On January 1, 1994, the North American Free Trade Agreement (NAFTA) officially came into effect, virtually eliminating all tariffs and trade restrictions between the United States, Canada, and Mexico.
Bill Clinton, who lobbied extensively to get the deal done, said it would encourage other nations to work towards a broader world-trade pact. ‘NAFTA means jobs. American jobs, and good-paying American jobs,’ said Clinton, as he signed the document, ‘If I didn’t believe that, I wouldn’t support this agreement.’
Ross Perot had a contrary perspective. Lobbying heavily against the agreement, he noted that if it was ratified, Americans would hear a giant ‘sucking sound’ as jobs went south of the border to Mexico.
It’s a Complicated World
Fast forward 20 years, and NAFTA is a hot-button issue again. Donald Trump has said he is working on ‘renegotiating’ the agreement, and many Americans are sympathetic to this course of action.
However, coming to a decisive viewpoint on NAFTA’s success or failure can be difficult to achieve. Over two decades, the economic and political landscape has changed. China has risen and created a surplus of cheap labor, technology has changed massively, and central banks have kept the spigots on with QE and ultra-low interest rates. Deciphering what results have been the direct cause of NAFTA – and what is simply the result of a fast-changing world – is not quite straightforward.
This post was published at The Burning Platform on March 25, 2017.