NAFTA rewrite could help labor picture, economist says

Desmond O'Rourke, a retired Washington State University agricultural economist and president of Belrose Inc. in Pullman, Wash.

PULLMAN, Wash. — A renegotiated North American Free Trade Agreement could be used to address labor shortages by allowing workers with visas to move between the U.S., Mexico and Canada, an agricultural economist says.

Free trade agreements such as the European Union allow laborers to move among the member countries, and if NAFTA contained that when it took effect in 1995 it could have prevented the millions of illegal immigrants living in the U.S. now, says Desmond O’Rourke, an apple market analyst and retired Washington State University ag economist in Pullman.

NAFTA allows temporary entry of business people, interpreted to mean owners or managers of firms, traders, investors, intra-company transferees and professionals, mainly from Canada, O’Rourke said.

“For us to continue to produce apples, pears and cherries, we need Mexican labor,” he said.

NAFTA could do that with visas not only for agriculture, but restaurants, hotels and small companies, he said.

The Northwest tree fruit industry is concerned about maintaining exports to Mexico and Canada with any renegotiation of the agreement, O’Rourke said. Before NAFTA, U.S. apples were smuggled into Mexico from Texas, he said. NAFTA made it possible for Mexico to become the No. 1 export market of Washington apples, buying about $200 million worth annually.

NAFTA could be improved with better technical aspects of fruit access, said Chris Schlect, president of the Northwest Horticultural Council in Yakima.

While President Donald Trump plans to renegotiate NAFTA to make it fairer to the U.S., it’s not as simple as believing it has cost U.S. jobs, O’Rourke said.

A lot of business in the U.S., Mexico and Canada is heavily intertwined, he said.

For example, Washington beef processors couldn’t survive without Canadian beef and a Pullman company, Schweitzer Engineering Laboratories, makes high-tech equipment for electrical transmission in factories in Pullman and Mexico, O’Rourke said. It does that to keep costs down, he said.

U.S. consumers get good product year-round by the expansion of Mexico avocado and vegetable industries, he said.

“We need to be careful. It’s like a marriage, mingled assets. Everyone suffers in a divorce,” he said.

Schweitzer’s managers worry that a 20 percent tariff on goods imported from Mexico, as the administration has mentioned to pay for a border wall, could lead to a tariff war that would damage trade and the company.

A trade war with Mexico would be disastrous for Washington tree fruit, O’Rourke said.

Apples and pears are easy targets because they are perishable. Mexico buys 25 to 30 percent of its apples from Washington and produces most of the rest itself, he said.

Trump, the Senate and House all have different ideas and no one knows what to expect or how soon, O’Rourke said.

After half a century of isolationism, Mexico recognized it was being bypassed in economic growth and liberalized its trade, he said.

When NAFTA was negotiated in the early 1990s, the average wage in Mexico was one-seventh of the average U.S. wage and productivity of the average Mexican worker was one-seventh of a U.S. worker, he said.

NAFTA failed to end the so-called Maquiladora zones along the border where American manufacturers were allowed to set up plants and import raw materials duty-free from the U.S. and export finished goods to the U.S. duty free, he said.

Leaving the system in place protected Mexican manufacturing from U.S. and Canadian competition in Mexico. That system is lessening and needs to end, he said.

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