






































 ó 


The Five-Year Effect of NAFTA on Pennsylvania: 
An Analysis of Export Data 

Paul G. Kengor 
Grove City College 

R. C. Phinney 
Shenango Institute for Public Policy 

J 

This article explores the effect of the North American Free Trade Agreeme11t 
(NAFTA) 071 Pe11nsylvania si11ce tile agreeme11t's enactment on January 1, 1994, 
It does so by examining export statistics related to Penl1sylvania as a whole as 
'well as to se'ueral key regions "withil1 the state, As judged by these export statis­
tics, NAFTA's impact Oll Pe1111sylv((1zia has bem q1loite pasiti'",e. At the very 
least, increases 111 exports from Pe1lnsylvania since N AFTA's enactment have 
been so strong that critics oj the agreement will be hard-pressed i1111laki11g a case 
against it, 

The first question usually asked about the North American Free Trade 
Agreement (NAFTA) is, how many American jobs have been lost or 
gained?1 Although we seem to hear more often of NAFTA costing jobs 
than creating them, we must be wary of anecdotal evidence, for securing 
solid information regarding specific job losses or gains in Pennsylvania 
is difficult and perhaps impossible. According to both the Pennsylvania 
Department of Labbr and Industry and the Employment and Training 
Administration office at the United States Department of Labor, no group 
at either the state or federallevel collects and tracks data on job losses 
(Currie 2001; Poole 2001).2 

This article avoids the debate about NAFTA and jobs. Instead, it ex­
amines the effect of NAFTA on Pennsylvania between 1994 and 1999 in 
terms of rising exports.3 These five years of fairly consistent trade data 
reveal NAFTA's dramatically positive effect on state and regional exports 
to Canada and Mexico. Most export numbers have jumped sharply. 
Equally significant, export growth has been broadly distributed across a 
variety of industries, including major manufacturing sectors that some 
analysts predicted would be hurt by NAFTA. The impressive overall 
export growth has not been driven merely by a handful of fortunate in­
dustries; the benefits have been widely shared. 

Despite the clarity of our findings, we encountered several problems 

in conducting this research. First, the state data4 gathered by the United 
States Department of Commerce (DoC) dates only to 1993, the year prior 
to NAFTA's implementation, as opposed to earlier data that is available 
on national-level exports.s Thus, we were not able to make estimates 

27 



based on long-term trends. Second, while industry data exists at the 
state levet it is not available at the regional or metropolitan levels. Third, 
because no organization collects state import data, it is not possible to 
compare imports against exports in order to ascertain whether a state 
trade deficit or surplus exists. 

We begin with some background on NAFTA and a brief description 
of recent studies of NAFTA's national and local effects. vVe then present 
the firstfive-year analysis of the impact of NAFTA on Pennsylvania as a 
wholp. Fina]]y, we examine NAFTA's impact on five particular metro­
politan areas in Pennsylvania: Erie, Harrisburg, Philadelphia, Pittsburgh, 
and Youngstown.6 

Background 

On December 17, 1992, Canadian Prime Minister Brian Mulroney, 
Mexican President Carlos Salinas de (;ortari, and US. President George 
Bush signed NAFTA, marking the end of a process that began on Febru­
ary 5, 1991 when the three leaders announced that they would negotiate 
the trade accord. Following approval by the legislatures of each of the 
three countries, NAFTA went into effect on January 1, 1994. It created a 
frpp-tradp arpa in North America that was the largest of its kind in the 
world, with a combined 1994 GDP of $7.7 trillion and 368 million con­
sumers. NAFTA seeks to: 

• Eliminate barriers to trade between the three member nations 
and facilitate the cross-border movement of goods and services 

• Promote conditions of fair competition in the free-trade area; 
• Increase substantially investment opportunities in the territories 

of the member nations; 
• Provide adequate and effective protection and enforcement of 

intellectual property rights in each nation's territory; 
• Create effective procedures for the implementation and applica­

tion of the agreement for its joint administration, ;mrl for the 
resolution of disputes; and 

• Establish a framework for further trilateral, regional, and multi­
lateral cooperation to expand and enhance the benefits of the 
agreement. 

NAFTA eliminates tariffs on most goods originating in Canada, 
Mexico, and the United States. The schedule to eliminate tariffs previ­
ously established in the Canada - U.s. Free Trade Agreement of 1989 
was continued as planned so that all trade between Canada and the 
United States is now duty free. For most trade between Mexico and the 
United States and between Canada and Mexico, the intent of NAFTA 
was to eliminate existing customs duties immediately or phase them out 
in five to 10 years. By 1998, many duties had been ended. On a few 

28 



Table 1 
NAFTA Tariff Reduction Schedule for Heinz Exports 

toMexico (percent) 

Product 19605 1988 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 

N I 57 sauce >100 20 20 18 16 14 12 10 8 6 4 2 0 
\..0 

BBQ Sallce >100 20 20 13.5 12 10.5 9 7.5 6 4.5 3 1.5 0 

Ketchup 100 20 20 16 12 8 4 0 0 0 0 0 0 

Pickles >100 20 20 16 12 8 4 0 0 0 0 C 0 

Tomato Sauce >100 20 20 13.5 12 10.5 9 7.5 6 4.5 ;) 1.5 0 

Source: Arthur Humphrey, national sales manager for Mexico, Heinz Co., April 28, 1997. 



sensitive items, the agreement will phase out tariffs over 15 years. NAFTA 
lllemvero ma y a~ree to a fatster end to tariffs on any goods at anytime. 

Table 1 shows a sample tariff-reduction schedule from an actual U.s. 
company, Heinz of Pittsburgh. 

This schedule, covering multiple products for a single U.S. company, 
is typical of the rate of tariff reduction experienced by thousands of com­
panies throughout America. Among the precedent-setting arrangements 
in the trade agreement are: the complete liberalization of agricultural 
goods within 15 years; inclusion of the innovative dispute-settlement 
procedures of the Canada - U.s. Free Trade Agreement; trade liberaliza­
tion in services, including financial services, within a framework of clear 
rules on intellectual property rights; and the removal of all tariffs and 
quotas on textiles and apparel in North America (Espana 1993). Many of 
these arrangements signify progress on issues that eluded GATT for gen­
erations, particularly those concerning textiles and agriculture. As 
Yarbrough and Yarbrough (1994) note, such trade-policy breakthroughs 
provided GATT with helpful insights in dealing with similar issues that 
have avoided settlement for decades. 

Analyses of the National and Local Effects of NAFTA 

NAFTA's potential impact at the national level was examined exten­
sively in the years prior to its adoption.7 The United States Federal Re­
serve Bank of Chicago estimated that NAFTA would produce II output 
gains" for all Lhree naliulls, im.:reatiing U.S. GDPby 0.24%, Mexican GDP 
by 0.11 %, and Canadian GDPby an astonishing 3.26% (Kouparitsas 1997; 
Weintraub 1997). 

Many studies measuring the actual impact were produced after 1994. 
A study done by the Heritage Foundation in 1997 gave NAFTA an "A" 
and dubbed it aI/remarkable success" for creating jobs, increasing ex­
ports, and stimulating export-led economic growth. The study noted 
that U.S. exports to Mexico grew by 37% from 1993 to 1996, reaching a 
record $57 billion (Sweeney 1997). As President Clinton happily pre­
dicted during his May 1997 trip to Mexico, by the end of 1997 the histori­
cally "Third World" country would buy more American products than 
any counlry excepl Cauada, tiurpatitiing tiecond-place Japan, which has 
an economy 15 times larger. Over the same period, U.s. exports to Canada 
rose by 33%. During NAFTA's first three years, 39 of the 50 states in­
creased their exports to Mexico, and 44 saw a rise between 1995 and 1996 
(Sweeny 1997). 

That three-year trend continued throughout the first five years of the 
trade accord (see Table 2). Since 1993, U.S. exports to Canada have grown 
by over 50% and those to Mexico have nearly doubled.s This increase 
reflects an added $93 billion in American exports. Because of this sig 

30 



nificant jump, former United States Trade Representative Charlene 
Barshefsky insisted that "there is no economic argument against NAFTA" 
(Cooper 1997) 

Table 2 
U. S. Exports to Canada and Mexico, 1993-1998 

(millions of dollars) 

Country 1993 1994 1995 1996 1997 1998 

Canada 100.4 114.4 127.2 134.2 151.8 156.3 

Mexico 41.6 50.8 46.3 56.8 71.4 79.0 

Source: U.S. Department of Commerce. 

As for jobs, estimates vary widely. The u.s. Trade Representative said 
that after its first three years, NAFTA had created 122,000 American jobs 
as a result of trade with Mexico, plus 189,000 due to trade with Canada 
(Barshefsky 1997). On the other hand, a study by a coalition of labor and 
environmental groups, led by the Economic Policy Institute, contended 
that NAFTA had cost the United States. 420,000 jobs (Associated Press 
1997). By mid-1997, the United States Department of Labor had certified 
] 16,516 job losses. Yet, a study done by UCLA's North American Integra­
tion and Development Center in 1997 found that the United States had 
experienced a net gain of 11,000 jobs due to NAFTA, having lost 38,000 to 
Mexican and Canadian competition, while gaining 49,000 from increased 
U.S. exports to those two nations (Hinojosa 1996; Silver 1996). Under­
standably, this study led some analysts to conclude that when it comes to 
NAFTA's job impact, the trade agreement is u "wash" (Cooper 1997). 

Job losses and gains are difficult to measure. The u.s. Trade Repre­
sentative argued that u.s. exports to Mexico "supports" 2.3 million Ameri­
can jobs. The Dallas Morning News (1999) claimed a gain of 688,000 new 
American jobs after five years. Some NAFTA supporters point to the 
creation of 12 million new American jobs and a drop in the overall un­
employment rate from 7.5% to 4.9% since 1994, suggesting that NAFTA 
had a role in the general job surge (see Lambro 1997). 

Studies projecting NAFTA's state-level effects were scarce.9 Four such 
studies produced in 1999 assessed NAFTA's impact on Texas, Michigan, 
Arizona, and Florida. Of these, the Florida report showed the least posi­
tive impact. The three other studies demonstrated that NAFTA had a 
remarkably positive impact on state exports. A study in 2000 of NAFTA' s 

31 



effect on Wisconsin tound the most impressive results in terms of in~ 
creased exports. Jll 

The Five-Year Effect of NAl'TA on Pennsylvania 

One of the first state-level N AFIA studies was done by the Allegheny 
Institute for Public Po1icy in 1997. This stlHiy fOC'l]Sf'c1 on N AFTA' s thrflfl­
year effect on Pennsylvania (Kengor 1997).11 It found that Pennsylvania's 
exports to Mexico and Canada reached record levels following the first 
full year of NAFTA's implementation, increasing by 31 oIL, and 11%, re­
spectively.12 Twenty of the 30 industry classifications for Pennsylvania 
experienced export gains to Mexico during NAFTA's first year, while 26 
of 32 saw increases to Canada. This led to an extra $616 million in Penn­
sylvania exports after just the first year, particularly in capital goods in­
dustries and environmental technology. None of the leading sectors of 
the state's economy experienced notable drops in exports to either Canada 
or Mexico. The agreement reportedly helped Pennsylvania companies 
like Heinz, Chester Environmental, Amp., and Mine Safety Appliances. 
Prior to NAFTA, Heinz had no sales in Mexico. In 1996, it sold between 
$3 million and $5 million worth of products there. 

Tables 3 and 4 best convey the effect of NAFTA. 

Table 3 
Percentage Changes for Pennsylvania's 

Exports to Selected Destinations, 1993-1999 

% Change % Change 

Market 1993-1999 1998-1999 

NAFTA Countries 88.9% 13.1% 

Canada 58.9% 1.2% 

Mexico 267.6% 61.8% 

Non-NAFTA Countries 27.9% -4.7% 

World 48.1% 2.0% 

Source: U.s. Department of Commerce. 

As these tables show, Pennsylvania's exports to the NAFTA countries 
grew from $4.36 billion in 1993 to $8.23 billion in 1999, an 88.9% increase. 
That was a rate of increase three times higher than the 27.9% rise in ex~ 

32 



VJ 
VJ 

Table 4 
Pennsylvania's Export Totals to Selected Destinations, 

1993-1999 

Market 1993 1994 1995 1996 1997 1998 1999 

Total NAFfA 4,357.6 4,932.8 5,412.9 5,652.6 6,756.0 7,282.2 8,233.4 

Canada 3,730.3 4,066.5 4,671.8 4,773.7 5,615.7 5,856.9 5,927.2 

Mexico 627.3 866.4 741.2 879.0 1,140.2 1,425.2 2,306.2 

Non-NAFTA 8,832.0 9,765.7 12,267.3 11,792.9 12,542.4 1 L856.6 1L294.2 

Total World 13,189.6 14,698.6 17,680.2 17,445.6 19,298.4 19,138.8 19,527.6 

Source: U.5. Department of Commerce. 



ports to non-NAFTA nations. The 58.9c~;) rise to Canada alone was twice 
as high as that to non-NAFTA nations. Most spectaculal~ the value of 
exports to Mexico more than tripled, from about $627 million in 1993 
(the year prior to NAFTA) to $2.31 billion in 1999. This was a gain of 
267.6%, almost 10 times the rate of increase to non-NAFTA nations over 
tht> period. 

The strength of Pennsylvania's exports to Mexico and Canada under 
NAFTA was so pronounced that no other two nations did more to pull up 
Pennsylvania's total exports in the post 1993 period. Because of the 
strength of Pennsylvania's exports to these two countries, the state man­
aged to increase its exports to the world as a whole by 48.1 %. Without the 
strength of those two foreign markets, Pennsylvania would have increased 
its exports merely by 27.9% from 1993-99. Under NAFTA, the added $3.9 
billion in Pennsylvania's exports to the NAFTAnations comprises 62% of 
the $6.3 billion in added state exports to the world as a whole. 

The numbers for the most recent year available are also positive. From 
1998 to 1999, Pennsylvania's exports to the NAFTAnations increased by 
13.1 %, compared with a 4.7% decrease in exports to non-NAFTA nations. 
Most responsible for the strength in exports to the NAFTA nations was a 
61.8% increase in state exports to Mexico. Thanks to the Mexican market 
alone, Pennsylvania's exports to the world as a whole barely managed to 
stay in the plus category, increasing by just 2%. 

Comparing NAFTA nations with the rest of the world is smart for 
many reasons. Most notably, one cannot argue that the boom in 
Pennsylvania's exports to the NAFTA countries was simply an outgrowth 
of the overall good economy during the 1990s. If that were the case, then 
we would see a similar, perhaps near equal rise in Pennsylvania's ex­
ports to all countries during the period. To the contrary, exports to the 
NAFTA countries are significantly larger - over three times the percent 
increase in exports to non-NAFTA countries. 

We tnust etnphasize that Mexico experienced one of the worst reces­
sions in its checkered history in 1995, known as the Peso Crisis. This 
recession greatly diminished Mexicans' purchasing power, particularly 
of ~oreign exports. Consequently, there was a sharp dip in Pennsylvania's 
exports to Mexico that year. Yet, even with that, Pennsylvania'S exports 
to the country vastly outpaced those to other countries in the post-NAFTA 
period. The overall strength of state exports to Mexico amid the Mexi­
can recession is extraordinary. 

The much larger growth in Pennsylvania's exports to the NAFTA na­
tions compared with the non-NAFTA nations is good news for another 
reason. The NAFTA nations constitute the state's two largest export 
markets. Indeed, the larger rate of growth might not be so significant if 
the two NAFTA nations ranked, sa}~ 10 and 15 in terms of size of export 

34 



market. Instead, they rank 1 and 2. A better stanc.l.ing could not be hoped 
for. According to DoC, 58)40 jobs have been created in Pennsylvania as 
(] result of the nearly $4 billion increase in state exports to Mexico and 
Canada under NAFTA.I.' 

Finally, it is important to note what happened to Pennsylvania's ex­
ports to Mexico immediately prior to NAFTA's imp1ementation. Since 
DoC did not collect such data then, we must turn to MISER, the only 
group collecting state trade data prior to 1993. According to MTSER, 
Pennsylvania's exports to Mexico declined precipitously the year before 
NAFTA, falling 12(~~.14 Yet, a turnaround took place immediately. In the 
first year of NAFTA, as Table 3 shows, Pennsylvania's exports to Mexico 
jumped from $627 million to $866 million - a 38% gain. The only ob­
stacle that slowed this stampede of exports (albeit temporarily) was the 
Mexican recession of 1995. MISER and DoC data also show that 
Pennsylvania's exports to Canada and Mexico reached record highs in 
the first year of NAFTA's implementation. Under NAFTA, Canadians 
and Mexicans have spent $38.3 billion on Pennsylvania exports. 

Pennsylvania Exports by Industry 

What is Pennsylvania exporting to Canada and Mexico? Which in­
dustries are enjoying big gains in exports under NAFTA? There are not 
merely one or two high-tech industries responsible for the boom in ex­
ports. The export success is broad based, covering the vast majority of 
Pennsylvania's industries. Of the 33 industry categories that export to 
CdHdUd, 28 increased exports; and of the 32 that export to Mexico, 25 
increased exports. In total, 82% of industries increased their exports. 

Table 5 shows Pennsylvania's exports to Canada within three groups 
of product categories: manufactures, agricultural and livestock prod­
ucts, and other commodities. 

Table 5 
Pennsylvania's Exports To Canada By Industry 

(millions of dollars) 

Product Gmup 

Manufactures 
Apparel 

Chemical Products 

Electric & Electronic Equipment 

Fabricated Metal Products 

35 

1993 

3,516.5 

23.0 

495.2 

318.2 

159.2 

% Change 

1999 1993-1999 

5,608.3 59.5% 

25.2 9.6% 

991.5 100.2% 

552.4 73.6% 

268.9 68.9% 



% Change 

Product Group 1993 1999 1993-1999 

Food Products 119.3 187.2 56.9% 

Furniture & Fixtures 36.0 28.5 -20.7% 

Industrial Machinery & Computers. 533.6 854.1 60.1% 

Leather Products 10.4 36.4 247.9% 

Lumber & Wood Products 106.2 129.9 22.3% 

Paper Products 84.0 214.4 155.2% 

Primary Metals 354.0 645.1 82.2% 

Printing & Publishing 120.3 198.7 65.1% 

Refined Petroleum Products 64.9 85.9 32.5% 

Rubber & Plastic Products 102.2 178.1 74.2% 

Scientific & Measuring Instruments 150.4 250.7 66.7% 

Stol1f\ Glass & Cl~y Procillf'ts 21.5.2 2RR2 14.0% 

Textile Mill Products 27.9 84.5 203.1% 

Tobacco Products 0.2 0.8 350.7% 

Transportation Equipment 493.7 466.4 -5.5% 

Miscellaneous Manufactures 92.7 102.4 10.5% 

Unidentified Manufactures 9.9 18.8 91.0% 

Agricultural & Livestock Products 67.6 76.2 12.8% 

Agricultural Products 58.8 68.0 15.7% 

Livestock & Livestock Products 8.8 8.2 -6.0% 

Other Commodities 146.2 242.6 65.9% 

Bituminous Coal & Lignite 32.6 77.2 137.0% 

Crude Petroleum & Natural Gas 15.4 4.2 -72.6% 

fish & Other Marine Products 3.4 1.0 -69.9% 

Forestry Products 0.6 2.3 276.7% 

Goods hnported & Returned Unchanged 31.0 55.5 63.4% 

Metallic Ores & Concentrates 3.6 6.8 86.5% 

Nonmetallic Minerals 3.1 3.8 19.8% 

Scrap & Waste 42.8 68.0 58.8% 

Special Classification Provisions 7.7 19.5 151.7% 

Used Merchandise 2.9 4.3 47.1% 

Total 3J30.3 5,856.9 58.9% 

Source: U.S. Department of Commerce. 

36 



The top exporting industrv to Canada is chemical products, whic1l 
sold nearly $1 billion in goods above the border in 1999 alone - more 
than a 100% increase under NAFTA. The second largest exportel~ indus­
trial machinery and computers, sold over $854 million, a 60.1 % increase. 
The third and fourth largest exporters, primary metals and electric and 
electronic equipment saw rises of 82.2tYtl and 73.6%, respectively. Among 
the top five exporting industries to Canada, only transportation equip­
ment saw a decline, a small one of S.5%. The sixth largest export indus­
try, fabricated metal products, was up 69% under NAFTA. Its rate of 
increase, and that for primary metals, exceeds the overall rate of increase 
for Pennsylvania's exports to Canada generally. Combined, these two 
industries sold $914 million in exports to Canada in 1999, up from $S13 
million the year before NAFTA's enactment. 

Table 6 displays Pennsylvania's exports to Mexico by industry. More 
than 99% of thp %2.:1 hillinn "vorth of Pennsylvania products exported 
and sold to Mexico in 1999 were manufactured goods. Similarly, almost 
96% of Pennsylvania products exported and sold to Canada were manu­
factures. These figures undercut the argument that opening free trade 
through agreements like NAFTA is undermining America's manufactur­
ing base. There may indeed be ways in which our manufacturing base is 
adversely affected by :\JAb'TA, but it is not in terms of total exports to 
Canada and Mexico. 

Table 6 
Pennsylvania's Exports To Mexico By Industry 

(millions of dollars) 
% Change 

Product Group 1993 1999 1993-1999 

Ma11ufactures 621.3 2,290.0 268.6% 

Apparel 5.9 22.0 27S.3% 

Chemical Products 15S.1 361.5 133.1% 

Electric & Electronic Equipment 112.4 879.2 682.1% 

Fabricated Metal Products 14.8 97.6 558.6% 

Food Products S1.4 34.4 -33.1% 

Leather Products 0.5 SO.3 9,128.9% 

Furniture & Fixtures 1.9 1.8 -2.2% 

Industrial Machinery & Computers 97.5 240.2 146.4% 

Lumber & Wood Products 4.8 2.8 -41.2% 

P;::JPf'l" Products 10.4 27.1 159.4% 

37 



% Change 

Product Group 1993 1999 1993-1999 

Primary Metals 55.8 153.5 175.3% 

Printing & Publishing 1.1 8.8 669.2% 

Refined Petroleum Products 1.2 3.5 190.1% 

Rubber & Plastic Products 13.4 121.9 811.8% 

Scientific & Measuring Instruments 29.5 79.4 169.2% 

Stone, Glass & Clay Products 17.2 53.3 210.5% 

Tobacco Products 0 1.5 N/A 
Textile Mill Products 26.4 45.4 72.0% 

Transportation Equipment 14.1 77.5 449.0% 

Miscellaneous Manufactures 6.3 6.1 -3.1% 

Unidentified Manufactures 1.6 22.1 1,320.5% 

Agricultural & Livestock Products 3.2 5.1 60.1% 

Agricultural Products 0.5 4.0 741.2% 

Livestock & Livestock Products 2.7 1.2 -57.0% 

Other Commodities 2.8 1.2 289.3% 

Forestry Products * 0.2 1,307.4% 

Fish & Other Marine Products * * 1.5% 

Metallic Ores & Concentrates 0.1 1.3 893.8% 

Bituminous Coal & Lignite 0.5 * -96.4% 

Crude Petroleum & Natural Gas 0 * N/A 

Nonmetallic Minerals 0.9 2.7 196.1% 

Scrap & Waste 0.2 3.8 2,077.7% 

Used Merchandise 1.0 0.7 -29.9% 

Special Classification Provisi ons 0.1 2.3 1,996.6% 

Total 627.3 2,306.2 267.6% 

. * less than $100,000 

Source: U.s. Department of Commerce. 

Table 6 reveals particularly good news about Pennsylvania's manu­
facturing exports. The state's top five exporting industries to Mexico are 
all in manufacturing. These are: electric and electronic equipment ($879.2 
million), chemical products ($361.5 million), industrial machinery and 
computers ($240.2 million), primary metals ($153.5 million), and rubber 

38 



and plastic products (5121.9 million). All five of these industries sa,v 
triple digit increases in their exports to Mexico under NAFTA. Among 
them, the highest increase was in rubber and plastic products, which 
saw a phenomenal 812% risc, followed by u 682% increase by electronic 
and eiectrical equipment. 

The news also seems favorable for the steel and metals industry. The 
export category that includes the steel industry - primary metals - in­
creased more than 175% under NAFTA after declining the year before 
NAFTA took effect. 15 Exports in fabricated metal products rose almost 
559%. Prior to NAFTA, fabricated metal products was the ninth largest 
exporting industry to Mexico. It is now sixth. Combined, the two indus­
tries sold more than $251 million in exports to Mexico in 1999 alone. Under 
NAFTA, the two have sold nearly half a billion dollars in exports to Mexico. 

Big increases also occurred in printing and publishing (669%) and 
transportation equipment (449%). Leather products, which hod the third 
largest rate of increase among state exports to Canada, grew an amazing 
9,129'10. Declines in manufacturing exports were small. 

The farm sector offered a mixed picture with a 741 % jump in agricul­
tural products compared with a 57% drop in livestock and livestock prod­
ucts. Metallic ores and concentrates rose almost 894% compared with a 
decrease of more than 96% for bituminous coal and lignite. The drop for 
coal is not a surprise, considering that Mexicans mine their own coal in a 
very strong domestic coal-mining industry. Pennsylvania companies like 
Mine Safety Appliances (MSA) have found significant success exporting 
mine-safety equipment to the Mexican coal industry. MSA has been ex­
porting to Mexico for five decades. Mexico is an annual multi million 
dollar market to the Pittsburgh company. Dom Palmieri, the interna­
tional sales representative for MSA, says the company sells "the com­
plete line" of its products in Mexico, "in excess of 4,500 items/' from 
mining-cap lamps to devices for detecting methane gas vapors. These 
sales to Mexico, he notes, "translate into a lot of local jobs here in Pitts­
burgh." NAFTA has helped MSA, says Palmieri, "mainly in reduced 
tariffs. This allows companies like MSA to compete favorably in a global 
market. It does so because it saves us money."lb 

The Five-Year Effect of NAFTA on Western Pennsylvania 

This section examines more closely exports to Canada and Mexico 
from the three major metropolitan areas affecting western Pennsylvania: 
Erie, Pittsburgh, and Youngstown. Like those for Pennsylvania as a whole, 
the results of NAFTA for exports from western Pennsylvania have been 
overwhelmingly positive, particularly when measured relative to non­
NAFTA nations. 

39 



Table 7 
Erie, PA 

Export Totals to Selected Destinations, 1993-1999 
(millions of dollars) 

% Change 

Market 1993 1994 1995 1996 1997 1998 1999 1993-1999 

NAFTA 
Countries 195.2 174.4 304.5 175.0 386.4 452.4 275.9 41.3% 

Canada 182.1 166.3 298.4 161.9 380.7 428.0 203.8 11.9% 

Mexico 13.1 8.1 6.1 13.1 5.6 24.4 72.1 448.6% 

Non-NAFTA 
Countries 116.4 111.0 186.3 146.9 211.8 168.8 260.4 123.8% 

World 311.6 285.4 490.8 321.9 598.2 621.2 536.3 72.1 % 

Source: U.S. Department of Commerce. 

Table 7 shows that in 1999 Pittsburgh ranked 36 in total dollar value 
among the largest exporting metropolitan areas in the United States, while 
Erie placed 123 and Youngstown 181. Pittsburgh exported $3.9 billion in 
products that year, Erie exported $536 million, and Youngstown exported 
nearly $240 million. The most telling evidence revealing NAFTA's effect 
on the three metropolitan areas emerges when their exports to the NAFTA 
nations are compared against those to the non-NAFTA nations. Addi­
tional insights are gained when viewing the export data of the two NAFTA 
nations individually and against their exports to non-NAFTA nations 
and to the world as a whole. Tables 7-9 provide this data. 

As with Pennsylvania as a whole, in all three metropolitan areas the 
rate of increase for exports to Mexico far exceeds the rise to non-NAFTA 
nations. For Erie, the rate of increase to Mexico was almost 449% under 
NAETA, about four times higher than the roughly 124% rise to non­
NAFTA nations. For Pittsburgh, the rate to Mexko was 121 %, 40 times 
higher than the 3.1 % rise to no~-NAFTA nations. The results were just as 
dramatic for Youngstown where exports to Mexico jumped 105% com­
pared with a decline of almost 12% to non-NAFTAnations. As in the case 
of Pennsylvania from 1998-99, Youngstown's exports to ivlexico under 
NAFTA have been so overwhelmingly strong that they helped to pull 
overall exports out of whot would have been Q decline from 1993-99. 

40 



Table 8 
Pittsburgh, PA 

Export Totals to Selected Destinations, 1993-1999 
(millions of dollars) 

% Change 

Market 1993 1994 1995 1996 1997 1998 1999 1993-1999 

NAFTA 
Countries 922.0 955.1 1,010.3 1,170.4 1,564.1 1,717.1 1,808.0 96.1% 

Canada 741.9 731.0 823.6 948.5 122.2 135.6 1,410.5 90.1% 

Mexico 180.1 224.1 186.7 221.9 341.6 360.9 397.5 120.7% 

Non~NArTA 

Countries 2067.2 2195.5 2971.8 2763.2 2,788.1 2362.1 2132.3 3.1 % 

vVorld 2c)R9.7 31 SOh 39R?2 3933.7 435?:I 4079.2 2132.3 31.8% 

Source: U. S. Department of Commerce 

Table 9 
Youngstown, OH 

Export Totals to Selected Destinations, 1993-1999 
(millions of dollars) 

% Change 

Market 1993 1994 1995 1996 1997 1998 1999 1993-1999 

NAFTA 
Countries 108.4 105.9 136.1 128.8 188.9 150.6 168.4 55.3% 

Canada 103.5 98.3 115.0 120.9 174.4 134.3 158.4 53.0% 

Mexico 4.8 7.5 21.1 7.9 14.5 16.3 10.0 105.1% 

Non-NAFTA 
Countries 80.8 79.4 89.8 95.1 134.1 145.9 71.4 -11.7% 

World 189.2 185.3 225.9 223.9 323.0 296.6 239.8 26.7% 

Source: U. S. Department of Commerce 

41 



For all the metropolitan areas but Erie, exports to Canada also out­
paced exports to non-NAF'lA nations by notable margins. Pittsburgh's 
exports to Canada increased 90%, almost doubling from nearly $742 mil­
lion in 1993 to $1.41 billion in 1999. This was nearly 30 times the rate of 
Pittsburgh's 3.1 % increase to non-NAFTA nations over the same period, 
Also impressive, Youngstown increased exports to Canada by 53% since 
NAFTA was implemented. 

The results for Erie are more complicated. Erie's exports to Canada in 
1999 were half of what they were in 1998. Erie has been consistently 
inconsistent in its exports to Canada since NAFTA, declining three times 
and rising three times. This likely reflects the export-production pattern 
of one or two companies or industries in the Erie area. 

For Pittsburgh, the 96.1 % rate of increase in exports to the NAFTA 
nations outdid the 3.1 % rise to non-NAFTA nations by a ratio of 31 to 1. 
Youngstown was likewise impressive, seeing exports to the NAFTA na­
tions grow 55.3% compared with a 12% drop in exports to non-NAFTA 
countries. Only for Erie was the rise in exports to non-NAFTA nations 
(123.8%) higher than the increase to NAFTA nations (41.3%). The Erie 
case is attributable not to the Mexican market, to which the city's exports 
boomed by 449%, but instead to a surprising collapse in exports to the 
Canadian market from 1998 to 1999. Indeed, had this article covered 
only 1993 to 1998, when Erie's exports to Canada were much stronger, 
the rate of increase for Erie's exports to the NAFTA nations would have 
been double what it was to the non-NAFTA nations. 

Of the three cities, Pittsburgh and Youngstown would have to be 
judg'ed stunning export successes under NAFTA, at least in terms of their 
export base. In total, Erie has gained $80.7 million in exports to Mexico 
and Canada under NAFTA, Pittsburgh has gained some $886 million, 
and Youngstown has gained nearly $60 million. Altogether, the three 
cities have seen a rise of $1.03 billion in exports to the two NAFTA na­
tions since the trade agreement was implemented. 

Remarkably, this $1.03 billion in added exports to the NAFTA nations 
accounts for 84% of the $1.23 billion in overall exports to all countries. In 
other words, the increase in exports to the NAFTA nations drove overall 
exports for the three cities combined. Just two of the world's more than 
170 nations - Canada and Mexico - accounted for 84% of the overall 
growth in exports from Erie, Pittsburgh, and Youngstown since NAFTA 
started. Under NAFTA, Canada and Mexico have become by far the two 
most attractive foreign markets to western Pennsylvania. According to 
DoC estimates, approximately 15,000 jobs have been created in these met­
ropolitan areas as a result of thls added $1 billion in exports under NAFTA. 

The data also underscore the prominence of the Canadian and Mexi­
can markets to the three metropolitan areas. Table 10 shows that Canada 

42 



is the top export market tor all three cities. For Pittsburgh, Mexico is now 
the second largest, buying over twice as many products in 1999 as did the 
third largest market, Germany. For Erie, Mexico places third, behind sec­
ond place Brazil and well ahead of Gern1.any, a distanl [Qurlh place. Mexi­

cans buy over five times more Erie products than do Germans. For Young­
stown, Mexico places third, behind the second place United Kingdom. 

Table 10 
Top Trade Partners for Selected Cities, 1999 (millions of dollars) 

Major Markets of: 
Erie Pittsburgh Youngstown 

1. Canada (203.8) 1. Canada (1,410.5) 1. Canada (158.4) 

2. Brazil (108.6) 2. Mexico (397.5) 2. U. K. (17.3) 

3. Mexico (72.1) 3. Germany (183.4) 3. Mexico (10.0) 

4. Germany (13.6) 4. U. K. (177.7) 4. France (9.8) 

5. Australia (13.3) 5. Netherlands (132.7) 5. Taiwan (5.3) 

C. K. = United Kingdom 

5011r('P: lTS DppClrtmpnt of Commercp 

Table 10 reveals the crucial importance of Mexico and Canada, and 
thus NAFTA, to these three major metropolitan areas in western Penn­
sylvania. Erie sold almost $204 million in products to Canada in 1999 
and more than $72 million to Mexico. Youngstown exported over $158 
million to Canada and $10 million to Mexico. Pittsburgh exported $1.4 
billion to Canada and $397.5 million to Mexico. Altogether, Canadians 
purchased $1.76 billion in products in 1999 from producers in Erie, Young­
stown, and Pittsburgh. Mexicans purchased $479 million. That totals 
$2.2 billion in regional exports to Canada and Mexico in 1999 alone. In 
all threp ('asps, ('Cln;:](1;:1 W;:IS thp singlp lClrgest pxport market, while Mexico 

was one of the top two or three largest markets. This further amplifies 
the Significance of the rates of increase in exports to Canada and Mexico 
relative to the non-NAFTA nations. 

The Five-Year Effect of NAFTA on the Harrisburg Metropolitan Area 

Harrisburg was among the nation's top 100 exporting cities in 1999, 
ranking 97 with $938 million in total exports. Tables 11 and 12 compare 
Harrisburg's exports with the NAFTA and non-NAFTA nations between 
1993 and 1999 and between 1998 and 1999. 

43 



Table 11 
Harrisburg, PA 

Export Totals to Selected Destinations, 1993-1999 
(millions of dollars) 

Market 1993 1994 1995 1996 1997 1998 1999 

NAFTA 
Countries 227.3 264.8 274.5 387.6 445.9 474.4 542.6 

Canada 148.0 164.9 164.2 229.8 264.6 292.8 311.2 

Mexico 79.3 99.9 110.4 157.7 176.3 181.6 231.4 

Non-NAFTA 
Countries 111.8 270.2 326.4 387.9 518.6 478.5 396.1 

World 339.2 535.0 601.0 775.5 964.4 952.9 938.7 

Source: U.s. Department of Commerce. 

Table 12 
Harrisburg, PA 

Export Totals to Selected Destinations (millions of dollars) 

Market 1993-1999 1998-1999 
$ Change % Change $ Change % Change 

NAFTA Countries 315.3 138.7% 68.2 14.4% 

Canada 163.2 110.2% 18.4 6.3% 

Mexico 152.1 191.8% 49.8 27.5% 

Non-NAFTA Countries 284.3 254.2% -82.4 -17.2% 

World 599.6 176.8% -14.2 -1.5% 

Source: U.S. Department of Commerce. 

Of the five metropolitan areas examined in this article, only Harris­
burg exported less to the NAFTA nations than to the non-NAFTA na­
tions. This does not necessarily reflect poorly on NAFTA. Under NAFTA, 
Harrisburg's exports to Mexico increased by almost 192%, compared with 
a 254% gain to the rest of the world. Its exports to the two NAFTA na­
tions combined increased almost 139%. While exports to the NAFTA 
nations are notably lower than those to the non-NAFTA nations, they are 

44 



still quite high. Indeed, of the five metropolitan areas, Harrisburg is prob­
ably the most impressive exporter generally, for it did well across the 
board. In fact, of the five metropolitan areas, only Harrisburg saw triple­
digit increases in its exports to Canada, Mexico, the two NAFTA nations 
combined, and the non-NAFTA nations. 

With such high increases to the NAFTA nations, it is difficult to call 
Harrisburg a NAFTA failure, or to assert that NAFTA has been bad for 
Harrisburg. Cities, regions, and states throughout the country would be 
thrilled to experience both a 110% increase in exports to Canada and a 
] 92% rise to Mexico, as Harrisburg has done under NAFTA. More re­
cently, Harrisburg has performed better with the NAFTA nations than 
with the non-NAFTA nations in terms of exports. In the most recent year 
for which data is available, Harrisburg's exports to the NAFTA nations 
increased by 14.4%, compared with a drop of 17.2% to the non-NAFTA 
nations, a drop that is among the largest declines for the five metropoli­
tan areas under review. Better yet for NAFTA, Harrisburg's exports to 
Mexico in that year jumped by 27.5%, far surpassing the 17.2% decline in 
its exports to the non-NAFTA nations. By selling more than $542 million 
in products and services to Canada and Mexico in 1998-1999, Harrisburg 
avoided a devastating decline in overall exports. 

The Five-Year Effect of NAFTA on the Philadelphia Metropolitan Area 

With roughly $9.3 billion in exports in 1999, Philadelphia ranked 13 
among the nation'slargest exporting cities. It is by far Pennsylvania's 
top exporting city. As Tables 13 and 14 show, the NAFTA export num­
bers for Philadelphia are simply superb. 

Since NAFTA was implemented, Philadelphia's exports to NAFTA 
countries have increased 129%, nearly four times the 33.4% rise to the 
non-NAFTA countries. The rise in exports to Canada was almost 79%, 
more than twice as high as the increase to the non-NAFTA countries. Most 
astounding was the almost 376% rise in exports to Mexico under NAFTA, 
more than 11 times the increase to non-NAFTA countries. 

Impressive as these numbers are, in just the most recent year 
Philadelphia's exports to the NAFTA countries shot up 39%, compared 
with a drop of 1.6% to the non-NAFTA countries. The rise in exports to 
Mexico alone that year was astonishing - jumping almost 156%, or a 
rate of increase over 150 times higher than the increase to the non-NAFTA 
countries. This performance is among the strongest of all major cities 
and metropolitan areas in the United States, particularly given the sheer 
volume of exports sent from Philadelphia to the NAFTA countries. 

The rise in exports to Mexico in the most recent year was so strong 
that the Mexican market alone pulled Philadelphia's overall exports to 
the world out of an otherwise devastating decline. Philadelphia now 

4" 



Table 13 
Philadelphia, PA 

Export Totals to Selected Destinations, 1993-1999 
(millions of dollars) 

Market 1993 1994 1995 1996 1997 1998 1999 

NAFTA 
Countries 1,500.3 1,771.5 1,942.2 1,994.3 2,171.4 2,473.3 3,436.9 

Canada 1,245.6 1,426.5 1,641.4 1,690.9 1,845.7 1,999.3 2,225.4 

Mexico 254.7 345.0 300.8 303.3 325.7 474.0 1,211.5 

Non-NAFTA 
Countries 4,368.8 4,774.3 5,946.6 5,733.7 5,856.3 5,923.9 5,830.2 

World 5,869.1 6,545.8 7,896.9 7,727.9 8,027.8 8,397.2 9,267.1 

Source: U.S. Department of Commerce. 

Table 14 
Philadelphia, PA 

Export Totals to Selected Destinations (millions of dollars) 

Market . 1993~1999 

$ Change % Change 

NAFTACountries 1,936.6 129.1% 

Canada 

Mexico 

979.8 

956.8 

Non-NAFTA Countries 1,461.4 

World 3,398.0 

78.7% 

375.7% 

33.4% 

57.9% 

1998-1999 
$ Change % Change 

963.6 39.0% 

226.1 

737.5 

-93.7 

8,699.9 

11.3% 

155.6% 

-1.6% 

10.4% 

Source: U.S. Department of Commerce. 

sells more than $3.4 billion in goods to Canada and Mexico annually. 
That figure has more than doubled since NAFTA began. Arguably, 
Canada and Mexico are now Philadelphia's two most successful and 
important export markets. According to the DoC, the added $1.93 bil­
lion in Philadelphia exports to the NAFTA nations since 1993 accounts 
for 29,040 new jobs in the area. 

46 



Conclusion 

This article has examined the five-year effect of NAFTA on Pennsyl­
vania. The trade accord has had a number of consequences. Unfortu­
nately, most of these, induding estimates on job gains or 10sses, are diffi­
cult to sustain adequately with data. One area that can be measured 
definitively, howevel~ is NAFTA's effect on export levels. It has been 
highly positive. Because of NAFTA, Pennsylvania has been among the 
most successful states in terms of increased exports. 

Across the vast majority of industries, NAFTA has had a very posi­
tive impact on exports from Pennsylvania, state-wide as well as region­
ally. Better export data is difficult to imagine, especially regarding sky­
rocketing exports to Mexico, which have far outpaced exports to the rest 
of the world. In a number of cases, exports to Mexico have been so over­
whelmingly strong that they pulled overall exports out of what would 
have been a decline without the Mexican market. In terms of export 
levels, particularly for regions like the Philadelphia metropolitan area, 
the data could not be better in making the case for NAFTA. 

To be sure, total exports constitute only a portion of overall state GDP, 
which means that Pennsylvania will not rise or fall based on NAFTA 
exportsY Nonetheless, the revenue from these exports is considerable, 
particularly for people employed in those industries, which includes a 
large number of Pennsylvanians. So, while we should not overstate 
NAFTA's impact, we likewise should not understate it. NAFTA sup­
porters can find comfort in these highly positive export gains for Penn­
sylvania. 

Notes 

1. In any discussion of trade and its impact, a kaleidoscope of related issues 
is often raised. For discussion of what a state government mlght do to promote 
trade in terms of trade missions, overseas trips, and other forms of economic 
development, see Kengor (1996). For discussion of the advantages and disad­
vantages of free trade and the conditions under which political coali.tions form 
either in favor of or in opposition to it! see Bhagwati (1969), Milner (1988)! and 
Yarbrough and Yarbrough (1994). 

2. Union officials often ask state and federal officials for the number of workers 
certified for NAFTA Trade Adjustment Assistance (NAFTA-TAA). Some of these 
officials inaccurately report the totals as job losses caused by NAFTA. Asked how 
many of those certified for NAFTA-TAA in Pennsylvania actually lost their jobs, 
John Currie of the Pennsylvania Department of Labor and Industry stated unequivo­
cally: "Nobody knows. And anyone who says they know cannot prove it" (Currie 
2001). Onc Pennsylvania SOUTce said he would be surprised if 10,000 of the 46,000 
workers certified for NAFTA-TAA in Pennsy lvania actually lost jobs due to NAFTA. 
At the same time, he cautioned that no one knows, including himself. 

47 



3. Throughout this article .. we cite estimates by the United States Department 
of Conmlerce (DoC) of job gains generated :in Pennsylvania by rising exports 
under NAFTA. Although these estimates are rellable, they tell us nothing about 
the types of jobs that have been gained, their quality, or how much they pay. 
With jndustry data, too, we could only speculate. 

4. The DoC data comes from the United States Census Bureau, which issues 
two principal data sets with export statistics for states and regions: the Exporter 
Location 1::ierie::; (EL), anu the Origin of Movement ::;erie::; (OM). The EL ::;erie::; it; 
referred to in this document as the DoC data. The OM series is known as MISER 
data (see next note). The EL series is newer and allocates exports according to 
the physkallocation of exporters by tracing export 5 to the pOint of sale. The EL 
series is based on the exact data recorded on U.s. export declarations. A problem 
with such data is that the exporter of record is not always the producer of the 
good sold but may be a wholesaler, retailer, broker, or other intermediary -
even a foreign buyer. The exporter of record might also be the administrative 
branch office of the manufacturer and located in a different state from the branch 
that actually produced the goods. The EL series therefore may at times be more 
of an indicator of marketing activity than export production even though about 
three-quarters of merchandise exports are produced by manufacturers who do 
their own exporting. Consider two companies: Lasermedics (Texas) and MD 
International (Florida). Lasermedics exports medical equipment to Latin America 
via MD International. A Lasermedics product sold abroad but exported via MD 
International would be credited as a "Florida export" by EL (DoC) data. That 
same product would be considered a "Texas export" by the OM (MISER) data. 

5. There is state export data from the University of Massachusetts Institute 
for Social and Economic Research (MISER) dating back to the 19805. As noted, 
however, that data, is collected differently from DoC data, measuring ditterent 
items with different results. We relied on DoC data because of its lower cost and 
greater availability. 

6. Youngstown is located in Ohio, just over Pennsylvania's western border. 
We include it because many western Pennsylvanians work there and because it 
has an important impact o~ the economy o{that part of the state. The only other 
region in western Pennsylvania for which DoC data exists is the Sharon metro­
politan area. Unfortunately, because Sharon is a sman exporter, DoC does not 
track its total exports on a country-by-country basis, but instead records only its 
total exports. Nonetheless, it is probably telling tho.t Sharon's overall exports 
under NAFTA have been even better than those of the other three western re~ 
gions and Pennsylvania as a whole. 

7. For an overview of many of these studies, see UnitE>d Statps lntprnationrll 
Trade Commission (1992). Among the more well-known studies, see Hinojosa 
and Robinson (1991)1 Hufbauer and Schott (1992), Marwick (1991)1 McCleery 
and Reynolds (1991), United States Department of Labor (1990), and United States 
International Trade Commission (1991). 

8. A common criticism is that NAFTA has led to higher trade deficits with 
Canada and Mexico. In fact, the United States had trade deficits with both na~ 
tions on and off for many years prior to NAFTA. An American trade deficit with 
Mexico in 1990, for example, became a surplus between 1991 and 1994. A deficit 
returned during the Mexican recession of 1995 and continued throughout 1996 

48 



before becoming'" surplus in 1997. In anv case, it i:; debatable whether 8 

trade deficit is economically unhealthy for a nation. 
9. See Systems Synthesis Project (1994,112-13), and Trade Partnership (1992). 
10. The Texas study "\-vas done bv the Texas Public Policy Foundation, the 

\1ichigan study was d~ne by the Ma~kinac Center, the ArizOl~a study was done 
by the Goldwater Institute, and the Florida study was done by the James Madi­
son Institute. Paul Kengor was the author or co-author of all these studies. 

11. Also see Kengor (1996). 
12. The state's first-year increase in exports to Mexico made this nation the 

second largest market for Pennsylvania's products. Pennsylvania's exports to 
Mexico in 1994 reached $854 million, which surpassed the state's exports to Ja­
pan and the United Kingdom. 

13. DoC bases its estimate on its assessment that 15,000 jobs are created for 
every new $1 billion in exports. 

14. MISER recorded $742 million in Pennsylvania exports to Mexico in 1992, 
5653 million in 1993, and $854 million in 1994. 

15. See MISER data for 1992 and 1993. 
16. For an extended treatment of the case of MSA and other Pennsylvania 

companies, see Kengor (1996). 
17. Pennsylvania's GDP is roughly $400 billion. State exports to Mexico and 

Canada in 1999 totaled $8.23 billion, or about 2% of state CDP. 

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50 


