That 'sucking sound' is NAFTA boosting Illinois economy, studies find

By Mark Reutter

Ross Perot, beware - the great sucking sound one hears in Illinois these
days comes from added factory jobs and increased commerce due to exports,
chiefly with trading partners Canada and Mexico.

In contrast to Perot's dire warnings about the impact of the North American
Free Trade Agreement (NAFTA) and other trade pacts on U.S. jobs, two UI
studies have found that exports are playing a vital role in the state
economy.

Since the United States and Canada signed the Free Trade Agreement of 1989,
a precursor to NAFTA, Illinois exports to Canada have surged to more than
$5 billion a year, compared with $3 billion in 1988. During the same
period, Illinois exports to Mexico have tripled.

"Export-related businesses that have benefited most from U.S.-Canada free
trade are transportation equipment, industrial machinery and computers,
electric and electronic equipment, fabricated and primary metals, and
chemicals," notes one of the UI reports, which was published in the current
issue of Illinois Business Review.

The report says that these industries create the highest paying factory
jobs in Illinois, with average hourly wages $1.11 to $2.08 above the
average manufacturing wage of $11.68.

Trade with Mexico has generated about 24,000 jobs in Illinois since 1991
and is expected to add 10,300 more over the next 10 years. "With government
action and well-organized job-training programs, most low-skilled American
workers could expect a relatively easy job shift to export industries," the
report says. "The further liberalization in regional trade and investment
brought by NAFTA is expected to have a positive effect on the Illinois
economy, especially in export industries."

A second UI study found that nearly one in five manufacturing jobs in the
state are directly tied to the production and distribution of exports,
compared with only one in 10 jobs in 1983.

The chief benefactors of export-related jobs have been many of the same
industries that were so hard-hit with sales and employment drops in the
1980s. Gains have been particularly noticeable in heavy construction
machinery, chemicals, electric equipment, communications equipment and
metals production.

In addition to Canada and Mexico, three other countries have become key
buyers of Illinois products: Japan is the largest importer of Illinois farm
products; Morocco is the largest importer of coal; and Britain is the
largest importer of lumber and wood products.

"Many more residents eam part of their paycheck in the markets of other
countries than now realize it," the report concludes. "With exports
becoming an increasingly important part of the state economy, even more
residents will be employed in export-related jobs over the next quarter
century."