DETROIT — I have always thought there were flaws in the way the North American Free Trade Agreement (NAFTA) was put together. It appears to many people in the U.S. and Canada that the treaty favors Mexico greatly.
Just look at where the investment is going. It would seem hard to refute that the treaty has done great things for Mexico at the expense of its northern neighbors.
Whether we are talking about full-fledged assembly plants or supplier plants, Mexico is booming with new automotive investment.
Actually, this investment has been going on for well over a decade, ever since the treaty was enacted. The strongest argument for investing in Mexico is simply that it has high-quality workers who are being paid a fraction of what the same worker would be paid in Canada or the U.S.
Despite this strong imbalance, everyone seems quite adamant that NAFTA should be left alone and that there should be no changes to the treaty.
I must admit, I am a bit confused by this attitude. But I would be the first to agree that the companies impacted the most should have the biggest say in what, if any, changes should be made.
I have no doubt that if the parties walk away from NAFTA, it would not be long before there is some sort of tariff on cars.
NAFTA is less than perfect, but if it is acceptable to the parties involved, then the best policy might simply be to leave it alone.
Mr. Crain is chairman of Crain Communications Inc., parent company of Tire Business, and is editor-in-chief of Detroit-based Automotive News.