Clashing Over Commerce: A History of US Trade Policy (Markets and Governments in Economic History)

by Douglas A. Irwin

Economists generally agreed with these conclusions and supported NAFTA. More than three hundred economists of all political stripes, including several Nobel laureates, signed a petition endorsing the agreement. Paul Krugman (1993) summarized NAFTA in five simple propositions: (1) that it would have no effect on the number of jobs in the United States; (2) that it would not hurt and might help the environment; (3) that it would produce a small gain in real income for the United States; (4) that it would probably lead to a slight fall in real wages of unskilled American workers; and (5) that NAFTA was really a foreign-policy issue rather than an economic issue. Along with most economists, Krugman (1993, 13) believed that “the intensity of this debate cannot be understood in terms of the real content or likely consequences of the agreement, nor is the debate’s outcome likely to turn on any serious examination of the evidence.” Instead, he argued, “the hard-core opposition to NAFTA is rooted in a modern populism that desperately wants to defend industrial America against the forces that are transforming us into a service economy. International trade in general and trade with Mexico in particular have little to do with those forces; clinging to the four percent average tariff the United States currently levies on imports of manufactures from Mexico might save a few low-wage industrial jobs for a little while, but it would do almost nothing to stop or even slow the long-run tren...