Manufacturing Trade Before & After NAFTA

Here is a new industry-by-industry analysis of US/Mexico Manufacturing trade before and after NAFTA.

With the Manufacturing sector in crisis as the US enters a new recession, you may find of interest my attached analysis of US/Mexico Manufacturing and other goods trade for the three years before Nafta compared with the most recent three years.

In the three years prior to Nafta, 1991-1993, the US Manufacturing sector enjoyed a combined surplus of $19.2 billion with Mexico. However, over the most recent three years, 2005-2007, US Manufacturing continued to suffer successive record deficits totaling -$188.3 billion for the three years. Note that the US Manufacturing deficit with Mexico now far exceeds even the US deficit with Mexico for Mineral Fuels. Indeed, in 2007 the US deficit with Mexico in Electrical Machinery alone was larger than the US deficit with Mexico in Mineral Fuels.

NAFTA failure

Comparing the period before and after Nafta went into effect in 1994, almost every US Manufacturing industry suffered worsening trade and production losses to Mexico while most of the much smaller gains by US producers are in bulk commodities including agribusiness.

After 14 years of experience, the economic judgment of Nafta’s cheerleaders has proven remarkably inept. Rather than the $160 billion in accumulated, job-creating, US Current Account surpluses with Mexico that Nafta’s most highly promoted economists forecast would occur by 2007, the US has suffered total Current Account deficits of about -$540 billion – a -$700 billion mistake in judgment.

NAFTA forecast

Before Nafta, evidence-challenged theorists insisted that Mexico’s lower wage rates and regulatory costs would be far more than offset by much higher aggregate productivity rates in the US. The mobile productive capabilities of modern trans-national firms had put the lie to these 18th Century theories long before Nafta. But the processes accelerated after Nafta to the point where the US now imports 50% more autos from Mexico than the entire number of autos exported from the US. Remarkably, with almost every US Manufacturing industry having been profoundly hollowed-out over the past 14 years, these same well-funded theorists continue to dominate the major media with the same discredited theories.

Mexico Auto Exports

PDF icon pre-post-Nafta-07.pdf30.43 KB



Why is it?

With such damning statistics and results does main stream media not point out these facts? At best we hear NAFTA is a controversy but the evidence is fairly damning to the point all of Ohio knows the truth.

Your charts and using statistics is a god send.