Promise: Free Trade Agreements (FTAs) will boost exports and prosperity.
This has been one of the most repeated broken promises of the FTA promoters, with NAFTA being the prime example. Two of the big-name experts most often cited by NAFTA supporters are Gary Hufbauer and Jeffrey Schott of the Peterson Institute for International Economics (PIIE). In their influential 1993 PIIE paper, “NAFTA: An Assessment,” they predicted that “with NAFTA, U.S. exports to Mexico will continue to outstrip Mexican exports to the United States, leading to a U.S. trade surplus with Mexico of about $7 (billion) to $9 billion annually by 1995.” They further predicted that the U.S. trade surplus with Mexico would rise to $12 billion annually between 2000 and 2010.
Reality: NAFTA turned an annual trade surplus with Mexico into an ever-growing deficit.
In 1993, the year before NAFTA went into effect, the United States had a $1.66 billion trade surplus with Mexico; by 1995, the first year after NAFTA had entered into force, that changed to a $15.8 billion deficit. The deficits have escalated ever since, soaring to $24.5 billion in 2000, $49.8 billion in 2005, and $74.7 billion in 2007. From 2010 on, the deficits have been running in the $60+ billion range annually.
In 1993, the year before NAFTA, we imported around 225,000 cars and trucks from Mexico. By 2005, our imports of Mexican-made vehicles had tripled to 700,000 vehicles annually, and in 2012 Mexico’s export of vehicles to the United States surpassed 1.4 million.
Chrysler, Ford, and GM transferred major production facilities (and jobs) from the United States to Mexico.
In 1993, our annual trade deficit with Canada was $10.7 billion; by 1995 it had ballooned to $17.1 billion, and by 2005 to $78.4 billion.
Click here to read the entire list of promises vs. realities.