Mexico trade pact costs U.S. nearly 700,000 jobs

May 4th, 2011, 1:00 am
by Mary Ann Milbourn

Business with Mexico since adoption of the North American Free Trade Agreement has cost the U.S. 682,900 jobs over 16 years, according to a report released Tuesday by the Economic Policy Institute. An estimated 10,700 were in Orange County.

The institute, which advocates on behalf of low- and moderate-income workers, says California had the most jobs lost to trade with Mexico. From 1994 to 2010, an estimated 86,500 jobs in California fell victim to the trade agreement.

Three out of five of the jobs cut nationwide — 415,000 — were in manufacturing.

Robert E. Scott, the report’s author, bases his numbers on the U.S. production work that moved to Mexico after the U.S. dropped its tariffs. The surge in Mexican exports to the U.S. — and the jobs that were created there — far outstripped the American work that came from increased trade. By Scott’s count, the U.S. ran up a $97.2 billion trade deficit with Mexico in the 16 years after NAFTA took effect.

NAFTA also removed trade barriers for Canada but the strong Canadian dollar, which made its exports more expensive in the U.S., limited the impact on the trade deficit and jobs, Scott said.

Other findings:

On average, 40,200 jobs have been lost or displaced per year since NAFTA took effect.

Computer and electronic parts (150,300 jobs, 22% of the 682,900 displaced jobs) and motor vehicles and parts (108,000 jobs; 15.8% of the total) were the manufacturing industries hardest hit by growing bilateral trade deficits.

More jobs were created in Mexico (30,400) by the growth of net exports of autos and auto parts to the United States in 2010 than were created in the entire U.S. auto industry in the same period, which added only 25,700 jobs between December 2009 and December 2010. (Click on chart to enlarge.)

The report does not say whether the jobs that were lost were replaced by other work but concludes that anyone who found employment was probably worse off.

“Even if increased demand in other sectors absorbs all the workers displaced by trade (an unlikely event), job quality is likely to suffer, as many non-trade-related industries, such as retail and home health care, pay lower wages and have less comprehensive benefits than trade-related industries,â€