Free Trade Fact of the Day

Today’s Free Trade Fact of the Day comes from a Business Week look at how NAFTA has affected the U.S. economy:

But the story of GE and Mexico is about more than lost U.S. jobs. Since 2006, GE has struck deals to sell Mexican companies $350 million worth of turbines built in Houston, 100 locomotives made in Erie, Pa., and scores of aircraft engines. GE Capital has amassed $10 billion in real estate, corporate loans, mortgages, and other assets south of the border. This is what a free-trade deal is intended to achieve. Mexico specializes in industries where its cheap labor gives it an edge, and it imports U.S. goods requiring advanced technology and major capital investment. Some U.S. workers lose jobs, but new ones are created in services and heavy manufacturing. “Nafta has been an unqualified success,” says Rafael Diaz-Granados, CEO of GE’s Mexico operations. “It helped turn GE from a very America-centered company into a much more global one.”
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Trade now accounts for 27% of American economic output annually, compared with around 20% in 1993. Gary C. Hufbauer and Jeffrey J. Schott of Washington’s Peter G. Peterson Institute for International Economics calculate that U.S. exports to nations with which it has free-trade deals, such as Singapore and Australia, have grown far faster than with the rest of the world. “By any definition, free-trade agreements have been a plus,” contends U.S. Trade Representative Susan C. Schwab.