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NAFTA--Glad We Met Ya : Early returns show the controversial trilateral trade pact working well

August 20, 1994

The North American Free Trade Agreement aims to eliminate continental trade barriers and in so doing stimulate the economies of the United States, Mexico and Canada. On the basis of NAFTA's first six months, it is succeeding.

U.S.-Mexico trade is now at record levels. Exports to Mexico, led by auto parts, telecommunications equipment and plastics, are up 17% over a year ago and total $24.5 billion since Jan. 1. U.S. exports over the three months ending with June jumped to $12.6 billion. Imports to the United States rose by 21%, to $23.4 billion, with oil and automobiles leading the way.

Trade with Canada, whose free-trade agreement with the United States predates NAFTA and which remains this country's biggest trading partner, rose by 10%. Through June, U.S. exports totaled $55.6 billion, while imports reached $61.4 billion.

The rising volume of trade with Mexico has been accompanied by a significant narrowing in the U.S. trade surplus, which some find worrisome. But a strengthening Mexican economy means an increase in domestic job openings, and as demand for Mexican products continues to grow, pressures for higher wages should rise. Mexico's exports are in fact expanding globally, all of which could encourage many who now look to the north for jobs to seek opportunities at home instead, thus reducing migratory labor pressure.

During the contentious NAFTA debate the Clinton Administration claimed that 170,000 new U.S. jobs would be created in the first year of the agreement. Commerce Secretary Ronald H. Brown now more conservatively estimates that 100,000 jobs will be linked to NAFTA by 1995. Meanwhile, through June, the Commerce Department says that 4,280 people were certified to get government help and retraining as a result of losing their jobs because of shifting trade patterns.

Overall, then, NAFTA at six months is looking pretty good, precisely the kind of win-win situation for its trading partners that its backers both here and in Mexico and Canada had promised.

Trading Up U.S. exports to Mexico, in billions of dollars. '94: $12.61Source: Commerce Department

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