• Heritage Action
  • More
Backgrounder #1462 on Trade and Economic Freedom

August 1, 2001

The Effects of NAFTA on Exports, Jobs, and the Environment: Myth vs. Reality

By

The North American Free Trade Agreement (NAFTA), which the United States implemented with Canada and Mexico in 1994, has benefited Americans substantially, according to U.S. government data. It has increased exports, expanded U.S. agriculture, improved environmental standards at home and abroad, and given Americans higher-paying jobs. Yet critics of free Trade continue to assert the opposite: that NAFTA has resulted in fewer U.S. exports, cost American jobs, and jeopardized the environment. The data clearly refute these claims.

Myth: NAFTA has diminished U.S. exports
Critics often claim that America has gained little from NAFTA. For example, theUnited Auto Workers has stated that "NAFTA has been a disaster."1 This is not true.

Reality: U.S. exports to America's NAFTA partners have vastly outpaced U.S. exports to the rest of the world
As U.S. Trade Representative Robert Zoellick points out, "U.S. exports to our NAFTA partners increased 104 percent between 1993 and 2000; U.S. Trade with the rest of the world grew only half as fast."2

According to the U.S. Department of Commerce, "During 1993-1998, U.S. goods and services exports to the world rose by approximately 45 percent (goods exports increased by nearly 47 percent). During the same period, exports of goods and services supported an additional 1.6 million jobs (to a total of 11.6 million in 1998)."3 Moreover:

  • America's NAFTA partners were Missouri's top export markets in 1998, with exports of $1.6 billion to Canada and $1.2 billion to Mexico, according to the Commerce Department. They were also the top two export markets for Georgia, Indiana, Michigan, North Carolina, and Pennsylvania in 1998.4
  • "Sales of U.S. corn to Canada increased more than 127 percent in volume between 1990 and 2000 and increased nearly eighteenfold to Mexico during 1993 to 2000," according to the U.S. Department of Agriculture, which adds that "NAFTA partners purchase 27 percent of U.S. agricultural exports."5
  • U.S. exports to Mexico of motor vehicles in 1998 were 14 times greater than in 1993, rising to $2.4 billion. Exports of parts were 30 percent greater, reaching $9.5 billion.6

Myth: NAFTA has cost American jobs
Representative David Bonior (D-MI) is among critics of NAFTA who claim that "hundreds of thousands of good paying jobs have been lost" because of the agreement.7 This is false.

Reality: NAFTA has led to more higher-paying jobs for Americans
The Bureau of labor Statistics has reported that more people lose their jobs each year from labor strikes than from import competition.8 Moreover:

  • After a five-year analysis of NAFTA, the Department of Commerce concluded:

We estimate U.S. exports to Canada and Mexico support over 600,000 more jobs now than in 1993. U.S. exports to Canada support an estimated 1.7 million jobs, over 300,000 more jobs than in 1993. Exports to Mexico in 1998 supported almost a million jobs, up over 350,000 jobs from 1993. jobs supported by exports pay 13 to 16 percent more than other U.S. jobs.9

  • Bureau of labor Statistics data confirm that "Total employment in the U.S. motor vehicle industry has grown five times faster following NAFTA that in the years prior to the Agreement."10
  • U.S. unemployment has declined significantly since NAFTA was signed. For example, U.S. unemployment in 1992 stood at 7.5 percent; today, it is 4.5 percent.11

Myth: NAFTA is not environmentally friendly
Representative Bonior also claims that "Since NAFTA, factories have moved to Mexico to take advantage of cheap labor and lax environmental standards."12 This claim also is not borne out by the facts.

Reality: NAFTA's side agreements on the environment have focused public attention on environmental problems and have helped to finance solutions
According to Tiahoga Ruge of the North American Centre for Environmental Information and Communication, "NAFTA has brought the environment into the mainstream in Mexico, as something to be taken seriously."13 NAFTA's side agreements have focused attention on significant environmental concerns:

  • Since NAFTA was implemented, Mexico has taken the initiative to pass environmental laws similar to those of the United States and
    Canada.
  • The North American Agreement on Environmental Cooperation (NAAEC), NAFTA's supplemental agreement on the environment, promotes development through mutually supportive environmental and economic policies. It also created the Commission for Environmental Cooperation (CEC) to protect, conserve, and improve the environment.
  • The NAFTA agreements also created the Border Environment Cooperation Commission (BECC) and the North American Development Bank (NADB). The BECC assists border communities in addressing environmental concerns and certifies environmental projects. The NADB uses private and public funding to finance BECC projects.
  • According to the U.S. Department of Commerce, since the NADB's establishment in 1995, it "has approved a total of $105 million in loans, guarantees, [and] grants to help finance 14 environmental projects benefiting over four million residents on both sides of the [U.S.-Mexico] border."14
  • As a result of one BECC-NADB project in the Lower Valley of El Paso, Texas, 2,600 households will be connected to a wastewater treatment system this year, according to the Office of the U.S. Trade Representative.15
  • Thanks to another wastewater treatment project in Mexico, 93 percent of the residents in the city of Ciudad Juarez will have sewage services. Without NAFTA, this probably would not have occurred.

Conclusion
According to the Office of the U.S. Trade Representative, "we Trade $1.8 billion a day with our NAFTA partners--that's $1.2 million a minute."16 As U.S. government data indicate, without NAFTA, the United States would have lower-paying jobs and would export less, and Mexico and the United States would have lower environmental standards.

Congress has the opportunity to expand the benefits of Trade agreements like NAFTA--which was passed with bipartisan support--to other countries by granting the President Trade promotion authority (TPA) this session. Such Trade agreements stimulate innovation and opportunity, both of which will bring the citizens of the United States and its trading partners many benefits.

U.S. Trade Representative Robert Zoellick points out that "NAFTA and the Uruguay Round [of the General Agreement on Tariffs and Trade] have boosted the annual income and lowered the cost of purchases for an average family of four by $1,300 to $2,000."17 New Trade agreements can only add to the income and savings of American families and encourage sound economic and environmental policies among its partners. Nothing less than prosperity is at stake.

Sara J. Fitzgerald is a Trade Policy Analyst in the Center for International Trade and Economics at The Heritage Foundation.

Show references in this report

1. United Auto Workers, "Derail Fast Track," UAW Politics , July 18, 2001, at http://www.uaw.org/politics/dclink/01071801fasttrack.html.

2. See http://www.ustr.gov/speech-test/zoellick/zoellick_7.PDF.

3. U.S. Department of Commerce, "NAFTA 5 Years Report--Expanding Opportunities for North American Trade and Growth," NAFTA Works for America, at http://www.ustr.gov/naftareport/expand1.htm.

4. U.S. Department of Commerce, as cited at http://www.uschamber.com/TradeRoots/State+Trade+Facts/.

5. U.S. Department of Agriculture, "Benefits of NAFTA," at http://www.fas.usda.gov/itp/policy/nafta/nafta_backgrounder.htm (July 29, 2001).

6. U.S. Department of Commerce, Office of Automotive Affairs, International Trade Administration, Fifth Annual Report to Congress Regarding the Impact of the North American Free Trade Agreement Upon U.S. Automotive Trade With Mexico , at http://www.ustr.gov/html/autos99.htm (July 31, 2001).

7. Representative David Bonior (D-MI), "Slam the Brakes on Fast Track," July 27, 2001, posted at http://www.uaw.org/atissue/01/072701bonior.html (July 31, 2001).

8. See Bureau of Labor Statistics Web site at http://www.bls.gov/top20.html#OEUS.

9. U.S. Department of Commerce, "NAFTA 5 Years Report--Fostering Higher Wage Jobs: Exports on Trade," NAFTA Works for America , at http://www.ustr.gov/naftareport/fastering.htm.

10. See Council of the Americas, "NAFTA's Positive Impact on Four U.S. Industries," NAFTA at Five Years , January 1999.

11. From Bureau of Labor Statistics Web site at http://www.bls.gov (July 29, 2001).

12. Bonior, "Slam the Brakes on Fast Track."

13. "A Greener, or Browner Mexico?" The Economist , August 7, 1999.

14. U.S. Department of Commerce, "NAFTA 5 Years Report--Fostering Higher Wage Jobs," at http://www.ustr.gov/naftareport/fastering.htm.

15. Ibid .

16. U.S. Trade Representative Robert Zoellick, speech to the Council of the Americas, May 7, 2001.

17. U.S. Trade Representative Robert Zoellick, "A Time to Choose: Trade and the American Nation," Heritage Foundation Lecture No. 710, July 3, 2001, at http://www.heritage.org/library/lecture/hl710.html.

Heritage's daily Morning Bell e-mail keeps you updated on the ongoing policy battles in Washington and around the country.


The subscription is free and delivers you the latest conservative policy perspectives on the news each weekday--straight from Heritage experts.


The Morning Bell is your daily wake-up call offering a fresh, conservative analysis of the news.


More than 450,000 Americans rely on Heritage's Morning Bell to stay up to date on the policy battles that affect them.


Rush Limbaugh says "The Heritage Foundation's Morning Bell is just terrific!"


Rep. Peter Roskam (R-IL) says it's "a great way to start the day for any conservative who wants to get America back on track."


Sign up to start your free subscription today!