The overall net effect of NAFTA on the U.S. economy has been relatively small, primarily
because total trade with both Mexico and Canada was equal to less than 5% of U.S. GDP at the
time NAFTA went into effect. Because many, if not most, of the economic effects came as a result
of U.S.-Mexico trade liberalization, it is also important to take into account that two-way trade
with Mexico was equal to an even smaller percentage of GDP (1.4%) in 1994. Thus, any changes
in trade patterns would not be expected to be significant in relation to the overall U.S. economy. A
major challenge in assessing NAFTA is separating the effects that came as a result of the
agreement from other factors. U.S. trade with Mexico and Canada was already growing prior to
NAFTA and it likely would have continued to do so without an agreement. A 2003 report by the
Congressional Budget Office observed that it was difficult to precisely measure the effects of
NAFTA. It estimated that NAFTA likely increased annual U.S. GDP, but by a very small amount
– “probably no more than a few billion dollars, or a few hundredths of a percent.”51 In some
sectors, trade-related effects could have been more significant, especially in those industries that
were more exposed to the removal of tariff and non-tariff trade barriers, such as the textile,
apparel, automotive, and agriculture industries.
Studies by the U.S. International Trade Commission (USITC) on the effects of NAFTA pointed
out the difficulty in isolating the agreement’s effects from other factors. Although the effects of
NAFTA are not easily measured, the USITC provided some estimates over the years. A 2003
study estimated that U.S. GDP could experience an increase between 0.1% and 0.5% upon full
implementation of the agreement.52 Another USITC study that was congressionally mandated in
1997 offered a comprehensive assessment of the operation and effects of NAFTA after three
years.53 The report estimated that NAFTA had a small, but positive, effect on the overall U.S.
economy. Some of the findings include the following: data inadequacies at the industry level
made it difficult to isolate the effects of NAFTA on absolute trade flows; U.S. trade with NAFTA
partners increased more rapidly than U.S. trade with the rest of the world; the share of U.S.
exports in the Mexican market increased by a higher percentage than the share of total imports
from other countries; industries such as autos, chemicals, textiles, and electronics benefitted by
achieving synergies across the North American market.54