Mexico’s admission to the free trade zone with the United States and Canada 3-1/2 years ago helped U.S. companies grab huge shares of Mexico’s market from foreign competitors, the Clinton administration said Friday.
The gains range from textiles to transportation equipment to electronic appliances, it said in its initial assessment of the controversial North American Free Trade Agreement.
But the assertion was labeled irrelevant by critics who contended U.S. employers are moving factories to Mexico and, even when they’re staying put, are using the threat of moving to hold down wages.
“While stockholders and corporate executives are making record profits, the real wages of working people in America are at a standstill,” said Teamsters President Ron Carey.
The report, released at a news conference by top members of Clinton’s economic team, said the pact has had a modestly positive impact on American jobs and incomes, even though U.S. trade deficits with Mexico and Canada have grown fourfold since it took effect on Jan. 1, 1994.
The administration said exports to Mexico supported the creation of 122,000 new jobs in the United States. That’s a modest amount in an economy that routinely creates twice that many jobs each month, but it’s a far cry from the “giant sucking sound” of jobs being pulled from the United States predicted by Ross Perot.
“NAFTA has already proved its worth to the United States,” President Clinton said in a letter transmitting the document to Congress. “NAFTA is an integral part of a broader growth strategy that has produced the strongest U.S. economy in a generation.”
The administration said Mexican tariffs on U.S. goods have fallen from 10 percent in 1993 to 2.9 percent. As a result, U.S.
suppliers have seen their share of Mexico’s import market grow from 69.3 to 75.5 percent.
The U.S. share of Mexican textile imports jumped 17.2 percentage points to 86.4 percent, it said. The share of transport equipment sector rose 19.2 percentage points to 83.1 percent and the share of electronic goods and appliances have risen 5.7 per cent.
But NAFTA opponents, including such traditional Democratic constituencies as organized labor and environmentalists, were not impressed.
“You won’t read about the working men and women who have been laid off or forced to take a pay cut since NAFTA,” said House Minority Whip David Bonior, D-Mich. “You won’t read about those corporations … now using it as a bargaining chip to drive down the paychecks and benefits of working families.”
America’s trade balance with Mexico has gone from a surplus of $1.7 billion in 1993, the year before NAFTA went into effect, to a record deficit of $16.2 billion last year. The imbalance with Canada doubled in the same period, to more than $22 billion.
The report blamed the big deficits on unrelated factors such as the 1994 peso crisis that triggered a severe recession in Mexico and argued that without NAFTA the deficit would have been worse.
Treasury Secretary Robert Rubin said NAFTA pushed Mexican officials to reform their economy after the peso crisis because it foreclosed the possibility of throwing up trade barriers.
As a result, Mexico was able to borrow on international financial markets just seven months after the peso emergency.
It took seven years to regain its standing after a debt crisis in 1982.
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