Easing the NAFTA Transition

There have been more winners than losers overall in the three years since the passage of the North American Free Trade Agreement. U.S. businesses, workers and states are generally prospering under the U.S.-Mexico-Canada trade pact. But there are pockets of displaced American workers, especially women, African Americans and Latinos employed in the apparel, textile and small-electronics industries, which tend to be import-sensitive and pay low wages.

It is difficult to quantify the job losses. The U.S. Labor Department certified as of July 31 that 136,802 workers were eligible for the NAFTA Transitional Adjustment Assistance program but said that only about 15% had used the retraining program or other benefits. Another estimate puts the job losses at 317,000.

Disputes over the numbers have distracted attention from the slow implementation of other NAFTA-adjustment programs. One, the North American Development Bank, was jointly developed by the United States and Mexico to fund environmental infrastructure projects along the border and to provide financial assistance to communities dealing with heavy NAFTA job losses. The bank, which operates its business loan program out of Los Angeles, has yet to make its first loan or loan guarantee to a business wanting to provide new jobs to replace the lost ones. The NADBank’s environmental arm in San Antonio has funded four border projects, mostly construction of sewage plants, since 1994.

On Aug. 1, the Treasury, which oversees the NADBank’s Los Angeles operations, finally announced that businesses in 35 communities in 19 states, including Pacoima, Santa Ana and Watsonville in California, are eligible for loan guarantees or direct loans if they create new jobs in these areas.

There have been political and administrative reasons for the delays, including the usual bureaucratic snarls of a multi-agency effort to create a new bank program. That is no consolation to the displaced workers. Now the question is how quickly the NADBank will award its first loan and get the word out to business that the government can help secure loans to assist in creating new jobs.