NAFTA’s Boost to Manufacturing – 20 Years in the Making

By December 30, 2013Economy, Trade

Expanded manufacturing. Increased exports. Improved competitiveness, integration and partnership. That is the NAFTA story for U.S. manufacturers.

January 1, 2014 marks the 20-year anniversary of the North American Free Trade Agreement’s (NAFTA) implementation and there is strong evidence of the pact’s positive impact on manufacturing in the United States. Since 1993, value-added manufacturing in the United States has expanded from $1.06 trillion to $1.87 trillion in 2012. The increased exports, improved competitiveness and greater industry integration helped contribute to this 76 percent expansion in manufacturing output.

As U.S. manufactured exports more than doubled since 1993, the largest growth market for our manufactured exports has been our two NAFTA partners – Canada and Mexico, which purchase more from the United States than any other country. U.S. manufactured goods to Canada and Mexico more than tripled since 1993, growing some $173 billion through 2012 and accounting for over 18 percent of the total growth in U.S. manufactured exports over that period.

NAFTA Graph 01 01 14NAFTA’s impact on U.S. competitiveness in an increasingly challenging global economy has also been powerful. NAFTA has promoted greater integration, new partnerships and improved connectivity between our economies. U.S. cross-border investment grew five-fold to $453 billion in 2012, while Canadian and Mexican investment into the United States increased nearly six-fold, expanding to $240 billion. Underneath this investment are cross-border supply and production chains that are improving North American competitiveness, innovation and efficiency.  Notably, the Wilson Center estimates that some 40 percent of the content of U.S. imports from Mexico and 25 percent of the content of U.S. imports from Canada represents U.S. value-added manufacturing, meaning that imports from our neighboring countries actually support U.S. manufacturing jobs.

As we all take stock of NAFTA at 20, manufacturers are also looking forward. We are working with government officials in all three countries to expand efforts to reduce regulatory barriers and improve trade flows and cross-border mobility. All three countries are also back at the negotiating table as part of the Trans-Pacific Partnership (TPP) negotiations, which provide an important opportunity to improve the rules that govern trade between our countries.  And finally, manufacturers are working diligently to support Trade Promotion Authority so that new agreements that eliminate barriers and put in place even stronger rules can be completed and help level the playing field for America’s manufacturers.

Linda Dempsey

Linda Dempsey

Linda Dempsey is the vice president of international economic affairs at the National Association of Manufacturers (NAM). In this capacity, Ms. Dempsey leads the NAM’s efforts to improve the global competitiveness of manufacturers in the United States by advocating intellectual property protection, increased export financing and the elimination of trade barriers as well as pushing for agreements and treaties to open up new export markets to create jobs. Ms. Dempsey is noted for her experience on a wide range of international trade and investment policy issues.
Linda Dempsey

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