Analysis Shows Nafta Has ‘Near-Zero’ Effect On U.S. Jobs Worst Fears, Highest Hopes From Trade Agreement Dashed

Haven’t heard that giant sucking sound? Maybe that’s because there hasn’t been one.

The North American Free Trade Agreement has not taken a substantial number of jobs from Americans, but neither has it generated the new employment its fans had promised, according to a U.S. government-funded study - the most comprehensive analysis yet of the 1994 accord.

NAFTA’s impact on U.S. jobs has been “near-zero” or slightly positive, researchers at the University of California at Los Angeles have found in a study to be released Thursday.

“The impact of NAFTA and of cutting tariffs is negligible. The main factor in creating U.S. export jobs is sustaining economic growth in Mexico - and we haven’t solved that problem yet,” said Raul Hinojosa, research director at UCLA’s North American Integration and Development Center.

NAFTA, which loosened restrictions on trade among Mexico, Canada and the United States, has created about 49,000 jobs through exports to Mexico. But at the same time, imports from Mexico have taken away more than 38,000 jobs, researchers found.

On balance, NAFTA has generated only 11,000 U.S. jobs since it became law Jan. 1, 1994 - an insignificant fraction of the country’s 125 million jobs.

When NAFTA was approved, the government created a program to retrain and give special unemployment benefits to people who lost jobs. However, the study found, less than 50 percent of people thrown out of work have been eligible for that program.

That’s because the government requires workers to prove they lost their jobs to increased trade with Mexico and Canada, a difficult task for former employees of small firms who lack the support of labor unions.

“There are problems identifying the impacted workers and we are concerned that they be identified and that their problems be addressed,” said Hinojosa.

Another government program was established to help communities where many people lost jobs. It, too, has qualification requirements that make it difficult for communities to prove they are eligible, the researchers found.

Union leaders agreed that the government has underestimated the number of workers who lost jobs because of trade. But they say the reason NAFTA has had little impact since 1994 is because it caused changes long before the treaty was signed into law.

U.S. automakers, for example, moved much of their assembly work to Mexico in the 1980s.

Mark Anderson, director of trade affairs for the AFL-CIO labor federation, agreed with the UCLA researchers that the United States will create jobs by selling more products to NAFTA trade partners. To do that, he said, U.S. and multinational companies must pay Mexican workers more instead of sending more jobs to Mexico.

“The corporations are still paying Mexicans $1 an hour,” he said. “If they wanted them to buy more, they’d pay them more.”

During the NAFTA debate, some economists predicted that each $1 billion in trade would generate 15,000 jobs. The UCLA study says that has not happened.

Economists were wary of commenting on the study before it is released, but one NAFTA opponent said it was implausible that the United States had not lost jobs from increased trade.

“It’s hard to make the argument that we’ve created jobs through NAFTA when our collective trade deficit with Mexico and Canada has quadrupled since 1993,” said Thea Lee, an economist from the Economic Policy Institute in Washington.

One limitation of the study is that it does not analyze in detail the effects of trade with Canada - whose trade with the United States is double that of Mexico’s.

A November survey of the North American auto industry by The Associated Press showed that Canada, not Mexico, has gained jobs from vehicle exports to the United States, even surpassing Japan as the leading exporter.

Mexico, on the other hand, saw its auto manufacturing jobs shrink since it opened its markets to free trade.