Page - 1

NAFTA Five Years of Failure In December of 1992, Presidents Salinas (Mexico), Bush (U.S.) and Prime Minister Brian Mulroney of Canada signed the North American Free Trade Agreement (NAFTA). The Mexican legislature ratified NAFTA in 1993 and the treaty went into effect on January 1, 1994, creating the largest free-trade zone in the world.
NAFTA's promoters promised 200,000 new jobs per year for the U.S., higher wages in Mexico and a growing U.S. trade surplus with Mexico, environmental clean-up and improved health along the border. The reality of the post-NAFTA surge in imports from Mexico has resulted in an $14.7 billion trade deficit with Mexico for 1998. By adding the Mexican trade deficit to the deficit with Canada, the overall U.S. NAFTA trade deficit for the year 1998 is $33.2 billion dollars. In the last five years we have gone from a pre-NAFTA trade surplus of $4.6 billion with Mexico to a $14.7 billion deficit. Using the Department of Commerce trade data in the formula used by NAFTA proponents to predict job gains, the real accumulated NAFTA trade deficit would translate into over four hundred thousand U.S. jobs lost.

A number of companies that specifically promised to create new jobs actually laid workers off because of the agreement. Allied Signal, General Electric, Mattel, Proctor and Gamble, Scott Paper and Zenith all made specific promises to create jobs, and all have laid workers off because of NAFTA as certified by the U.S. Department of Labor's special NAFTA unemployment assistance program (NAFTA TAA).

(1) These are not the only companies who broke their promise of new jobs. In February 1997, Public Citizen's Global Trade Watch conducted an investigation of companies that had specifically promised that they would create jobs if NAFTA were enacted in 1993. Of the 67 companies studied, 60 had not created jobs or even increased their exports to Mexico. When we look at the goods exported from the U.S. to Mexico, we must understand that the figures used do not mean goods to be sold in Mexico. Most of the figures released by the government include what is termed as "industrial tourism". This means we send goods to Mexico to be assembled in their low wage plants and then re-imported into the U.S. as finished products.

Next

* Contributed by -
Arvind Bothra,
PGP 2nd Year, Class of 2004-06, IIM Lucknow,
Archana Khemka,
PGP 2nd Year, Class of 2004-06, SPJIMR Mumbai.