“Our nation’s ballooning trade deficit has gutted American manufacturing, killed jobs and sapped our wealth. That is going to change under President Trump, and rules of origin are just the beginning.”

Wilbur Ross: These NAFTA Rules Are Killing Our Jobs By Wilbur Ross The Washington Post September 21, 2017

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NAFTA supporters assert that the U.S. content in cars assembled in Canada and Mexico is particularly high and that therefore our $70 billion-plus trade deficits with our NAFTA partners are not worrisome.

That would be a great argument if it were correct. But it isn’t.

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A study to be released Friday by Anne Flatness and Chris Rasmussen of the Office of Trade and Economic Analysis within the Commerce Department proves its falsity. The study, based on Trade in Value Added data recently released by the Organization for Economic Cooperation and Development, shows that between 1995, the year after NAFTA went into effect, and 2011, U.S. content of manufactured goods imported from Canada dropped significantly — from 21 percent to 15 percent. U.S. content in goods imported from Mexico fell even more — from 26 percent to 16 percent.

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The numbers for the automobile industry specifically are similar — not surprising because automobiles account for 27 percent of total imports from Canada and Mexico.

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Canada and Mexico combined are the largest source of manufactured products imported into the United States, accounting for nearly a quarter of our imports.

This problem is particularly troubling because the previous U.S. share of the content found in imports from Canada and Mexico is largely being absorbed by non-NAFTA trading partners, not by Canada and Mexico themselves.

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NAFTA has provided entry into a bigger market for outside countries, and the United States is paying the price.

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Hundreds of thousands of Americans go to work every day in the automobile manufacturing industry. The declining U.S. share of content in imports from Canada and Mexico puts those jobs at risk.

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NAFTA included “rules of origin” provisions that were intended to restrict the non-NAFTA content in final goods. Yet the numbers above show that the opposite has, in fact, happened.

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These facts are why U.S. Trade Representative Robert E. Lighthizer announced that two major objectives for NAFTA are raising the total NAFTA content requirement and raising the U.S. share of that requirement, especially in autos and auto parts.

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If we don’t fix the rules of origin, negotiations on the rest of the agreement will fail to meaningfully shift the trade imbalance. Our nation’s ballooning trade deficit has gutted American manufacturing, killed jobs and sapped our wealth. That is going to change under President Trump, and rules of origin are just the beginning.

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Read the full op-ed here.

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