Under the North American Free Trade Agreement (NAFTA), Mexican and Canadian markets have become much more important to New York State producers and workers.

From 1993 — the year prior to NAFTA’s implementation — through 1999, New York State’s merchandise exports to NAFTA partners increased by 52%, rising from $7.8 billion to $11.8 billion. In comparison, New York State’s merchandise exports to the world increased by 6.4%, up from $40.7 billion to $43.3 billion. Of all New York exports during this period, 27.2% were delivered to NAFTA partners.

A much larger portion of Upstate New York exports are shipped to NAFTA partners than Downstate. The Buffalo-Niagara metro area is one region that has seized many opportunities presented by Mexico and Canada. From 1993 through 1998, Buffalo-Niagara metro area exports to NAFTA partners rose by 134.2%, significantly higher than its merchandise export growth rate of 95.8% to the world. Obviously the NAFTA partners have become extremely important to the area.

Of the other metro areas covered in this report, Rochester, New York City, and Long Island exports to NAFTA partners also increased significantly faster than their exports to the world.

The Buffalo-Niagara metro area also led the pack in terms of percentage of exports sold to NAFTA partners, as compared to exports sold to the rest of the world. A staggering 71.5% of the metro area’s total exports were shipped to Mexico and Canada — identifying markets of heavy dependence. Following were the Syracuse metro area, 38%, Rochester, 35%, Long Island, 21%, and the New York City metro area, 13%.

Gains Under NAFTA

Although it is easy to identify a job lost, it is difficult to identify a job gained as a result of trade with a specific country or region. Nevertheless, there’s no doubt that NAFTA has generated a net increase in jobs in the United States and in New York State.

According to NAFTA At Five Years, published by the Council of the Americas and The U.S. Council of the Mexico-U.S. Business Committee, “NAFTA has led to more high-quality, better-paying jobs for U.S. workers.” Between January 1994 and October 1998, the report states that the U.S. economy created 14.2 million jobs, “and many of these jobs can reasonably be attributed to NAFTA.”

From 1993 through 1999, U.S. merchandise exports to NAFTA partners increased by $111 billion. Based on the U.S. Trade Representative’s calculation of 10,917 jobs supported by $1 billion in merchandise exports (lower job quantity due to exclusion of service exports), this supported 1.21 million new U.S. jobs.

According to the NAFTA-Transitional Adjustment Assistance program (NAFTA-TAA), from 1994 through 1999, a total of 281,868 U.S. jobs were lost or scaled back in hours due to imports from NAFTA partners. That means NAFTA still resulted in a net gain of over 900,000 jobs in the United States through December 31, 1999.

Since NAFTA was implemented, New York’s exports to NAFTA partners increased by $4 billion. Based on the U.S. Trade Representative’s calculation, this generated almost 44,000 new jobs in New York as of December 31, 1999. According to NAFTA-TAA, between January 1, 1994, and December 31, 1999, the number of New York-based workers having lost their job or experienced a reduction in hours was 18,053. (Again, the NAFTA-TAA program does not document whether a job is lost or scaled back.) Subtracted from job gain estimates of 44,000, NAFTA still generated at least 26,000 new jobs in New York State.

But job gains are only one indicator of benefit. According to The U.S. Employment Impact of North American Integration After NAFTA: A Partial Equilibrium Approach, published by the North American Integration and Development Center at UCLA, “In general, job gain/loss accounting methodologies should not be used to evaluate the relative benefits of trade... What is much more significant as a measure of trade policy is the impact on economies of scale, technological change, new investments, and productivity growth in the liberated sectors and the ability of the economy as a whole to reap benefits from these productivity increases.”

Stated by NAFTA At Five Years, “NAFTA has fostered growth in cross-border investment that has improved the competitiveness of American companies and, consequently, their ability to keep high-skill, high-wage jobs in the United States. Hence, NAFTA’s positive impact on the quality of jobs has been significant, while its overall impact on the number of U.S. jobs has been positive as well.”

This section appeared in the report International Trade Benefits New York, published on behalf of goTRADE New York and the Business Roundtable, 2001.

John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the ManzellaReport.com, is a world-recognized speaker, author and nationally syndicated columnist on global business, trade policy, labor, and economic trends. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.

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