Texas could benefit immensely from NAFTA

By HARIHAR KRISHNAN UPI Business Writer   |   Aug. 12, 1992
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DALLAS -- Texas could beome one of the largest beneficiaries of the North American Free Trade Agreement both in terms of sharply increased trade with Mexico and the resulting job gains, economic experts said Wednesday.

Dr. M. Ray Perryman, director of the Center for the Advancement of Economic Analysis at Baylor University in Waco, said details of the NAFTA, whose completion was announced Wednesday by President Bush, will not be available for months.

However, he said, if the agreement as presently conceived emerges intact from the congressional bodies of Canada, the United States and Mexico, there will be immense benefits to Texas in the long run.

'The administration estimates that our sales to Mexico will reach $44 billion over a period of time from the current $15 billion,' Perryman said. 'In other words, we will literally triple our volume of trade and that is going to bring hundreds of thousands of jobs to Texas and the country as a whole.'

He said the government estimates that some 600,000 jobs in the United States are directly related to trade with Mexico, and his own estimate is closer to 700,000. Of that, Texas accounts for 300,000 jobs.

Perryman said currently Texas produces 40 percent of all the U.S. goods sold to Mexico, and if the tripling effect through NAFTA is right, Texas can add hundreds of thousands of jobs more in the state.

The NAFTA was completed after 14 months of talks, some of them extremely intense and complex because of the need to resolve hundreds of different tariffs and barriers. The precise details must still be worked out by lawyers of the three countries and that could take weeks or months.

The pact must also be approved by the congressional bodies of all three countries. In the United states, the NAFTA will come under the fast track provision, meaning Congress must either approve or reject it through enabling legislation without inserting any amendment.

Referring to the legislative hurdle, Sen. Lloyd Bentsen, D-Texas, chairman of the Senate Finance Committee, warned that Congress would be unlikely to approve any agreement that fails to adequately address issues like more stringent control of pollution along the U.S.-Mexico border that is bound to increase with incresed trade activity.

Bentsen said Congress voted last year to permit President Bush to negotiate the agreement on the 'fast track,' relying on the President's commitments through an 'action plan' that the agreement would ensure adequte time for adjusting to increased imports, provide tough rules for what qualifies as a'North American' product and do nothing to weaken environmetnal and health laws.

These provisions are important especially for Texas because of its long border with Mexcio and NAFTA's impact especially in the border areas.

Texas Agriculture Commissioner Rick Perry said NAFTA will bring jobs and prosperity to Texas.

'What we have heard about the agreement so far has been positive. But now we will scrutinze the final version in detail, especially the key issues such as import licenses and the reduction and elimination of tariffs to make sure that it does what we've sought all along -- benefits Texas agriculture and the entire Texas economy.'

Perryman said that while NAFTA will bring benefits to Texas in the long term, there could be some adverse effects in the short term if industries begin to relocate in increasing numbers to Mexico to take advantge of lower wages in that country.

In this context, he said, he can understand the concerns of U.S. labor groups about loss of jobs. But he said not too worried about on a long-term basis.

'We have been losing jobs in recent years any way. A lot of industries have arleady moved to countries like Malaysia and China anyway,' he said.

'But still, the upside of the agreement will be incredible as all the trade barriers are removed,' he added.

Perryman said Texas will benefit in such industries as energy, telecommunications and financial institutions.

'For example, I have always felt that in a true energy crisis, we will be able to depend on Mexico for increased oil supplies and this agreement will solidify that.'

Giving the industry view, T. Boone Pickens, chariman of MESA Inc., one of the largest independent natural gas producers, said his company has entered into discussions with the government of Mexico about exporting natural gas vehicle fuel technology to help improve Mexico's air quality.

Perryman said there will also be intangible benefits to Texas which would include higher living standards in Mexico that will help stem the flow of illegal immigration and drug trafficking.

Perryman said South Texas, one of the poorest areas in the country, will see increased economic activity through NAFTA and that in turn will allow that area to prosper.

John Goodman, head of the National Center for Policy Analysis, a think tank in Dallas, said NAFTA will also help eliminate extremely restrictive U.S. trade barriers heavily distorted against lower income groups.

As examples, Goodman said, current U.S. tarrrifs impose a 40 percent tariff on imported orange juice but less than 1 percent on Perrier, a 34.6 percent duty on children's polyester sweaters but none on mink coats, or a 17.2 percent tariff on infant formula while there is no tariff on imported lobsters.

'My onlyworry is that NAFTA's goals may be eventully subverted through fine print later on,' Goodman said.

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