News-Sentinel.com

Thursday, 03/18/1999

NAFTA

Too early to determine NAFTA's long-term effects

The treaty's success depends on linking the three nations.

By LYNNE McKENNA FRAZIER of The News-Sentinel



News-Sentinel photo by C. Somodevilla
New roads Construction of the new NAFTA (North American Free Trade Agreement) freeway has already started on the Mexico side of the boarder. This stretch of the new road is just south of the U.S.-Mexico bo-rder.

Bill Summers views NAFTA as a baby.

"It's only been five years. You've got to give it a chance," says the president of the Rio Grande Valley Partnership based in Weslaco, Texas.

Others see the North American Free Trade Agreement as five years of trouble promising more of the same. "The jobs have gone south and the money has gone south," said Mary Lou Campbell, president of the Rio Grande Valley chapter of the Sierra Club. "Plant after plant has closed and the jobs are gone."

The treaty tying together Mexico, the United States and Canada into a free-trade zone has not been fully implemented yet. Some phased-in provisions don't take effect for another few years. And procedural issues still have to be worked out.

Yet there's an undiminished debate about what NAFTA has wrought.

Carlos Barbera says the numbers tell the tale. Indiana's trade with Mexico has surged over the last few years. Barbera, director of international trade for the state Department of Commerce, says NAFTA isn't necessarily the key to that change.

"The cause and effects (of NAFTA) are not as important as the opening of the Mexican market," he said.

Also being debated is the planned extension of Interstate 69. Opponents and proponents wrangle about the need for the highway while proponents war among themselves over the highway's route.

Towns from southern Indiana to the Mexican border are eyeing the highway hungrily.

"If we've learned anything in the last 30 years, we've learned that access to transportation makes all the difference," said Patrick Barkey, director of the Bureau of Business Research at Ball State University.

The lack of an interstate, Barkey says, is one major reason that half of the lowest-earning counties in Indiana are in the state's southwest corner — the section without an interstate.

If an interstate highway equals growth, then a 2,000-mile-long band of villages, towns and cities is looking toward an unparalleled opportunity. If trade with Mexico and Latin America develops as promised, they could be along a highway paved with gold.

But those are two big ifs. And the answer is unlikely to be apparent for many years.

Interstate's benefits

It wasn't until the 1980s that northeast Indiana began to reap the full benefits of I-69, which was built through this area in the mid-1960s. It was only within the last 20 years that automotive suppliers set up shop in the towns along I-69 between Fort Wayne and the Michigan line. Anchoring that development was the General Motors Corp. truck plant at I-69 and Lafayette Center Road.

Now I-69 is central to economic development planning for northeast Indiana towns along its route.

Southwestern Indiana would like I-69 to play the same role. That area would feel the biggest immediate impact if the highway is extended, Barkey said, but the effects would filter north.

"This is what's going to plug southwest Indiana into the manufacturing economy of the north," he said.

I-69 would go through some of the poorest sections of the nation when it's extended to the Texas-Mexico border, Barkey said. The highway could give many of those areas a chance of attracting better-paying jobs.

"`It's very important for us, for our people, to get jobs and be able to support a family," said Nancy Boultinghouse, director of marketing for the McAllen Economic Development Corp.

But good roads aren't the only obstacle. Those well-paid jobs require an educated, skilled and prepared work force.

That's the advantage areas such as northeast Indiana are expected to hold.

Workers in the Fort Wayne area have been touched by production being shifted to Mexico.

But although more than 1,400 northeast Indiana workers have been declared eligible for training assistance, only a few have taken advantage of the opportunity, said Jim Holderness, who oversees the program locally. Some have retired while others have taken opportunities in the same company or been snapped up by employers scrambling for help in a tight job market, he said.

There are no corresponding numbers to see how many jobs have been created by increased trade with Mexico or any other nation. A study by Larry Davidson, who heads Indiana University's Global Business Information Network, attributed 88 percent of the state's manufacturing jobs created between 1993 and 1995 to exports.

Lessons from the past

Since the beginning of the Industrial Revolution, nations that led the pace of change have resisted spreading their knowledge. English law forbade exporting the equipment or even selling the plans for the inventions that mechanized the textile industry. But an English immigrant to New England was able to build the machinery from memory, spawning the textile industry in the United States.

The U.S. economy has adjusted to shifting employment in the past, Davidson said. Those shifts are undeniably painful for some.

"There's a continuous process of evolution of the nature of work in this country," he said. To cope with change, "We'll do what we have to do."

History argues that industrial development cannot be bottled up. NAFTA is part of that pattern.