Transcription
Everyone hates NAFTA. I would like to renegotiate it. NAFTA, the worst trade deal. It wasn't always that way. The North American Free Trade Agreement was supposed to expand our exports, create new jobs, and most people were really excited about it. So what actually happened? What did NAFTA do that was good, and what did it do that was bad? To understand that, you have to understand America's relationship with avocados and shoes.
One part of NAFTA we don't often think about is this: NAFTA changed how Americans eat. One of the most successful Mexican imports to the U.S. is avocados. Avocado consumption in the United States has exploded, you going from one pound per person to seven over the course of 20 years. That's according to avocado expert David Yanowski. U.S. production has been flat, but Mexican production has been through the roof. Before NAFTA, Americans didn't eat a lot of avocados; they only had access to them from California and Florida, and only seasonally. Most of the avocados in the world are grown in Mexico, and for 80 years, Mexican avocados were banned from the U.S. Americans didn't even know they liked them. But NAFTA made them available year-round, and it turns out Americans love avocados. It has become a much more broadly popular food, and that has actually created more avocado demand, which has meant good business for U.S. growers too. When it came to avocados, NAFTA was a win-win. It created this whole new staple of the American diet, and it built up this huge part of the Mexican economy. And avocados are just one example of this. Americans now drink a lot of Mexican beer and eat Mexican mangoes, papayas, and fresh bell peppers and cucumbers from Canada.
Certain places around the world are better at making certain things, and to create efficiency in the global economy, one nation devotes its resources to the things that it's good at and exchanges those things for the things that another nation is good at, or is better at. So the United States is really good at growing corn, and we ship a lot of corn to Mexico. In turn, the United States buys a lot of avocados in the other direction, and often that arrangement works out really well. But what if there's something that two countries are equally good at making, and the only difference is that one country has cheaper labor? Historically, trade deals had been between high-income countries. Dan Cough is our economics reporter. The amount of low-skill and high-skill labor in those countries are relatively similar, um, and so it's not going to have necessarily a dramatic effect on the composition of labor. But around the time when NAFTA was signed, that balance between the U.S. and Mexico was off. Mexican labor is cheaper, but before NAFTA, that really didn't matter. By the time a Mexican product made it across the border, it'd be slapped with a tax. So Mexican manufacturers were never really a threat, and certain industries in the U.S. were heavily protected by taxes. Like, for example, shoe manufacturers at that time had something like 15 to 177% tariffs on their product. So, you know, that made it, you know, 177% more expensive to get the product from Mexico. As a result of NAFTA, those tariffs went down all the way to zero over 10 years, and that meant that it was much less appealing to do manufacturing of that good in the United States, and those jobs basically disappeared. And that's the story we're familiar with by now: cheaper Mexican labor means the jobs go to Mexico.
But changes like that affected more than just the manufacturing jobs. It was not only the people who worked in the factories that lost their jobs, but even the people surrounding them. So if you worked in a coffee shop, or if you worked in a department store in a town that relied on that shoe manufacturer, you would also lose your job. That's how an entire shoe manufacturing town can be devastated by NAFTA, but 100 miles away from that town, you might have no idea. And that is emblematic of how Americans experience NAFTA's pros and cons. The pros were spread around: a little bit of benefit to a lot of people, whether you're in Texas or you're in Washington state or Massachusetts. You can now get shoes cheaper as a result of the products that were made in Mexico; you might be able to get avocados year-round. And most Americans probably didn't even notice those changes. Who really thinks about NAFTA every time they pick up an avocado at the grocery store? But the cons of NAFTA were concentrated for a relatively small group of people. The pain was deep, and it was deepest in the American South. The people who will definitely notice are the people who lose their jobs. And that is the question at the core of NAFTA: on balance, Americans probably saved money because of it, and they got stuff that they wouldn't have had otherwise. And some people lost their jobs. Was it worth it?