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July 1, 1997

YOU DECIDE: HAS NAFTA HELPED OR HURT NORTH CAROLINA?

It's been three years since the North American Free Trade Agreement -- or NAFTA -- went into effect. NAFTA is an agreement between the US, Mexico, and Canada that is reducing trade barriers between the countries and is expected to increase trade.

Both supporters and detractors alike thought NAFTA would destroy some American jobs and create others. Where do we now stand on jobs three years into NAFTA? Has NAFTA been good or bad for North Carolina workers?

Almost 118,000 U.S. jobs have been certified as being lost in the nation due to NAFTA. The largest share of these jobs -- 44 percent -- has been lost due to shifting production to Mexico. The next largest share of jobs has been lost due to increased imports from Mexico and Canada.

The industry most adversely affected by NAFTA has been textiles and apparel. Almost 30,000 domestic textile and apparel jobs have been cut by the changes in production and buying patterns caused by NAFTA. Next in line is the electronics industry, which has lost 20,000 jobs as a result of NAFTA.

Since North Carolina is a big textile and apparel producer, it shouldn't be surprising that our state has had significant job losses from NAFTA. North Carolina ranks second only to Texas in the number of jobs lost due to NAFTA, at almost 11,000 jobs.

However, these numbers must be kept in perspective to the total number of jobs in North Carolina. At last count, there were 3.5 million jobs in North Carolina. The 11,000 jobs lost due to NAFTA are 0.3 percent of all jobs in North Carolina.

Now what about the plus side of NAFTA, the jobs created in the US due to this treaty? Unfortunately, there is no official enumeration of the job gains from NAFTA as there is for the job losses. However, an independent analysis from UCLA estimates that 3,000 more jobs have been created nationwide due to NAFTA than have been lost.

In North Carolina, we might expect that NAFTA has cost more jobs than it has created because of the importance of the textile and apparel industry in the state. This may be true, but North Carolina exports to both Canada and Mexico have boomed since NAFTA. From 1994 to 1996, North Carolina exports to Canada increased 28 percent, and Tarheel exports to Mexico rose 36 percent. North Carolina now sells $4 billion of products to Canada and $1 billion of goods to Mexico each year. Approximately 87,000 state jobs are related to these exports.

For workers who have lost their jobs as a result of NAFTA, there is available help. The Transitional Adjustment Assistance (TAA) program provides help to workers adversely affected by NAFTA. Any group of three or more workers can petition the state and federal governments to certify that NAFTA caused the loss of their jobs.

If certification is granted, then several kinds of help are available to the workers. These services include job training, job search, relocation assistance, and income support while in job training.

So, as forecasted, NAFTA has been a "mixed bag" for the economy. Jobs in the textile and apparel industry, especially, have been lost, but sales of North Carolina products to both Canada and Mexico have soared. You decide if this has been a net "plus" or a net "minus."

Dr. Walden is a professor and North Carolina Cooperative Extension Service specialist at North Carolina State University. You Decide endeavors to provide a balanced look at a variety of economic, public policy and personal finance issues. This feature is provided every two weeks by Dr. Walden and the Department of Agricultural Communications at NC State University.

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