The Washington Post rah-rah story on trade with Mexico last week left out key context for its American readers.
The Post writes that Mexicans are buying lots of American-made stuff thanks to NAFTA, a growing middle class, and retailers like Costco. But the paper does all it can to avoid talking about the flipside of that coin: That Americans are buying way more Mexican stuff than they’re buying from us. Since NAFTA, our balance of trade with Mexico has gone from small surplus to massive deficit.
The Post glosses this over by mentioning it once, deep in the story, and framing it as a positive for Mexico rather than as a negative for the US:
“Before NAFTA, we had a slight trade deficit with the United States,” said Daniel Chiquiar, a Bank of Mexico statistician. “Now we have a huge trade surplus.”
Yay, Mexico. But it’s bad for the US when we buy significantly more stuff from someone than we sell to them. At base, it means we’re borrowing money to finance exporting our own jobs.
The Post never bothers to tell readers how much that Mexican trade surplus with us is. The U.S. Trade Representative puts it at $54 billion last year, or about $174 per American. Or let’s frame it like the Post does: Every Mexican man, woman, and child on average sold us $482 more than we bought from them.
(It’s worth noting that the US International Trade Commission says our trade deficit with Mexico is far higher, at $103 billion, though that doesn’t include services.)
So while the Post touts how many “marbled slabs of steak” Mexicans buy from us at Costco, it doesn’t give us a dollar figure on Costco revenue there, telling us only that same-store sales (I think, the paper is sort of hazy here) were up 12 percent last year. It doesn’t mention that Costco’s same-store sales everywhere were up 11 percent and its overall sales were up 14 percent.
Nor does the Post wonder whether Costco sells more US goods in Mexico or more Mexican goods in the US. You can bet it’s the latter by a mile, since there are all of 32 Costcos south of the border.
Dean Baker of the Center for Economic and Policy Research notes that the WaPo, which he notes has a two-decade history of cheerleading NAFTA, is just wrong in its enthusiasm about Mexico’s middle class, its overall economy, and the impact of trade agreements with the US:
In reality Mexico had the slowest growing economy in Latin America over the last decade, but what do you expect, it’s the Washington Post.
And Public Citizen writes that:
The Post article missed nearly two-thirds of the NAFTA story. It reported that “trade between the United States and Mexico is surging” thanks to NAFTA. Indeed. But 65% of the surge has been in Mexican products imported into the US, not US products heading to Mexico. While US exports to Mexico have more than doubled since NAFTA, imports from Mexico have more than quadrupled (after controlling for inflation). The net impact on US workers has been the disappearance of hundreds of thousands of jobs as the small pre-NAFTA trade surplus with Mexico has crashed into 17 consecutive years of trade deficits.
The only data the Post gives us on the jobs impact comes from a consultant paid by Mexico and uses a misleading measure that doesn’t account for the net impact on employment here, much less wages:
About 6 million jobs in the United States depend on trade with Mexico, according to the consulting group Trade Partnership Worldwide, which calculated the total for the Mexican government in 2008.
Then there’s the harder-to-quantify impact on labor here. If you work for an American automaker, say, your executives can send your work to Mexico and pay someone $4 an hour and import the car to the U.S. sans tariff, you have much less leverage to demand higher wages and benefits than you would without NAFTA.
Which is one reason why middle-class Americans have struggled while middle-class Mexicans have prospered.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at firstname.lastname@example.org. Follow him on Twitter at @ryanchittum.
Tags: free trade, labor, Mexico, NAFTA, Washington Post