A North American Free Trade Agreement more closely linking the economies of the United States, Mexico and Canada can be a potent force for regional prosperity.
The United States is Mexico's principal trading partner; Mexico is our third largest customer. Canada is our largest trading partner. Linking our complementary economies through free trade can only strengthen these economic bonds and increase regional political stability.Ultimately, the creation of a North American Free Trade Area will create the largest, richest market in the world with 360 million consumers and $6 trillion annual output.
A U.S.-Mexico-Canada FTA also will support our broader aim of open markets and expanded trade globally, for other countries will have an enormous incentive to seek open markets with us.
Despite these benefits, some critics claim an FTA will be a "one-way street" with inexpensive Mexican goods flowing into the United States and few of ours going the other way.
The evidence disproves this notion. Since 1986, when Mexico joined the General Agreement on Tariffs and Trade, U.S. exports to Mexico have more than doubled, rising from $12.4 billion to an annualrate of $28.4 billion in 1990.
The doubling of U.S. exports created 320,000 U.S. jobs. Each additional $1 billion of U.S. exports will mean more than 20,000 new jobs.
All sectors of the U.S. economy have benefited from this market opening; exports of automobiles and auto parts have quadrupled; exports of corn have tripled; and exports of telecommunications equipment have doubled.
Exports of iron and steel that were running a $12 million deficit four years ago now are tallying a $300 million surplus. Just four years ago, we had a $90 million deficit in textiles and apparel trade with Mexico. Today, we are running a surplus.
There is also fear that a free trade agreement will export U.S. jobs to Mexico. But again, the experience of the past decade disproves this speculation.
During the 1980s, U.S. firms set up factories in Mexico at a record pace under the maquiladora program. As a result, thousands of jobs were created and retained on the U.S. side of the border to support those facilities, according to some studies.
A good example is Deltec, a San Diego electronics manufacturer. Since starting a maquiladora five years ago, sales have quadrupled and its work force tripled. Its employment in San Diego rose 50 percent.
Many of its San Diego workers were retained to fill higher-skilled and higher-paying jobs. Deltec's added business also generated new jobs in and around San Diego as its spending for raw materials and services there grew four-and-a half times.
Indeed, the availability of Mexico as a factory site is saving U.S. jobs. Kendall Co., a Massachusetts-based medical equipment maker, says that were it not for the maquiladora program, its ability to compete effectively in certain segments of the health care market would have been significantly impacted. This could have jeopardized the 3,000 jobs that currently exist within the United States.
While the benefits of an FTA are apparent, the administration recognizes that some groups worry about the consequences of increased competition from Mexico.
In this regard, nothing we negotiate will be implemented overnight. We know that business, labor, and farmers on both sides of the border will need time to adjust.
We will ensure that any agreement be phased in and provide a mechanism to protect against import surges.
The goal of United States trade policy is to open markets and expand trade for U.S. goods throughout the world and provide a powerful stimulus for economic growth. A North American Free Trade Agreement will do just that and create a new era of opportunity and prosperity.