The North American Free Trade Agreement, commonly abbreviated as NAFTA, took center stage at the final Presidential debate October 19. Donald Trump pointed out that Hillary Clinton‘s husband Bill signed the agreement (though his predecessor George H.W. Bush negotiated it) and that she backed it as First Lady. He went on to say that the deal had been “a disaster” for America, causing significant job losses in areas like the Midwest (a notable set of swing states). Whether it’s true or not is a source of significant debate among economists, with opinions ranging in both directions.
The union-backed Economic Policy Institute called NAFTA a “failure” in a 2003 report. EPI noted that America’s trade balance with Mexico fell from a deficit of 40.8 percent to a 61.1 percent deficit. These deficits, according to EPI, account for 2.4 million manufacturing jobs. Trump has cited the EPI frequently in his campaign despite their open distaste for him.
A report from Trump’s alma mater, the Wharton School of Business at Penn, found mixed evidence for NAFTA’s success. The elimination of tariffs allowed American car manufacturers to move to Mexico, causing a drop in American automotive manufacturing jobs as a percentage of the continent’s jobs in that sector from 64.5 percent to 53.4 percent, a drop of 11.1 percent. Mexican automotive manufacturing is eventually expected to take a 25 percent share of the sector’s production and jobs. However, economists noted that NAFTA dropped Mexican immigration to America “nearly to a halt” and increased American jobs in design due to lower production costs. The report also noted that there was no guarantee the jobs would have stayed in America even without Mexico entering the market. The report ultimately concluded that NAFTA neither contributed to nor detracted from America’s economic growth in the ’90s.
Meanwhile, the conservative Heritage Foundation found a net increase of around 1 million jobs as a result of NAFTA. Heritage also found that wages from jobs supporting US exports paid 13 to 16 percent more than most other job sectors. Heritage quotes the US Trade Representative as saying that $1.2 million was traded per minute with NAFTA partners.
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