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THE PROS AND CONS OF NAFTA, REVISITED
NAFTA: An Assessment, revised edition.
Gary Clyde Hufbauer and Jeffrey J. Schott (Washington, DC: Institute for International Economics, 1993) 125pp.
Reviewed by Terry Bennett Muckleroy
From the beginning, the North American Free Trade Agreement was shrouded in controversy. Proponents of NAFTA viewed the agreement as a logical extension of U.S. trade liberalization policy, while opponents of NAFTA denounced the agreement as a product of big business. Encountering intense opposition in the United States, NAFTA gave rise to an eclectic coalition of environmentalists, organized labor, protectionist Democrats and populist independents. They claimed that the ratification of NAFTA would result in a mass exodus of jobs from the United States and Canada into Mexico, where wages were lower and labor and environmental laws less stringent.
While the opposition's arguments had some intuitive appeal, their concerns also seemed exaggerated when considering Mexico's overall relative economic importance vis-a-vis the United States and Canada. Indeed, Mexico's economy is a mere 5 percent of the size of the combined U.S. and Canadian economies. Nevertheless, opponents argued that the consequences of NAFTA on domestic employment in the United States could potentially be substantial. In the revised edition of NAFTA: An Assessment, Gary Clyde Hufbauer and Jeffrey J. Schott critique the analysis of the pact by NAFTA opponents whose "analytic methods bear a [close] kinship to astrology" and give their own appraisal of NAFTA based on serious economic research.
Hufbauer and Schott, senior fellows at the Institute of International Economics, have written numerous articles and books regarding international trade. Six months after NAFTA negotiations were concluded in August 1992, the institute published the first edition of NAFTA: An Assessment, which summarized the key provisions of NAFTA and analyzed its potential economic impact on the United States, Canada and Mexico.
Published in October 1993, the revised edition of NAFTA: An Assessment expands the analysis of the first edition to include the three side agreements on import surges, labor and the environment, which were concluded in August 1993. It also responds to accusations made by critics that, for instance, millions of U.S. jobs will be lost as a result of the agreement. The preface suggests that the authors envisaged the book as an information source for politicians and...