NAFTA At 25: Landmark Free-Trade Deal Should Be Celebrated

By VERONIQUE DE RUGY and DONALD J. BOUDREAUX. Excerpt:

"First, there's no denying that the deal has successfully delivered a North American continent that is effectively duty-free. While some minor tariffs remain — Canadian taxes on dairy imports and U.S. duties on light trucks, for example — overwhelmingly, commerce flows freely throughout North America.

NAFTA also delivered a substantial increase in total trade and consolidated the position of Canada and Mexico as among the United States' largest trading partners. In 2016, U.S. companies exported $262 billion to Mexico and more than $320 billion to Canada alone.

Surging cross-border investments have produced a sophisticated and highly efficient North American supply chain. Many corporations base their headquarters in North America to take advantage of the pro-growth trade conditions.

As for the impact on the U.S. workforce, there's no evidence that NAFTA resulted in any net job losses, although there was — as always when trade patterns change — intense but very small competitive disruptions for certain U.S. industries.

Looking at manufacturing in particular, data show that while there are some concentrated job losses that can credibly be attributed to NAFTA, most job losses in manufacturing are due to innovation rather than to increased trade. Moreover, NAFTA didn't depress Americans wages across the board as the deal's critics warned it would.

So why all the fuss? The root cause of anxiety over freer trade is the mistaken belief that exports are good while imports are bad. Critics argued that NAFTA would increase American imports relative to American exports and, thus, cause permanent job losses.
 
But this framing of the issue is utterly misguided. Exports are a cost, not a benefit, while imports are a benefit, not a cost. The benefit of NAFTA to us Americans lies exclusively in the additional amounts of goods and services that it allows us to import.

NAFTA would have been an even better deal for us Americans if our northern and southern neighbors had sent more goods and services to us at no additional cost, not fewer.

What about that "giant sucking sound?" It never materialized. Today's unemployment rate of 3.7 percent is proof enough that Mr. Perot's doomsday prediction was off base. And because global investment funds continue flowing into the U.S., any "trade deficits" with Mexico mean that there was no exodus of capital from the U.S. to Mexico. Quite the contrary."