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New Report Shows NAFTA's Grim Toll

May 9, 2011

Economists and government officials promised that the North American Free Trade Agreement would create hundreds of thousands new jobs, but a new report from the Economic Policy Institute shows that free trade with Mexico has killed more jobs in the U.S. than it created.

The report – “Heading South: U.S.-Mexico Trade and Job Displacement after NAFTA” –finds that more than 680,000 American jobs have been lost since NAFTA was passed in 1994.

Says report author Robert Scott, a senior economist at EPI:

The growing U.S. trade deficit with Mexico has displaced a large number of jobs in the United States and is a significant contributor to the current crisis in U.S. manufacturing, which lost 5.6 million jobs between February 2000 and February 2011.

One of the hardest hit states is Tennessee, which lost more than 16,000 jobs due to the American trade deficit with Mexico.

One of NAFTA’s latest victims is the Philips Luminaires lighting fixture plant in Sparta, which employees 275 people. The plant has won numerous awards for excellence, being named one of North America’s 10 best plants in 2009 by Industry Week magazine, and even winning Philips’ own “lean” manufacturing cup last fall.

The 40-year plant was purchased by Netherlands-based multinational Philips in 2007. Despite initial promises to keep the work in the U.S., Philips is now using NAFTA to send a profitable and productive plant south of the to save on labor costs.

Other states hard hit by NAFTA include Michigan, Ohio and Indiana. But every state and the District of Columbia has seen good jobs go south, says Scott.

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