By Larry Lloyd
As the sixth and penultimate round of NAFTA negotiations wrapped up recently in Montreal, business and industry groups across the U.S. and North America are focused on the future of the 25-year-old free trade deal.
Since its inception in 1993, NAFTA has opened new markets and catalyzed enormous economic growth by lowering trade barriers between the U.S., Canada and Mexico. Fourteen million U.S. jobs – many of those in the retail sector – depend on NAFTA. Collectively, North American GDP has risen by 166 percent because of NAFTA, from $8 trillion up to $21 trillion today, according to World Bank data.
For retailers and their customers, the implications of a NAFTA withdrawal would be sweeping and harmful. In addition to the nearly 7 million retail jobs tied to trade, retailers depend on imported goods to deliver for customers at reasonable prices. A study found that in the past decade alone, the cost of television sets in the U.S. is down 87 percent, computers down 75 percent and toys down 43 percent.
NAFTA’s lower trade barriers have also fostered complex supply chains, where jeans may be made in Mexico, but with cotton, zippers, thread and buttons made in the U.S. These supply chains work – keeping costs down for customers – because they utilize each country’s comparative advantages and resources. A National Retail Foundation (NRF) study examining five types of apparel even found that 75 percent of the prices went to U.S. contributors.
“An end to NAFTA would not lead to a rush of jobs back to the United States,” writes Matthew Shay, president and CEO of the National Retail Federation, in The Hill. “It would have the opposite impact, negatively impacting the U.S. economy, particularly U.S. companies that have used the provisions of NAFTA to build North American value chains.”
Many other industry groups have joined the NRF in its calls to preserve the benefits of NAFTA. Privately owned freight railroads — an industry that connects and serves nearly every industrial, wholesale, retail and resource-based sector of the economy — offers a distinct perspective on how trade powers our economy, with a recent report finding that 50,000 rail jobs and 42 percent of rail carloads and intermodal units directly depend on trade.
The Michigan economy is closely linked with trade. A seamless supply chain linking North American production and markets enables Michigan retailers to be globally competitive.
Railroads have invested $100 million of private capital into the intermodal network over the last four years to enhance efficiency, productivity and safety for shippers. Railroaders also comprise 50,000 of the 7 million U.S. jobs dependent on North American retail free trade.
With the final round of NAFTA negotiations set for late February in Mexico, stakeholders across the U.S. are highlighting the benefits of the agreement and watching closely.
Larry Lloyd is State Director-Michigan of GoRail, which educates community leaders across the country about the public benefits of freight rail investments and a strong rail network. You can follow him on Twitter: @LarryIsaacLloyd and @GoRail.
