President Bill Clinton – major advocate for NAFTA

November 17, 1993 marks the 32nd anniversary of the passing of the North American Free Trade Agreement. Since that time it’s been widely supported, widely criticized, revised, politicized and ultimately scrapped in favor of United States-Mexico-Canada Agreement (USMCA) which resulted in a trade war between the U.S., Mexico and Canada.

But in 1993 it was generally viewed favorably with regards to jobs and increased trade between the three countries. Economists generally agreed that the United States economy benefited overall from NAFTA as it increased trade. In a 2012 survey of the Initiative on Global Markets‘ Economic Experts Panel, 95% of the participants said that, on average, U.S. citizens benefited from NAFTA while none said that NAFTA hurt US citizens, on average. A 2001 Journal of Economic Perspectives review found that NAFTA was a net benefit to the United States. A 2015 study found that US welfare increased by 0.08% as a result of NAFTA tariff reductions, and that US intra-bloc trade increased by 41%.

One of concerns raised by the implementation of NAFTA in Mexico was wealth inequality. National Bureau of Economic Research found that NAFTA increased the wage gap between the lowest and highest earners, directly affecting wealth inequality. According to Global Trade Watch, under NAFTA Mexico observed a decline in real average annual wages, with this decline mainly affecting those who earned the least – the real average wage of minimum wage workers decreased by 14 percent. GTW concluded that “inflation-adjusted wages for virtually every category of Mexican worker decreased over NAFTA’s first six years, even as hundreds of thousands of manufacturing jobs were being shifted from the United States to Mexico”.

Production of corn in Mexico increased since NAFTA. However, internal demand for corn had increased beyond Mexico’s supply to the point where imports became necessary, far beyond the quotas Mexico originally negotiated. Zahniser & Coyle pointed out that corn prices in Mexico, adjusted for international prices, have drastically decreased, but through a program of subsidies expanded by former president Vicente Fox, production remained stable since 2000. Reducing agricultural subsidies, especially corn subsidies, was suggested as a way to reduce harm to Mexican farmers.

NAFTA had also been credited with the rise of the Mexican middle class. A Tufts University study found that NAFTA lowered the average cost of basic necessities in Mexico by up to 50%. This price reduction increased cash-on-hand for many Mexican families, allowing Mexico to graduate more engineers than Germany each year.

Growth in new sales orders indicated an increase in demand for manufactured products, which resulted in expansion of production and a higher employment rate to satisfy the increment in the demand. The growth in the maquiladora industry and in the manufacturing industry was of 4.7% in August 2016. Three quarters of the imports and exports are with the U.S.

Tufts University political scientist Daniel W. Drezner argued that NAFTA made it easier for Mexico to transform to a real democracy and become a country that views itself as North American. This has boosted cooperation between the United States and Mexico.

This broadcast features the final vote as well as a message from President Clinton and commentary by way of Warren Olney who hosted the program “Which Way, L.A.?” over KCRW in Los Angeles as well as special coverage from National Public Radio.

Food for a lot of thought in 1993.

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