May 04, 2012
Let me review with you a success story that has been a major plus for the U.S. and especially for our ag industry. I’m talking about the North American Free Trade Agreement between U.S., Canada, and Mexico.
This all began in 1989 with the signing of the Canada-U.S. Free Trade Agreement. Then, in 1993 (4 years later, almost 20 years ago), Mexico was brought in to the fold with Canada and the U.S. to create the North American Free Trade Agreement.
NAFTA has succeeded beyond imagination. Over that time, total U.S. and Mexican trade has exploded by more than 5 times to $460 billion in 2011. Ag exports to Canada have tripled and our ag exports to Mexico are up 4 times. This year, our ag exports to Canada will reach $20 billion and Mexico, $17 billion. Mexico is our second largest export market. Mexico buys more U.S. goods than all the rest of Latin America combined.
NAFTA’s success has been contagious. Countries all over the world are cutting tariffs and writing trade agreements. Fortunately, at long last, we completed our Colombia, Panama, and South Korean agreements. There is no question but countries that have serious trade relations are less likely to start a war.
Back to NAFTA – perhaps one of the more important side effects of the Agreement is beginning to bear fruit. In 1993, President Clinton, in support of bring Mexico into NAFTA, had this to say: "Slashing tariffs will create jobs and increase incomes in Mexico, resulting in much less pressure on them to come to the U.S. in the form of illegal immigration.
That didn’t happen right away. In fact, at first, illegal immigration increased, but not today. The number of illegals in the U.S. has stabilized. As many are leaving as coming in.
Mexico has a dynamic job-creating economy with a growth rate of more than 5 percent. We know that NAFTA is not the only reason Mexico is moving up the ladder to become a middle class democracy, but trade is a big help.
Our ag industry exports nearly 30 percent of what we produce. It’s obvious how important trade is to the American farmer, but don’t forget all the other side benefits.
In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
Until next week, I am John Block in Washington.