NOTE: NAFTA = North American Free Trade Agreement. Thirty-nine respondents did not reply to questions about export growth.
Increased exports to Canada
Will, MacPherson / ECONOMY OF WESTERN NEW YORK
Incidence of NAFTA-Related Export Growth
Increased Exports to Mexico No
2 manufacturers of scientific instruments. Group 2 consists of 2 metal fabricators, 1 producer of electronic goods, 1 furniture company, and 1 manufacturer of paper products.
The 8 companies contacted in Group 1 revealed that a total of 145 jobs had been created as a direct consequence of NAFTA. (This figure is a rough estimate that came from a series of rough estimates supplied by the firms themselves.) All of these firms reported that their exports had increased as a direct result of NAFTA’s tariff reductions. On average, export sales for this group increased by 13% over the 1994 to 1998 period. (The range was from 1% to 50%.) One of these companies reported an increase of 40 jobs, along with a 20% increase for both exports and total sales. This firm also declared that a “substantial” direct investment in Mexico had taken place since 1994 but that production levels in WNY had also grown since that time. The 5 companies contacted in Group 2 reported losing a total of 43 jobs as a result of NAFTA (import competition). From this sample, then, the net employment effect is positive (142 additional jobs).
In themselves, of course, these figures are not terribly illuminating, in that the sample may not be representative of the broader population of WNY establishments. It is interesting to note, how- ever, that the TAA/export multiplier methodology (when applied to WNY) suggests that the employment gains from increased trade with NAFTA members ought to be about 7 times higher than the employment losses (keep in mind that we have not deflated these gains to account specifi- cally for NAFTA). Our estimates suggest that the gains are 3 times higher than the losses. Still, our estimates may be on the low side, in that not 1 of the 5 companies in Group 2 actually applied for TAA relief over the 1994 to 1999 period. According to the nearest TAA center (Binghamton, New York), TAA claims from the WNY area more typically come from firms experiencing import com- petition from Asian or European nations—not Canada or Mexico. The question thus arises, How important is NAFTA to regions like WNY?
Our estimates suggest that the gains are three times higher than the losses.
Evidence from our survey suggests that NAFTA has had a positive impact on WNY, in that post- 1994 employment gains have exceeded losses by at least 300%. There is also evidence that NAFTA has promoted increased export activity and/or cheaper import sourcing. On a more cautious note, it should be repeated that many firms simply do not know whether NAFTA has had an impact or not. In terms of employment effects, for instance, fully 68% of the survey firms belong to this “unknown” category. Among those firms that did indicate an impact, moreover, rather few were able to describe the positive or negative effects with any real precision. As a result, we are left with a series of general impressions rather than robust estimates. In short, there is insufficient evidence to warrant unqualified enthusiasm or disdain for NAFTA as far as local economic impact is concerned.
. . . it should be repeated that many firms simply do not know whether NAFTA has had an impact or not.
Nevertheless, the fact that exports continue to play an important role in WNY’s economic per- formance (growth of GRP) suggests that any regulatory initiative that safeguards the region’s access to foreign markets ought to be applauded. In this sense, NAFTA provides a legal framework that serves the interests of WNY quite well. Moreover, the relatively sparse number of adjustment assistance claims over the past few years implies that the negative effects of NAFTA have not been