BOTTOM line: The North American Free Trade Agreement (NAFTA) is an overwhelmingly positive development for the people of the United States, Mexico, and Canada. Lawmakers in the three countries should never lose sight of that as they begin the task of ratifying the pact announced last week.Skip to next paragraph
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If it's approved, NAFTA will create the largest free-trading zone in the world, covering some 370 million people. The agreement will phase out tariffs on thousands of goods and services that are exchanged among the three North American neighbors. The effects will be to expand choices and lower prices for consumers and to broaden markets for producers. The resulting economic growth will create jobs.
Yet intense resistance will be mounted against NAFTA, especially in Canada and the US. Opposition comes from some business people, particularly in Canada, concerned about cross-border competition; labor unions afraid that manufacturing jobs will be lost to low-paid workers in Mexico; and environmentalists alarmed about the pollution effects of rapid industrialization along the border in Mexico.
By far the most sensitive issue is jobs. With the average Mexican manufacturing wage only about 10 percent of the US rate, many American workers are understandably worried that US automobile, steel, and other companies will move plants to Mexico.
Yes, some labor-intensive US companies will build plants in Mexico (if they haven't already relocated to Asia). For many other manufacturers, though, moving to Mexico would not be cost-effective, owing to the lower productivity of Mexican workers. Also, according to many economists, any loss of jobs to Mexico will be more than offset by new export-related jobs in the US.
Certainly Congress should be sure, however, that the NAFTA legislation contains adequate job-training and economic-adjustment provisions for American workers displaced by the effects of the agreement.
Similarly, environmental concerns can be adequately dealt with in legislation, without gutting the agreement. And Mexico's leaders know that it isn't in their country's long-term interests to become an environmental dumping ground; Mexico has already adopted many international environmental regulations.
No doubt NAFTA isn't perfect, and some fine-tuning may be necessary. But protectionism isn't acceptable in today's world. The question critics of the pact must answer is: Will North America's triumvirate be on the leading edge of the global economy, or will they cling to parochial nationalistic ways, to the ultimate detriment of all their citizens?