Ohio steadily profits with free trade pact

Jacqueline Rabe and Jacqueline Rabe

Trade between Mexico and the United States is at record levels due to the North Atlantic Free Trade Alliance, and Ohio is gaining significantly from the agreement.

Since nearly 25 percent of Ohio’s agricultural product is exported outside the country international trade remains one of the most important issues for Ohio’s economic success said Joe Cornely from the Ohio Farm Bureau.

‘I don’t know any industry that would be profitable if they had to give up 25 percent of what they sell,’ Cornely said.

NAFTA has helped free up the market system by eliminating international trade barriers and Ohio has taken advantage of this – becoming the sixth largest state for exports in the United States, Cornely said

‘Success depends on how available you are to international markets – and Ohio is very available,’ he said.

The Ohio Department of Agriculture has helped Ohio farmers become more available to international markets by leading trade missions that increase awareness and demand for Ohio products. In 2004 these missions resulted in an $8.1 million increase in annual sales and around 120 new jobs in Ohio said a press release from the ODA.

Mark Kosoff, economics professor at the University, said Ohio has had so much success with exports because of its proximity to Canada who invests in more than 50 percent of Ohio’s exports.

Nationally, the U.S. exports 23 percent of its total goods to Canada – quite a difference from Ohio’s exports pattern.

‘This trade with Canada has created thousands of jobs in Ohio’ Kosoff said. ‘For every billion dollars in trade about 20,000 jobs are created, and for Ohio most of these jobs are in manufacturing, which are higher paying.’

Specifically, NAFTA has helped open trade for the Jeep plant located in Toledo as well as many other businesses.

‘Mexico has terrible roads and there is definitely a demand for Jeeps,’ Kosoff said. ‘Before NAFTA trade for Jeep was difficult with Mexico, but not now.’

This ‘easier’ trade between the three countries has made Canada the largest trading partner with the United States and Mexico coming in second. However, statistics show that Canada and Mexico are much more dependent on the United States than the U.S. is on them.

The United States is the most important trade partner for Mexico since 87.6 percent of its exports go to the U.S. while only 13.6 percent of U.S. exports go to Mexico.

Canada follows a similar pattern with 85.1 percent of its exports going to the United States while only 23 percent of U.S. exports go to Canada.

Kosoff credits this disproportional trade to the fact that the United States wants to buy goods at the cheapest price available – even if they are buying from another country.

‘It just doesn’t make sense to buy a product for a higher price when a lower price is available,’ Kosoff said.

But not everyone feels that lower prices for goods will always stimulate the economy.

‘While cheaper goods might be a result of NAFTA, many laborers will lose their jobs,’ Candace Archer said, professor of political science at the University. ‘It’s difficult to deal with NAFTA because of the wide range of perspectives. One group might see its benefits, another might hate it, and another not even care or notice.’

One group that holds disregard for NAFTA is the National Family Farm Coalition, which is an organization of small farms that feel they are unable to compete with this international market.

‘The natives on the land should have the right to provide the food for its people,’ said Bill Christison, from NFFC. ‘NAFTA gives privileges to large farms and none to family farms. Therefore, small farms cannot compete and the farmers are forced off their land.’

Christison said small farms are at a disadvantage because NAFTA nearly eliminates the trade barriers previously placed on foreign goods and small domestic farms are forced to compete with wealthy international farms and routinely fail.

In Mexico when NAFTA was signed, the Chiapas rebellion began, which was comprised of mostly small farmers who could not lower their prices to compete with rich international markets. When they did lower their prices, major debt began to occur. One Mexican farmer describes his frustration in the book ‘Maya Vision’ saying, ‘they set the prices for the fruit of our labor.’

But Kosoff said trade barriers should not protect overpriced goods.

‘Sugar is protected in the U.S. by their political power,’ he said. ‘And this is unfair. If we can get sugar cheaper elsewhere, we should be allowed to do so.’

While small farms may be at a disadvantage according to the NFFC, the economy and standard of living has continued to rise since the signing of NAFTA in all three countries.

‘This success proves the American, Canadian and Mexican farmer can compete with each other,’ Cornely said. ‘But what they cannot compete with is foreign governments setting up international barrier for trade.’