In addition, many economists argue that recent U.S. production problems have little to do with NAFTA and say that domestic production was under pressure decades before the contract. Surveys by David Autor, David Dorn and Gordon Hanson, published in 2016 [PDF], have shown that competition with China since 2001, when China joined the WTO, has had a much greater negative impact on U.S. employment. Hanson, an economist and trade expert at the University of California, San Diego (UCSD), says the biggest decline in manufacturing employment – between 17 million and 11 million between 2000 and 2010 – is mainly due to trade with China and underlying technological changes. „China is at the top of the list in terms of the impact on employment that we have seen since 2000, with technology being second and NAFTA much less important,” he says. NAFTA shows the classic dilemma of free trade: diffuse benefits with concentrated costs. While the economy as a whole may have recovered slightly, some sectors and communities have experienced profound disruptions. A southeastern city loses hundreds of jobs when a textile factory closes, but hundreds of thousands of people find their clothes slightly cheaper. Depending on how you quantify it, the overall economic benefit is probably greater, but not very noticeable at the individual level; the overall economic loss is small in the grand scheme of things, but devastating for those it directly affects. In the end, according to many experts, Mexico`s recent economic performance was influenced by non-NAFTA factors. The depreciation of the peso in 1994 stimulated Mexican exports, while competition with low-priced Chinese industry [PDF] likely slowed growth. Non-coherent public measures, such as land reform, have facilitated the sale and emigration of farmers.
Hanson of UCSD argued [PDF] that Mexico`s struggles are mainly due to domestic causes: underdeveloped credit markets, a large and low-productivity informal sector and dysfunctional regulation. Historically, Mexico depended on its policy of trade protectionism and investment, which limited unfair competition from abroad. Through its policy of trade protectionism, Mexico hoped to cultivate domestic growth and protect itself from the perceived risk of foreign supremacy. Unfortunately, these hopes never materialized and did not achieve the desired growth. This protectionist mentality came into force after Mexico`s revolutionary period and remained until the 1980s, when it faced a debt crisis. As a result of this economic instability, Mexico had no choice but to change its restrictive trade policy to become one of the most open in the world. A possibility of restructuring their economies occurred in 1986, when Mexico became a member of the General Agreement on Tariffs and Trade (GATT). THE GATT, a multilateral trading system, was established in 1948 to remove trade barriers. Participation as a GATT member was conditional on Mexico owed a reduction in the highest tariff.
Although Mexico lowered its tariff, there were still many restrictions in the form of import licences for all imports (www.crs.gov, R42965). As a result, Mexico`s participation in THE GATT has long been the political objective of NAFTA relations in the United States. In 2008, then-Presidential candidate Barack Obama responded to widespread trade skepticism within the Democratic base by promising to renegotiate NAFTA to incorporate stricter labor and environmental standards.