The Center for the Study of Western Hemispheric Trade has a developed
"TRACKING US TRADE" and the CSWHT TRADE INDEX for all those engaged in
tracking trade with the Western Hemisphere.
The CSWHT Trade Index is a part of our free trade news service, "Tracking
US Trade", and is available on the World Wide Web at URL:
<< http://lanic.utexas.edu/cswht/tradeindex.html >>
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TRACKING US TRADE: A TRADE NEWS SERVICE FOR THE AMERICAS
Released Wednesday, November 20, 1996
Western Hemispheric Trade Issues for September 1996:
Total U.S. merchandise trade with NAFTA partners (exports plus imports)
topped $36.2 billion in September, a 2.4 percent increase over August's
figures. At the same time, U.S. trade with countries outside of the
Western Hemisphere fell 3.1 percent (to $72.3 billion) due to a $1.5
billion drop in exports.
The September boom in NAFTA trade was largely attributable to a $705
million (6.5 percent) surge in U.S. exports to Canada, led by motor
vehicles and electrical machinery.
U.S. trade in goods with Mexico was down $177 million (1.58 percent) as
U.S. exports fell from $4.8 billion in August to 4.7 billion in September
while U.S. imports remained steady at $6.3 billion. The biggest slowdowns
in monthly exports were felt in seeds, motor vehicles, cereals, and iron,
steel and metal manufactures.
Total trade with Mexico in the first three quarters of 1996 are up an
impressive 18.5 percent over the same period last year. While the United
States still maintains a trade deficit with Mexico, U.S. exports have been
growing at a faster rate (19.4 percent) than imports (17.9 percent).
Total U.S. trade with Central and South America remained flat in September
at $8.7 billion (a negligible 0.33 percent increase over August) as
declines in exports were nearly matched by increases in imports.
Central and South America have enjoyed a 13.9 percent increase in exports
to the United States in the first three quarters of 1996 ($35.9 billion)
over the same period last year ($31.5 billion). U.S. exports to the
non-NAFTA Western Hemisphere through September, on the other hand, are
running at $38.1 billion, a 3.0 percent increase over the first three
quarters of 1995.
U.S. exports to the largest economies of South America were down or steady
in September. Shipments to Brazil fell $34.9 million to $1.2 billion while
exports to Chile slid $9.9 million to $314.5 million. Exports to Argentina
remained steady at $394 million. The U.S. trade surplus with South and
Central America contracted by $177 million compared to August, and stands
at $130 million.
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SPECIAL FEATURE ON NAFTA:
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" NAFTA at Three: How's it Doing? "
President Clinton is legally obligated to submit a progress report to the
Congress on NAFTA by June 1997. The law dictates a number of measures by
which NAFTA will be assessed. These measures reflect the acrimonious debate
surrounding NAFTA's passage rather than indicators that an economist would
deem appropriate. What are key criteria by which NAFTA should and should
not be judged?
The negatives first, the "should nots". The most contentious issue during
the congressional and public discussion of NAFTA before it was approved at
the end of 1993 was that it would result in the loss of hundreds of
thousands, even millions, of U.S. jobs. The projected job losses would
come from industry flight to take advantage of low wages in Mexico combined
with the increased imports that would ensue.
This contention was flawed from the outset. U.S. job-creation is a
function of domestic economic policy. During the three years of NAFTA, the
United States has created about seven million jobs. In the first six
months of this year, more than 1.2 million workers were added to payrolls.
Over the entire period of NAFTA, about 80,000 workers were certified has
having lost jobs due to increased imports from both Mexico and Canada,
about as many jobs as are created in ten working days in the U.S. economy.
(There is no comparable system of certification for jobs created by NAFTA.)
Clearly, the cries of massive layoffs due to NAFTA were exaggerated.
The second most repeated anti-NAFTA argument was that the agreement would
lead to a U.S. trade deficit with Mexico. It did in 1995, when Mexico
suffered its worst year since the Great Depression. But economists point
out that a trade balance with any single country does not matter much in a
global trading system. The U.S. had a merchandise trade surplus with
Mexico in 1994, the first year of NAFTA, and this was no more relevant than
the trade deficit in 1995 and 1996. The bilateral balance is variable and
depends primarily on economic conditions in the two countries, conditions
which change. Exports to Mexico can be expected to rise whenever Mexico's
economy grows, as it did in 1996.
The argument that $1 billion of exports creates 20,000 jobs (or other
numbers used by the U.S. Department of Commerce) is just as phony as the
contention that an equivalent amount of imports costs that many jobs. Do
energy imports cost jobs, or do they permit other jobs to be created? If
the increased exports result from a shift from domestic sales to exports,
no additional jobs need be created. If high exports stem from increased
productivity, no new jobs need be added. Imports can create jobs, and more
efficient exports can cost jobs.
What criteria should be used to evaluate NAFTA? One key measure should be
the increase in total trade as a result of the agreement. Two-way trade
between Mexico and the United States (using U.S. trade data) has risen from
$81.5 billion in 1993 to $107 billion in 1995, and is running at about $130
billion this year. Totals for U.S.-Canada trade also have grown and come
close to $1 billion a day. All of this increase is not due to NAFTA alone,
but NAFTA contributed. One piece of evidence is that the decline in
Mexico's imports from the U.S. in 1995 was far lower proportionately than
the decline in Mexico's imports from other countries.
The efficiency benefits of economic integration come from specialization
within industries, co-production and economies of scale. Intra-industry
trade is increasing under NAFTA. Most of the leading products traded are
in the same broad sectors, dominated by automotive, electronics and
machinery. Much of the trade between the United States and the other two
NAFTA countries are in goods used as inputs for further production. One
final criterion is whether economic relations between the member countries
is becoming institutionalized. This is now taking place between Mexico and
the United States, as has long been true between Canada and the United
States.
Contact: Dr. Sidney Weintraub, Center for Strategic and International
Studies. Tel: (202) 775-3292, e-mail: sxw@csis.org Forthcoming
monograph, _NAFTA at Three: How's it Doing_ (expected February 1997).
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TRACKING US TRADE is distributed monthly by fax or e-mail.
To request your free monthly copy, call (512) 475-8679 or send e-mail to:
< trade@uts.cc.utexas.edu > including the following information: 1) name,
2) organization, 3) telephone, 4) fax and 5) e-mail address
The next issue of "Tracking US Trade" will be released on DECEMBER 19, 1996.
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FOR MORE INFORMATION CONTACT:
Julie Nordskog, Research Associate
Center for the Study of Western Hemispheric Trade
3925 W. Braker Lane / MCC Bldg., Ste. 1.900
Austin, TX 78758
Tel. (512) 475-8679 / Fax (512) 475-7966
e-mail: jnordskog@mail.utexas.edu
URL: http://lanic.utexas.edu/cswht/tradeindex.html
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Julie Nordskog-Mier, Research Associate
Center for the Study of Western Hemispheric Trade
MCC Building, Suite 1.900
3925 West Braker Lane Telephone: 512-475-8679
Austin TX 78759 Fax:512-475-7966
E-mail: jnordskog@mail.utexas.edu
URL: http://www.lanic.utexas.edu/cswht/tradeindex.html
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