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. Last Updated: 07/27/2016

NAFTA Produces Mixed Blessings So Far

FALL RIVER, Massachusetts -- Joe Pavao knows that somewhere in the huge American workplace, the North American Free Trade Agreement has wreaked havoc.


"But for me," he says, "it's only good that has come out of it" -- a steady job paying $9.31 an hour, plus health insurance, for dispatching tractor-trailers filled with upholstery fabric destined for Mexico.


Now look 864 miles west to Fredonia, Wisconsin, where Marvin Windsor, a 25-year veteran of assembly-line work, lost his $40,000-a-year job 15 months ago when the Square D Co. moved production of low-voltage transformers to other U.S. locations and to Mexico. He hasn't had a steady job since.


"I used to bowl. I used to shoot pool. I don't do none of that any more," he says. "I wish they'd move the job back."


Three years ago, as Congress neared a final vote on NAFTA, both supporters and opponents predicted that trade and its impact on jobs would be a major issue in the 1996 election. Supporters, describing the scenario that Pavao is living, argued that the agreement would bring new jobs. Opponents, pointing to what would befall Windsor, said NAFTA would devastate U.S. employment.


Now, however, it is clear that both sides exaggerated. There are plenty of Pavaos and plenty of Windsors, but NAFTA's effects have been less dramatic than either side forecast. And trade has become one of the disappearing issues of the 1996 election -- so much so that Ross Perot's presidential candidacy, based in part on warnings of NAFTA's sucking millions of American jobs to Mexico, is so far a shadow of his 1992 run at the presidency.


"I don't think NAFTA has made much difference in either country when it comes to employment," says economist Gary Hufbauer of Washington's Institute for International Economics. "But it has intensified trade between the two countries."


Three years ago, before NAFTA took effect, the United States ran a slight surplus in its trade with Mexico. Since then, U.S. exports to Mexico have grown by a healthy 25 percent, but imports have nearly doubled, turning the small U.S. trade surplus with Mexico into a $17 billion deficit.


What effect has that had on American jobs? No one can say with precision. The U.S. Commerce Department, which has not attempted an actual count, estimates that the increased sales of U.S. goods and services in Mexico and Canada, which is also part of the accord, since Congress approved NAFTA in 1993 are probably responsible for 260,000 jobs in this country.


Critics are dubious.


"If there are 260,000 jobs created by NAFTA, can someone even show me 50,000?" asked Lori Wallach, a trade expert with Ralph Nader's Public Citizen group. "It's like `Where's Waldo?'"


The other side of the equation -- jobs that have migrated because of NAFTA -- is even harder to pin down. The U.S. government has certified that 86,000 jobs were lost to both Mexico and Canada as of July 31 as a result of the trade pact.


At Waterman Industries in Exeter, California, sales to Mexico of valves and other water-control machinery have more than tripled since the trade pact, said Hector Molina, the Latin America sales manager, "and everything's made here in California."


Does that mean more workers? Not exactly, said foreman Danny Eggleston.


"There's been more work, but companies are streamlining," he said. "Our sales to Mexico have increased. Our productivity has increased. As far as more man hours - we haven't worked any more man hours because of it."