2. Who gained from the process of readjustment in the textile industry after NAFTA? Who lost? When the North American Free Trade Agreement (NAFTA) went into effect in 1994, many expressed fears that large job losses in the U.S. textile industry would occur as companies moved production from the United States to Mexico. NAFTA opponents argued passionately, but unsuccessfully, that the treaty should not be adopted because of the negative impact it would have on U.S. employment.

A quick glance at the data available 10 years after the passage of NAFTA suggests the critics had a point. Between 1994 and 2004, production of apparel fell by 40 percent and production of textiles by 20 percent—and this during a period when overall U.S. demand for apparel grew by almost 60 percent. During the same time frame, employment in textile mills in the United Stated dropped from 478,000 to 239,000 and employment in apparel plummeted from 858,000 to 296,000, while exports of apparel from Mexico to the United States surged from $1.26 billion to $3.84 billion. Such data seem to indicate that the job losses have been due to apparel production migrating from the United States to Mexico.