IF the United States House of Representatives votes to pass the North American Free Trade Agreement (NAFTA) Nov. 17, it will ``secure a process that has been under way since 1987,'' says Laura D'Andrea Tyson, chairwoman of the White House Council of Economic Advisers.
Anyone wondering just how the US will fare under NAFTA should look at how the US-Mexico trade relationship has been transformed over the past five years, Ms. Tyson told reporters at a Monitor breakfast Nov. 16. During that period, Mexico's economic and trade liberalization moved the US export position with its southern neighbor from a trade deficit to a trade surplus.
``The president made the NAFTA decision based on economic grounds,'' she says. Some of the biggest beneficiaries of NAFTA, Tyson says, are small and mid-sized American firms that cannot afford to jump the current barriers to the Mexican market.
With the agreement, ``we are in a preferred position with a country we believe will take off with a very successful development strategy.'' Tyson says an agreement with Mexico ``offers us an early entree'' into a region that will be a lucrative export market for US producers. Other Latin countries are relying on the passage of NAFTA as an endorsement of their path toward economic and trade liberalization. As they speed up their own development processes, these countries will form ``a major market for us.''
Tyson says that labor's opposition to NAFTA is misplaced. The administration ``is sympathetic'' to its concerns, says Tyson, including the increasing job insecurity, stagnant family incomes, the lack of portability of health care, and the limited worker-training programs. ``We are trying to establish policies [to address these concerns] in our investment agenda,'' she says. ``Where we depart from labor is that we do not believe that these problems are rooted in [past] trade liberalization [and will be exacerbated with NAFTA].'' Further liberalization, she adds, ``is wedded'' to improving economic conditions for US workers.
Should NAFTA fail congressional muster, she warns, ``one of the most dramatic effects'' could be a downturn in the Mexican economy, a weakening of its national currency, the peso, and an increase in illegal Mexican migration to the US.