NAFTA DATA REVEALS TRADE ACCORD WORKS

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Given the earlier noisy predictions of doom, a surprisingly small number of the respondents to Plastics News' recent annual processors poll expressed unhappiness with the effects NAFTA has had on their businesses.

After three years of the North American Free Trade Agreement, only five of the 369 that replied to the questionnaire sent to 1,042 North American processors have expressed complaints about the pact.

According to the Canadian Embassy in Washington, that country's trade with the United States expanded nearly 15 percent the first year of the agreement and 13 percent the second year. Meanwhile, the director of Mexico's Washington NAFTA office reports that the compact has elevated Mexico to the United State's third biggest trading partner, after Canada and Japan. In 1995, U.S.-Mexico trade rose to a record $120 billion. That helped Mexico repay — three years early — the $12.5 billion U.S. loan it received two years ago to avoid a financial collapse.

The Federal Reserve Bank of Chicago issued a report this month in which a staff economist projected that NAFTA will produce about double the output and trade increases for the United States, Mexico and Canada originally predicted by analysts.

Part of the reason for the increase in trade can be traced to a number of bilateral side agreements Mexico has obtained with countries outside NAFTA, such as Colombia, Venezuela, Costa Rica, Guatemala, San Salvador and Chile.

Those agreements continue to unfold; Canada is in the process of also negotiating one with Chile.

The salutary effect of NAFTA on the North American economy is presumably not lost on the processors who fault it for making life more difficult for them. They find it more problematic to compete with companies paying lower wages in countries where government regulation is minimal. One New England blow molder, for example, told Plastics News that his firm lost $3 million in sales due to NAFTA.

Other businesses have gained sales, however. Latin American countries, the United States and Canada have experienced economic growth and increased exports, as well, proving that NAFTA works and is not excessively priced.