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Facts and fears about NAFTA.

From the Yukon to the Yucatan, nearly everyone who feels in any way, shape or form affected by NAFTA has an opinion on the opportunities or threats that the pact poses. And, if you've paid any attention at all to these opinions, it's obvious that both sides of the table can present some pretty eloquent cases why the agreement should or shouldn't be enacted.

According to the Wall Street Journal, NAFTA, signed last summer by the presidents of the U.S. and Mexico and the prime minister of Canada, is supposed to lower tariffs on 8000 different items, open up Mexico's closed financial system and ease restrictions on auto production.

While this remains to be seen, it is certain that, if enacted into law, NAFTA will create the largest single market and free trading bloc in the world. Combined, Canada, Mexico and the U.S. boast a population of more than 360 million people, a workforce of 163 million and a combined economic output estimated to be about $6 trillion.

Trade between the U.S. and Canada, and the U.S. and Mexico in 1989 totaled $215 billion. Trade between the U.S. and its three other largest trading partners--Japan, Germany and Britain--in that same year amounted to about $224 billion. Canada and the U.S. are easily the largest trading partners in the world accounting for $171 billion in 1989. The U.S. and Japan is second at nearly $137 billion.

What NAFTA would accomplish isn't entirely clear. Proponents of the agreement say that it would be a positive step for all three countries creating more jobs, helping raise Mexico's standard of living, thus creating new and larger markets for U.S. and Canadian businesses, while paving the way for enlarging the trade bloc into Central and South America.

Opponents of NAFTA, on the other hand, insist that jobs in the U.S. and Canada will be lost as businesses in these countries rush to take advantage of the low Mexican labor rates. Reportedly, the U.S. manufacturing wage with benefits amounts to about $14.50 per hour, compared with Mexico's $2.50. The environmental issue with Mexico has two sides, they say. First, opponents to the treaty don't believe that the country is moving quickly enough to resolve their environmental problems and with increased manufacturing, the problems will only get worse and ultimately spill over into the U.S. Second, if Mexican manufacturing isn't required to invest in pollution control and clean up, their economic advantage over U.S. and Canadian manufacturers will increase dramatically.

Speaking to the Casting Industry Suppliers Association meeting held last summer, Manuel Suarez-Mier, minister of Economic Affairs for Mexico, addressed, what he called, these and other fallacies about doing business with Mexico.

According to Mier, on a per capita basis Mexicans buy an average of $420 of U.S. products annually. This, he says, compares with $390 that the average Japanese buys from the U.S. and the $290 that Europeans purchase and, he adds, "Remember, Mexico is ten times poorer than Japan and Europe." It is estimated that currently 70% of all products imported by Mexico come from the U.S.

The second fallacy, he says, is the fear about lost jobs. "Everyone talks about losing jobs and they choose to ignore the new jobs that will be created by the increased export of products into Mexico. As many as 400,000 new jobs will be created in the U.S. alone by NAFTA."

On the environmental issues, Mier says, "There is a strong and growing political demand to get rid of pollution in Mexico. We understand the seriousness of this issue, both internally and outside of the country. It is not unusual for us to shut down individual and groups of plants when pollution limits are exceeded."

While both the U.S. and Canadian governments are solidly behind NAFTA, the opinions of businessmen in the two countries are sharply divided.

Donald Kennedy, executive director of the Canadian Foundry Association, who also spoke at the CISA meeting last July, pointed to the results of a survey conducted by the Canadian Manufacturers Association in 1990 and again in 1992. In the 1990 survey, 46% of the Canadian manufacturers surveyed felt that NAFTA was an opportunity, 29% believed it was a threat and 25% expressed no opinion. The same survey conducted this year showed support for NAFTA eroding as only 36% viewed the pact as an opportunity and 44% saying that it posed a threat to their businesses.

U.S. manufacturers, on the other hand, overwhelmingly favor the accord. In a poll of 455 senior manufacturing executives conducted by the Roper Organization and published in the September 24 issue of the Wall Street Journal, 34% of the executives strongly favored NAFTA, 47% mostly favored it, 8% mostly opposed the deal, 4% strongly oppose it, while 4% said they need to know more and 3% didn't know.

If anything's clear, it's that there's very little clear about the potential ramifications of the North American Free Trade Agreement. And while most people are speculating on what will happen if NAFTA is ratified by all three countries, here's something else to think about: What if it isn't?
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Title Annotation:North American Free Trade Agreement
Author:Kanicki, David P.
Publication:Modern Casting
Article Type:Editorial
Date:Oct 1, 1992
Words:870
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