How Would Changing NAFTA Affect Arizona’s Economy?

Published: Tuesday, November 22, 2016 - 5:22pm
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(Photo by Rodrigo Cervantes - KJZZ)
Mexican peso.

On the campaign trail, Donald Trump had a lot to say about trade deals, from the proposed Trans-Pacific Partnership to the North American Free Trade Agreement.

NAFTA was signed in 1994, and President-Elect Trump has vowed to leave the deal if it’s not renegotiated to get a better deal for U.S. workers.

Arizona does about $13 billion in trade with Mexico, according to Margie Emmermann, vice president of Strategic Initiatives at government-affairs firm Molera Alvarez.

So, what would renegotiating NAFTA mean for our state’s economy?

Emmermann has spent her career working on Mexico policy in Arizona, and she said that just in terms of jobs, “it’s about 90,000 jobs a year,” she said. “And then, if you put in the tourism side of it, you’ve got about another 60,000 jobs there.”

And, if you start impacting Mexico’s ability to have robust trade with the U.S. in a way that inhibits its ability to create jobs, you’re going to hurt tourism and retail here in Arizona, according to Emmermann.

Mexicans spend about $7 million a day in Arizona now, she said.

“So, the net affect will be pretty detrimental to the state of Arizona if that balance of trade and tourism is impacted by any of President-Elect Trump’s thoughts right now,’ she said.

She’s hoping the collective trade community can convince President-Elect Trump that, “in a globalized economy, you want to have robust trade agreements with as many people as possible,” she said. “The global economy is not going to stand still.”

She thinks that Arizona would be uniquely affected if NAFTA were to change because the state finally has some great assets that we can capitalize on.

The infrastructure at the Mariposa port of entry on Arizona’s border with Mexico has been maximized recently, Emmermann said. It’s a gateway for huge amounts of produce, she said.

“We are positioned to be able to increase our trade because of that,” she said.

The aerospace and automotive sectors would be affected most if NAFTA is changed, according to Emmerman, because those industries are part of an integrated supply chain that goes across borders.

The greatest criticism of NAFTA if that the trade agreement resulted in American jobs being sent to Mexico. But, she said that’s a fallacy.

“Some jobs left the United States and went to Mexico,” she said. “Other jobs were created to fulfill that integrated supply chain.”

Many other jobs, she said, were replaced by automation.

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