Newspaper article The Christian Science Monitor

NAFTA's Shop-Floor Impact ; Ten Years Later, the Trade Deal Costs Some US Jobs but Buoys Trade and Efficiency

Newspaper article The Christian Science Monitor

NAFTA's Shop-Floor Impact ; Ten Years Later, the Trade Deal Costs Some US Jobs but Buoys Trade and Efficiency

Article excerpt

Inside the spotless Caterpillar plant, men and women quickly take apart used fuel injectors, identify those that can be recycled, and then retrofit them with new parts.

The goal, says plant manager Walt Mazzei, is to do it so well that no one can tell the difference between new and remanufactured - except in price. Listen for a few minutes, and it's impossible to miss Mr. Mazzei's pride in this factory - one of several thousand maquiladoras along the border, which rely on Mexican labor and foreign ownership.

He has reason. Profits at the lean manufacturing plant are growing 20 percent a year. Mazzei credits the plant's workers, who he says can go "toe to toe with any in the US." He pays them about $5 an hour, a quarter of the typical pay in the United States.

Now, on the eve of the 10th anniversary of the North American Free Trade Agreement, many experts say the treaty has cost US jobs, just as critics feared it would. But competition in manufacturing now comes increasingly from 50-cent-an-hour Chinese workers. For this and other reasons, the reality of the deal between the US, Mexico, and Canada is more nuanced than foes or boosters allow.

Yes, US jobs have been lost. But the "giant sucking sound" famously predicted by presidential candidate Ross Perot in 1992 has arguably been more of a whimper. Nor has it created enough jobs in Mexico to stem illegal immigration, as others predicted.

What it has accomplished, without dispute, is increase trade. Commerce between the US and Mexico has nearly tripled in a decade, growing twice as fast as US trade with the rest of the world.

"This increased trade has brought cheaper products and allowed US manufacturers to remain competitive in the world market," says Jorge Gonzalez, chairman of the economics department at Trinity University in San Antonio. "And that is exactly what it was supposed to do. Trade is not an engine for jobs, it's an engine for efficiency."

Most economists do not deny that NAFTA has displaced American workers and devastated entire towns - even as the US economy has added about 2 million jobs a year since 1990. It's evident from the job-training centers in southern Texas to the "NAFTA ghost towns" of North Carolina, with their shuttered textile plants.

The US Department of Labor calculates that about 500,000 jobs - mostly in manufacturing - have been lost to Canada or Mexico since NAFTA was enacted Jan. 1, 1994. Some claim that number is even higher. Robert Scott at the Economic Policy Institute in Washington, for example calculates it at 766,000.

But others say the benefits of NAFTA are unseen. Regardless of how one felt about it during the raucous debates a decade ago, NAFTA's primary benefit for Americans was clear: cheap labor. And today 3,182 plants dot Mexico's countryside.

And as prices for certain goods drop as a result, Americans have more money to spend on other things, thus stimulating the economy. …

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