If You Like Guacamole, You Have a Stake in NAFTA

by Matthew Rooney

 

NAFTA is perhaps the most important issue that President Trump has put on the table, if for no other reason than the fact that it touches the daily lives of every single American – or at least every American who drives a car, carries an iPhone, wears shoes and clothing, or wants fresh guacamole for the Super Bowl.  Aware that many Americans may not realize how important NAFTA really is, the Bush Institute recently worked with the Bipartisan Policy Center, the World Affairs Council of Dallas/Fort Worth and SMU’s U.S.-Mexico Center and John G. Tower Center to organize a panel discussion on the topic.  Over 150 people from the DFW area and beyond came together to talk with U.S. Congressman Will Hurd, Mission Foods CEO Javier Velez and North American Strategy for Competitiveness President Tiffany Melvin.

The panelists generally agreed that NAFTA has on balance been positive for the U.S.  Some jobs have been lost – some estimates suggest about 200,000 jobs in the U.S. have been transferred to Mexico since 1994 – and these losses have concentrated in lower-skilled manufacturing where companies that compete on the global market face intense pressure to reduce labor costs.  That is comparable to net job creation in a good month in the U.S., however, and in fact, many millions more jobs have been created in the U.S. since 1994 as U.S. exports to the rest of the world have more than doubled, from $769 billion to $1.7 trillion, and U.S. gross domestic product almost doubled, from $9 trillion to $17 trillion.  As Congressman Hurd noted, Texas has been a major beneficiary of these developments, building an automotive and aerospace manufacturing giant on our traditional energy and agricultural base – and adding a globally competitive logistics and service sector to become the largest exporting state in the U.S.  As a result, the panelists agreed, it is incumbent on Texas leaders to ensure that the Administration, the Congress and the broader American public understand these developments and that any renegotiation of NAFTA preserves and strengthens these gains.

The discussion with the audience raised many of the questions and concerns that we see reflected in the broader discussion of NAFTA.  The loss of less-skilled manufacturing jobs hits many people hard and has left them feeling victimized and abandoned. The quickening automation of manufacturing, which has displaced more workers than competition with foreign goods, is disquieting as well, and it is cold comfort to those whose jobs are lost that the U.S. remains the largest manufacturer and the second largest exporter of manufactured goods in the world.  The panel agreed that these are serious concerns that demand a better response than we have generally offered over the past 20 years – but that these dislocations have numerous drivers and that tinkering with a trade agreement is unlikely to resolve them.

The discussion is part of the Bush Institute’s longstanding focus on North America and the many benefits for the U.S. of close trade and investment relations with our Mexican and Canadian neighbors.  Consult our databases on competitiveness and economic integration and our recommendations for promoting the global competitiveness of the U.S. on our website and let us know what you think.

Matthew Rooney is the Director of Economic Growth at George W. Bush Institute.

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