By Bill May
Journal Record Staff Reporter
A North American Free Trade Agreement, creating a free market
among Canada, the United States and Mexico, would have little
impact on Oklahoma's economy, a pair of economists said Monday.
In some areas, such an agreement would have a positive impact
while in other areas the impact would be negative, resulting in
an economic situation about the same as the one which exists
Those are the conclusions of Gerald M. Lage and Andreas
Savvides, economics professors at Oklahoma State University.
Their conclusions are contained in a report "The Economic Impact
of the North American Free Trade Agreement on the Oklahoma
Economy" released Monday.
It was prepared at the behest of Larry Bowles of the
Halliburton Inc. office in Washington, D.C., Lage said Monday
during a telephone interview from his Stillwater office.
"This is not something you can look at and come up with a
simple answer," he said. "It was prepared for people who are
willing to think in terms of a major impact on the Mexican market
which will grow over a period of time, and Oklahoma will share in
"Of course, since Oklahoma now exports about one-half the
national average to Mexico, our conclusions are that Oklahoma's
share would still be about one-half the national average."
This estimate is based upon exports to Mexico, because there
are no figures with which to track imports from Mexico, he said.
Biggest impact on Oklahoma's economy, Lage said, is that as
Mexico's economy begins to grow and residents there begin to
import more products from the United States, Oklahoma will
prosper and create jobs along with the rest of the nation. But no
longer will illegal aliens flock to the United States from Mexico
in search of job opportunities.
Other than this, Oklahoma's biggest opportunities lie in
exporting manufactured goods, wheat and cattle to Mexico.
"Mexican imports of wheat are expected to rise considerably by
the time of full implementation of the agreement in 15 years,"
the report read. "Also, U.S. exports of wheat are expected to
rise further and faster immediately following implementation
because of rising demands to feed expanding Mexican livestock
herds, as corn imports remain tightly constrained by high
transitional, above-quota tariffs."
Oklahoma's share of this increased trade is expected to total
about $4.1 million annually, with 38 percent of that going to the
Mexico should prove to be a valuable market for United States
beef with implementation of this agreement, the professors
"No estimates are available to attribute cattle and beef sales
to individual states, but the Oklahoma share of all livestock and
meat products was 0.6 percent of U.S. exports," the report read.
"The value attributed to Oklahoma has ranged from $12 million to
$18 million over the last three years."
One area in which Oklahoma's expertise would be expected to
show up is in the oil and gas industry, but under the proposed
agreement, this won't happen.
Exploration, production, refining and distribution all are
expected to remain under Pemex, a government-owned monopoly, even
under the new trade agreement. But there will be a huge equipment
investment which will be open to United States and Canadian
companies. Analysts predict that the Mexican company will spend
$4 billion per year for the next five years to meet production
targets. The proposed agreement provides that 50 percent of these
expenditures be open to foreign companies. …