On January 1st, 1994 the North American Free Trade Agreement, commonly referred to as NAFTA, went into effect after years of contentious battle and debate amongst those drafting it and viewing it from afar. In fact, it took three U.S. Presidents to finally complete the deal: Reagan, Bush Sr., and ultimately, Clinton. Those who opposed it warned of vanishing industries, skyrocketing unemployment, and of unfair consequences to those that were less educated. Ross Perot famously stated, “ giant sucking sound” of jobs leaving the United States would be heard. On the other hand, those in favor argued for that there would be an increase in global competitiveness, export revenue, and plenty of new jobs created. Twenty years later, it is important
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firms to invest freely and with legal protection, particularly in Mexico, and increase their production at a lower expense. With exports to Mexico and Canada being made easier, 122,000 medium sized firms were able to export products to those countries. In terms of supply chains created through NAFTA, U.S. industries were able to become more competitive via this avenue as well. For instance, the auto industry took advantage of the new economies of scale and saw total auto exports to Mexico increase by 232%. That is to say, supply chains increasingly crossed national boundaries to be produces wherever it was most efficient. For example, 40% of the content of U.S. imports from Mexico and 25% of the content of U.S. imports from Canada is of U.S. origin.
According to the USTR, NAFTA is responsible for an annual boost it the United State’s GDP of about .5%. The United States was able to increase its exports from $142 million to $452 million in 2007 (USTR). However, critics would point to the recent decline, which has contributed to the U.S. deficit but are incorrect in the sense that the 2008 financial crisis severely affected domestic production and foreign demand. In the agricultural sector, the U.S. economy was able to increase its agricultural exports to Mexico and Canada from 22% to 30%, that’s more than the next six largest markets combined. In Oregon, for example, agricultural exports have risen by 145% since NAFTA and the value of