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Experts say overall impact has been positive

NAFTA has cost jobs in state

Has passage of the North American Free Trade Agreement (NAFTA) hurt or helped industries in the states closest to Mexico more than the rest of the country? How

has Mississippi fared overall following the passage of NAFTA?

The garment industry and other labor-intensive manufacturing operations in Mississippi have lost a significant number of jobs to Mexico following the passage of

NAFTA. And Mississippi vegetable growers have been hurt by increased imports from Mexico. But many other industries in the state have benefitted from increased

trade following NAFTA.

“Mississippi has enjoyed increased exports to Mexico and Canada since the enactment of NAFTA, and we anticipate continued growth in both markets,” said Liz

Cleveland, deputy director of trade for the Mississippi Development Authority. “Building on this solid business growth, this year the U.S. will begin to work on

expansion of NAFTA to include other areas of Latin America through negotiation of the Free Trade Agreement of the Americas (FTAA).

“The shift in labor-intensive jobs to lesser developed economies was in fact a business decision based on the cost of doing business. NAFTA encouraged that shift in

labor costs to markets such as Mexico rather than locations outside the Americas such as Southeast Asia, thus keeping the opportunity for some production and

supply of raw materials in the U.S.”

Mississippi exports to Mexico and Canada have gone up every year since the passage of NAFTA. Cleveland said most experts believe the overall impact of NAFTA

in Mississippi has been positive. More than 800 businesses in Mississippi export goods to Mexico and/or Canada.

John Baas, director of industrial relations for the Mississippi Manufacturers Association, says that overall manufacturers in Mississippi have benefitted from NAFTA.

But the bleeding of jobs in the garment industry is expected to continue due to legislation recently passed by Congress.

“My background is in the apparel business, so I know a lot of those people have been hurt,” Baas said. “Congress has passed legislation which, in effect, for apparel

manufacturers extends NAFTA to the Caribbean Basin including Central America. It used to be you could cut a garment in the U.S., ship it to Haiti to be sown, bring

it back to U.S., package it, and it would say, ‘Made in the USA.’ The new bill, according to the American Garment Association, creates duty-free imports. So now

there will be no need to even cut it in the U.S. anymore. The cutting operations will be moving offshore. There will be another round of closings and downsizings

because of that.”

He said some people who have been employed in the garment industry for as long as 30 years will be losing their jobs. Ten thousand jobs were lost in the garment

industry in the U.S. in August alone.

A report on the impact of NAFTA in Mississippi prepared by The Trade Partnership, Washington D.C., provides evidence that the overall impact of NAFTA has

been favorable:

• Exports from Mississippi to Canada and Mexico continued to grow under NAFTA in 1998. Overall, state exports to NAFTA partners grew 33.6% during the year.

While state exports to Canada rose 6.5% to reach $520.8 million, exports to Mexico more than doubled, reaching $300.5 million.

• Mississippi exports to NAFTA partners have increased 77.5% since the trade agreement was implemented in 1994, representing a 40% growth to Canada and an

astounding 232.4% growth of state exports to Mexico.

• The swift growth in Mississippi’s exports to Mexico is broad-based, with 20 or 28 exports sectors expanding by more than 10% in 1998. State export growth to

Canada was also diverse with 14 of 25 sectors increasing by more than 5%.

• Another sector that has seen tremendous gains under NAFTA is Mississippi’s textile sector.

Exports of Mississippi’s textile products to Mexico have grown steadily since 1995 and expanded 76.3% in 1998 to reach $20.1 million. An American Textiles

Manufacturers Institute report noted that “recent production and shipment figures for most (textile) sectors equal or exceed pre- NAFTA levels, and the industry’s

health…is stronger than it was prior to NAFTA.” The report concludes that NAFTA production has kept a significant amount of apparel production in North America,

and this production is usually made with U.S. fabrics, to the benefit of U.S. textile producers.

• Several of Mississippi’s high-technology, high value-added manufacturing products also enjoyed large export gains to Mexico in 1998. For example, exports of

chemical products to Mexico grew by 103.8% during the year, while exports of industrial machinery and computer equipment shot up 538.8% to $62.6 million.

• Other important industries in Mississippi also saw exports to Canada expand significantly in 1998. State exports of transportation equipment grew 43.1% to $27.5

million. Exports of furniture and fixtures rose 21% to $54.7 million.

• Many companies in Mississippi have benefited from NAFTA’s liberalization of trade and investment. For example, Quartet Manufacturing (Booneville), a

manufacturer of office products, has purchased one of its competitors, the Mexican firm Ibico.

• In 1998, Mississippi’s production of goods for export to Mexico directly supported approximately 1,400 jobs, while state exports to Canada directly supported an

additional 2,500 jobs, for a total of over 3,900 jobs. The actual number of jobs benefiting from trade with NAFTA partners is much higher, once related jobs in

transportation, banking, finance and other sectors are included.

• Mississippi farmers continue to be leading beneficiaries of NAFTA. In 1998, state exports of agricultural products to Canada expanded dramatically, up 61.98% to

nearly $9 million. Exports of agricultural products to Mexico skyrocketed in 1998, up 318.1% to $85.7 million.

However, it is also important to look at trends in agricultural imports from Mexico and Canada. According to the U.S. Department of Agriculture’s (USDA)

Agriculture Outlook, September 1999, imports have also increased. Total agricultural exports to the two countries averaged $11.3 billion during 1994-1998,

compared to $7.4 billion from 1989-1993. Ag imports increased from $6.2 billion during 1989-1993 to $10.5 billion in 1994-1998.

The USDA report states that the impact of NAFTA on American agriculture varies by commodity and country. It concludes that the elimination of numerous trade

barriers between the U.S. and its closest neighbors “are enabling economic agents throughout North American to respond more efficiently to changing conditions and

to benefit more from their relative strengths. Ultimately, these developments should lead to a more integrated and prosperous North American economy.”

The trends for increasing trade of both agricultural and non-agricultural products between Mississippi and Mexico and Canada continued in 1999. Overall exports

grew by 13.1%, with exports to Mexico up 21.7% and exports to Canada up 8.1%. In 1999, Canada and Mexico were Mississippi’s first and second largest export

markets, respectively, accounting for 37.6% of Mississippi’s total exports.

Contact MBJ staff writer Becky Gillette at mullein@datasync.com or (228) 872-3457.

About Becky Gillette

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