How NAFTA has helped American Manufacturing

If you have enjoyed prosperity with competitive goods from your business, and care about the future of American manufacturing, you should be supporting NAFTA (now USMCA).

It’s just that simple: NAFTA countries and the American manufacturing industry have benefitted so greatly from their mutual partnership, and are tied so closely together, to have one without the other would be a catastrophe in all three countries.  Contrary to the rhetoric that has been coming from the White House of late, NAFTA has not been a bad deal for the United States; in fact, the very opposite is true.  If tremendous benefits for the U.S. and its manufacturing companies are to continue in the future, NAFTA will need to remain in place.

For more than 20 years, NAFTA has provided the United States, Canada and Mexico with a level of mutual market access that has produced significant economic gains for manufacturers, manufacturing workers, their families and communities.

As CEO of a company with operations in all three NAFTA nations, I’ve seen the benefits of this trade agreement first-hand. The integrated market zone created by NAFTA established an open, multilateral environment for investment and innovation — generating new opportunities for companies like ours to expand their businesses, offer good jobs and wages and support local communities.” – David MacLennan , Cargill chairman and CEO, Vice Chairman of International Economic Policy at the National Association of Manufacturers (NAM). source

What  prosperity have we enjoyed as  a result of NAFTA and what can we look forward to in the future?  Consider the following:

An Indisputable Fact: NAFTA has Created, and will Continue to Create,  Millions of New American Jobs

When it was first enacted in 1994 one of the biggest arguments against NAFTA was that jobs-wise, America would be the big loser; millions of manufacturing and other labor-intensive jobs would flood out of the country, never to return. But in the 17 years since its inception, the data collected from the manufacturing industry has produced an indisputable fact: NAFTA has created millions of new American jobs, and will continue to produce them well into the future (if it remains in place.)

According to the U.S. Chamber of Commerce, NAFTA exports has created five million new U.S. jobs since 1994, dwarfing the success of any other government program or industry since that time.  While most of those jobs went to 17 states, all states enjoyed increases in jobs. Between 1993 and 1997, U.S. manufacturers added more than 800,000 jobs: This was due in large part to the $487 billion manufacturers exported by 2014. source

NAFTA Has Increased Economic Growth

In January of this year, President Trump tweeted “Mexico has taken advantage of the US for long enough.”

Yet the income from trade among NAFTA partners does not represent that unfounded characterization: $290 billion in 1993 to over $1 trillion by 2016. A $710 billion gain would hardly seem to being taken advantage of by any definition. source According to the United States Trade Representative, NAFTA has provided an expansion to U.S. economic growth at the rate of 0.5 percent a year (including the time of the Financial Crisis of 2007 – 2008).  Source The sectors that benefited the most were agriculture, automobiles, and services such as nearshore manufacturing.

U.S. farm exports to Canada and Mexico grew 156 percent compared to a 65 percent increase in farm exports to the rest of the world. Farm exports to Canada and Mexico alone were greater than exports to the next six largest markets combined; this is due to the elimination of high Mexican tariffs making it the highest export destination for beef, rice, soybean meal, corn sweeteners, apples, and beans from the United States. It is the second largest export destination for corn, soybeans, and oils. source

The efficiency in trade led to foreign investment tripling:  According to the U.S. Census in 2015, foreign businesses invested $452 billion in Mexico and Canada and in turn, companies in Mexico and Canada invested $240.2 billion back to the United States.  That huge investment helped spur large growth manufacturing, insurance, and banking companies. source

US Jobs Depend on NAFTA

Over 5 million jobs, in every state in the Union, depend on Nafta to create and keep jobs.

This infographic tells the entire story: The end of NAFTA would mean the loss of trillions of dollars.  $178 billion, along with 382,0000 jobs,  would be lost annually, in Texas alone.

Conclusion: NAFTA is an Example to Follow

As competition in the labor market deepens, manufacturing in Mexico provides low-cost manufacturing allowing US companies to keep higher level, salaried, and technical positions rather than losing these jobs overseas. NAFTA makes all this possible.  The loss of revenue and jobs would be a colossal mistake for numerous American industries not to mention the United States economy as a whole.

An Example to Follow

NAFTA’s legacy includes more jobs, higher wages, cleaner environments, more manufacturing output, less poverty, and (perhaps most significantly) increased economic freedom. ” – Bryan Riley , Jay Van Andel Senior Analyst in Trade Policy in the Center for Trade and Economics, a department of the Institute for Economic Freedom and Opportunity, and Donghun Yu, Visiting Fellow, at The Heritage Foundation.”

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