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Impact of NAFTA Eyed After 5 Years

By Michelle Mittelstadt, Associated Press Writer, Thursday January 28 1999; 2:11 a.m. EST

WASHINGTON (AP) -- Five years after the United States, Canada and Mexico entered into a new trade alliance, whether the North American Free Trade Agreement is a boon or a burden generally depends on who's evaluating it.

The Clinton administration lobbied furiously to secure congressional passage of the trade pact in 1993. Not surprisingly, it views NAFTA as a net positive -- particularly in light of the current Asian economic downturn and Mexico's 1994 peso crisis.

"We think it's been a very successful enterprise," David Aaron, Commerce undersecretary for international trade, said in a recent interview. "There are still problems. It's still a work in progress, and there are more things we need to do to improve it ..., but I think we can take significant satisfaction in the fact our exports to NAFTA in the five years have risen more than 67 percent -- almost double the rest-of-world exports."

On the other hand, the critics: NAFTA is to blame for job flight to Mexico, lowered labor and environmental standards and a host of other ills in all three partner countries.

The debate over NAFTA's impact on the U.S. economy is certain to be among the central issues Congress will examine this year as it considers President Clinton's request to renew the negotiating authority he needs to strike new trade agreements, including the suggestion in his State of the Union address for a round of talks involving the 133 nations of the World Trade Organization.

Determined opposition from labor and environmental groups has blocked Clinton for four years from obtaining the trade authority, known as fast track. Opponents argue that NAFTA did not provide enough safeguards to ensure that U.S. companies setting up operations in Mexico did not exploit workers' rights or the environment.

"It's obvious NAFTA has failed to produce the benefits its boosters promised," said Lori Wallach, director of Public Citizen's Global Trade Watch, which battled to keep the pact from being enacted. "But NAFTA also fails a more lenient `do no harm' test. In key areas NAFTA affects, things are worse than before."

In its recently issued NAFTA report card, Global Trade Watch gives failing grades on everything from agriculture to highway safety, public health and national sovereignty.

NAFTA has cost Americans hundreds of thousands of jobs, depressed wages in some sectors and transformed the $1.7 billion trade surplus with Mexico in 1993 to an $11.5 billion deficit by fall 1998, Global Trade Watch says.

The administration retains a far more positive view.

"Look at the whole spectrum of issues -- trade, the environment, labor conditions, cooperation with Mexico in law enforcement. Whatever the issue, there is not one area where we would be better off today if the NAFTA were not in place," said Jay Ziegler, a spokesman for the office of the U.S. Trade Representative.

Trade with Canada and Mexico supports 2.6 million U.S. jobs, Aaron said, an increase of 655,000 over 1993. As to the job loss claim, he said: "It's quite clear that most of the job dislocation that has taken place in the United States is not due to trade, let alone trade with NAFTA. Most of it is due to technological change."

Noting the United States is enjoying its lowest unemployment rates in three decades, averaging 4.5 percent last year, Aaron said, "You can hardly say (NAFTA) has precipitated some kind of jobs crisis."

NAFTA is scored, however, as having cost the jobs of 209,000 Americans. That is the number of workers certified under a federal program designed to help people who lose work because of shifting trade patterns with Canada and Mexico.

Administration officials rush to say it's far easier to quantify jobs lost under NAFTA than those created. They also say the 209,000 figure is an inaccurate reflection of job loss because, although entire work forces are certified as NAFTA losses, many displaced workers immediately go to new jobs or choose to retire. Some also may be reported under different federal trade assistance programs.

Don Beale, acting director of the Labor Department's Office of Trade Adjustment Assistance, said his staff often is asked how many jobs have been lost to NAFTA, "to which we give a hearty `We don't have the slightest idea,"' he said.

The states with the most certifications of NAFTA job loss are North Carolina, Texas, Pennsylvania, New York and California.

The sectors with the most certifications are the apparel industry, with 55,000; electrical and electronic equipment, 26,600; and transportation equipment, 14,600.