July 8, 1997 in Nation/World

Nafta Is Bitter Pill For Many

Associated Press
 

Convince Nancy DeWent.

That’s the dilemma the Clinton administration faces as it prepares to paint a glorious picture of the benefits to the American economy in the three years since a free trade deal with Mexico.

The White House talks of booming export sales, low unemployment and a competitive America confidently facing the challenges of the 21st century.

DeWent talks of her $11.58-per-hour manufacturing job disappearing to Mexico where a worker will do what she has done - assemble Swingline brand staplers - for only 50 cents an hour.

“The company told us in May that they were shutting the plant - 408 union people will lose their jobs. We were devastated,” says Ms. DeWent, 47. “I have been at the plant for 19 years. I am too old to start over and too young to retire.”

The factory has turned out staplers in Queens, N.Y., for 75 years, but owner Acco USA Inc. says by moving to Mexico it will save $12 million annually, mostly in cheaper labor costs.

Since the North American Free Trade Agreement - creating the world’s biggest free trade zone connecting the United States, Canada and Mexico - took effect on Jan. 1, 1994, the pattern of plant closings and layoffs has been repeated in virtually every state.

From lumber mill workers in Alaska to cabinet makers in West Virginia, the Labor Department as of last month had certified 132,972 persons who have lost their jobs because of NAFTA.

And that total misses many people who do not bother to apply for benefits, NAFTA opponents argue. They put the total at 420,000 - Ross Perot’s giant sucking sound - based on calculations linked to a quadrupling of America’s trade deficits with Mexico and Canada.

Nonsense, says the Clinton administration. It will argue in a report expected by week’s end that America’s overall deficits with Canada and Mexico are influenced by many factors beyond NAFTA, such as Mexico’s severe peso crisis two years ago.

The report, according to officials who have seen drafts, will contend that booming U.S. exports to Mexico and Canada, which are growing at a faster rate than the rest of the world, actually have resulted in an increase of 433,000 new jobs.

So who’s right? Opponents with their estimate of 420,000 job losses over the past three years or the administration with its claim of 433,000 job gains?

Both sides are overstating NAFTA’s impact, private economists say.

The trade deal has had “a negligible impact” on the number of U.S. jobs, said Jeffrey Schott of the Institute of International Economics. “NAFTA is such a small part of the story of what is going on in U.S. labor markets.”

For one thing, NAFTA simply accelerated trends already underway. Two-way trade between the United States and Mexico has been growing rapidly ever since the late 1980s when Mexico began lowering trade barriers.

In addition, more powerful forces, such as the Federal Reserve’s interest rate policies, determine the level of employment in the United States, not trade flows, economists say.

One of the most comprehensive studies, produced by economist Raul Hinojosa of the University of California at Los Angeles, found that NAFTA had produced a “near zero net impact” on U.S. employment its first three years.

And even with a sharply increasing trade deficit over the past three years, U.S. employment growth has outstripped all other countries. In NAFTA’s three years, 3.7 million new jobs have been created on average each year and 1.5 million jobs have been lost, leaving net job creation at 2.2 million.

While the closing of a stapler factory in Queens attracts headlines, the increase in export sales by other companies often goes unnoticed.

Telephone equipment manufacturer Miles Press of Indianapolis, Berg Electronics of St. Louis and U.S. Filter Corp. of Palm Desert, Calif., are among the American companies reporting sizable export gains to Mexico since NAFTA took effect.

The administration argues that rising exports have accounted for one out of eight net new jobs created since 1992.

© Copyright 1997 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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