, in terms of jobs supported, were electrical and non-electrical machinery at 54,886 jobs, vehicles at 16,200 jobs, fossil fuels at 9,300 jobs, plastics at 6,700 jobs and surgical instruments at 3,500 jobs. Thus, data show the beneficiaries of exports to Canada and Mexico are broadly disbursed across U.S. states and industries.

Those running for the U.S. presidency should appeal to the economic logic of the American voter not misguided economic chauvinism.
Ernie Goss

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