The Surprising True Story of NAFTA

June 4, 2015 — Blog   

The United States has a large trade SURPLUS with NAFTA, excluding oil/energy trade

  • NAFTA is generating large and consistent U.S. trade surpluses:  Excluding crude oil and other energy products trade, the United States had an overall trade surplus with Canada and Mexico of $41.4 billion in 2014.
  • Our NAFTA trade surplus extends across all three major sectors of the U.S. economy:
    • Manufacturing: U.S. trade surplus of $21.5 billion in 2014. U.S. manufacturing output rose faster in the 15 years after NAFTA entered into force than in the 15 years before.
    • Services:  U.S. trade surplus of $41.8 billion in 2014.
    • Agriculture, food & beverages:  U.S. trade surplus of $1.8 billion in 2014.
  • Speeding U.S. export growth:  U.S. goods and services exports to NAFTA grew from $170 billion in 1993 (the year before NAFTA entered into force) to over $550 billion in 2014.  Our goods trade with NAFTA nearly tripled since NAFTA went into effect, growing faster than U.S. trade with the rest of the world.
  • Building our two largest export markets:  Canada and Mexico are our largest and second largest export markets.  Combined, they account for more than 25% of all U.S. exports.

Large U.S. oil imports from Canada and Mexico contribute to U.S. geopolitical security

  • Imports of crude oil, petroleum, and other energy products are why the United States has an overall trade deficit with NAFTA: In 2014, over one-third of U.S. crude oil imports were from Canada ($83 billion), and over 10 percent were from Mexico ($27 billion). It is oil & energy trade that generates an overall U.S. trade deficit within NAFTA, not other manufacturing, services, or ag.
  • U.S. geopolitical security would suffer without these oil imports:  Without access to energy imports from Canada and Mexico, the United States would be forced to rely more on imports from less dependable sources.  In addition to Canada and Mexico, the other top sources of U.S. crude oil imports are Saudi Arabia, Venezuela, Iraq, Kuwait, and Colombia. As the EU is realizing right now, geopolitical security requires having friendly sources of energy.

NAFTA generates millions of well-paying U.S. jobs and benefits U.S. small business

  • Millions of U.S. jobs depend on NAFTA:  A U.S. Chamber of Commerce study found that 14 million U.S. jobs depend on trade with NAFTA markets and that 5 million result from NAFTA trade increases.
  • NAFTA brings jobs from inward foreign investment to the United States:  Mexico’s investment into the United States, for example, has grown 83 percent faster than non-NAFTA countries’ investment here.
  • U.S. small business depends on NAFTA for sales:  Over 140,000 U.S. SMEs export to NAFTA markets.

U.S. jobs data actually improved after NAFTA was passed

  • NAFTA did not result in a significant increase in unemployment compared to the same period before NAFTA:  From 1982 to 1993, U.S. unemployment averaged 7.1 percent.  For the same period after NAFTA entered into force in 1994, average unemployment fell to 5.1 percent.  U.S. private sector jobs increased by 24 million – a 21 percent increase – since NAFTA entered into force.
SUBCOMMITTEE: Trade