Eight years have passed since the North American Free Trade Agreement (NAFTA) took effect. At the time, plenty of people went on record with predictions—many of them dire—concerning the potential effects on trade in general and several industry sectors in particular.

Even now, NAFTA has plenty of critics. Yet there's one fact no one can deny: Since NAFTA was implemented, trade has increased significantly within North America. Last year, trade among the NAFTA nations totaled $612 billion, and the year before, in 2000, trade reached a whopping $659 billion. A December 2001 report by the General Accounting Office (GAO) revealed that trade with Mexico alone increased from $100 billion in 1994 to $248 billion in 2000. Trade between the United States and Canada during that same period increased from $242 billion to $409 billion.

Although the magnitude of the trade increase has taken many by surprise, it's hardly the only area in which NAFTA has brought unexpected results. For one thing, though certain industry sectors, such as transportation, were projected to realize impressive gains, that hasn't happened. For another, NAFTA's passage has not delivered a death blow to the U.S. textile and garment industries as many had predicted. Most surprising, perhaps, is that the boom in cross-border trade does not appear to have produced significant economic benefits for border towns and cities.

One economic sector for which NAFTA was expected to provide many benefits is freight transportation. But it hasn't done so, which is particularly disappointing given that most business between the three NAFTA nations moves by truck.

The United States and Canada have had a relatively free flow of cross-border trucking for years, which can largely be attributed to the pre-NAFTA U.S.-Canada Free Trade Agreement. But Mexico has been a different story.

Under NAFTA, the four U.S. and six Mexican border states were to open for cross-border trucking on Dec. 18, 1995, and the entire U.S. territory was to be opened to Mexican truckers in 2000. That didn't happen, of course. As is well known, the Clinton administration bowed to political pressure and failed to give Mexican motor carriers access to U.S. highways by the deadline, though it cited safety concerns when announcing its decision. Mexico filed a claim and in February 2001, the NAFTA Dispute Panel ruled that the U.S. claim of unsafe Mexican trucks could not be substantiated and that the United States had breached its NAFTA obligations.

At the time of this writing, both the border states and the full territory of the United States remain closed to Mexican motor carriers. (President Bush is expected to issue an order opening the border soon.) The failure to open all of North America equally to cross-border transportation has been costly, especially for Mexican and U.S. companies.

As things stand now, trailers carrying southbound cargo headed for Mexico and northbound cargo destined for the United States must stop at the border, where they are unhooked or unloaded so the cargo can be transferred to the country of destination by a shuttle service referred to as a drayage company. Drayage automatically increases costs for each truckload by $100 on average, plus associated charges for handling, classifying, counting and storing merchandise prior to transfer into the destination country. When you consider that truck crossings between the United States and Mexico have increased from 2.7 million in Fiscal Year 1994 to 4.3 million in FY 2001, it's clear that the cost of drayage is staggering.

Other costs have arisen from the failure to allow cross-border trucking as well. Because cargo is transferred to a motor carrier that is not part of the contractual relationship between the shipper and the originating carrier, each shipment enters a risky legal "black hole" outside of the liability regime that was established by the original bill of lading. In addition, closing the border to longhaul trucking delays the delivery of cargo to its final destination.

And finally, contrary to popular opinion, a closed border may pose greater security risks than an open border would. As long as the border remains closed, inspectors must try to monitor thousands of mom-and-pop shuttle carriers as opposed to a small number of reputable Mexican longhaul carriers that follow the rules for maintaining U.S. operating authority. Based on many years of experience on the border, I'm convinced that it would be much easier to bring illegitimate cargo into the United States using an unregulated drayage carrier than it would be with an established Mexican longhaul trucker. In my opinion, simply following the terms of NAFTA and allowing Mexican longhaul carriers into the United States could do more to assuage the threat of terrorism from our southern border than any other approach.

Back when NAFTA was first being discussed, many observers predicted that the agreement would harm a number of U.S. manufacturing industries. In particular, the U.S. textile and garment manufacturing businesses were believed to be at risk. But it now appears that NAFTA has not doomed the textile industry after all.

It's true that over the years, a significant amount of production has moved overseas. As a result, all three NAFTA nations have experienced textile-industry job losses.

Though NAFTA is often blamed for those losses and has indeed played a small role, it is by no means entirely at fault. In fact, Carlos Moore, the former executive director of the American Textile Manufacturing Institute, has pointed out that NAFTA provided the textile industry with an opportunity to sell American-made fabrics and yarn to garment makers in Mexico and Canada. "Since NAFTA went into effect in 1994," he says, "our exports of yarns and fabrics into Mexico tripled to over $6 billion, and we had a similar increase to Canada."

Supporting that view is a study that will soon be published in the Journal of Textile and Apparel Technology and Management. Researchers reviewed documents regarding textile industry layoffs and plant closures provided by the U.S. Department of Labor and North Carolina's Department of Commerce. They also included information concerning applications by textile companies for NAFTA Transition Adjustment Assistance. Of the 417 textile companies in North Carolina that closed or laid off workers between January 1994 and July 2001, only 15 percent cited NAFTA or foreign competition as the basis for those job losses.

The research further suggests that the underlying reasons for closings and layoffs might rest with the U.S. textile industry's inability to adapt to the challenges of doing business in a global economy and its shortsighted reliance on government protection. Whatever the reasons for North Carolina's textile woes, the data clearly did not support claims that NAFTA was largely to blame.

NAFTA's proponents have long argued that, even if the trade agreement led to job losses elsewhere in the country, it would boost employment along the U.S. borders with Mexico and Canada. But in 1999, the U.S. International Trade Commission (ITC) found that NAFTA "had no discernible effects" on aggregate employment.

Recent reports issued by the Texas Comptroller and the U.S. Department of the Interior, moreover, concluded that the U.S.-Mexico border was economically handicapped. NAFTA may even have cost the southern border with respect to social welfare. (No similar comparisons can be made for Canada because almost all of its major population centers are close to the U.S.-Canada border.)

In an analysis published this spring in the journal Regional Studies, researchers reported that the post-NAFTA rate of employment growth along much of the Texas-Mexico border had been so slow that it was barely measurable and in fact was significantly lower than the growth rate recorded before NAFTA. In addition, post-NAFTA unemployment rates along the southern border have remained substantially the same as they were before NAFTA took effect. And while the border area has reported high unemployment in absolute terms, the unemployment rate there is especially high in relation to the rest of Texas and to the nation as a whole.

Nor has the border area reported the income growth that was initially projected. In fact, the rate of growth in per-capita income has not only failed to increase, but it actually has slowed. It appears that border communities have realized surprisingly little economic benefit given the huge increase in trade passing through their gates. In all likelihood, whatever economic benefit has been realized as a result of increased trade has gone to the rest of the nation.

NAFTA, like most agreements, is not perfect. So far, it has produced some predictable consequences, such as increased trade, closer cooperation among governments, and for Mexico, a stronger economy. It also has produced some unexpected consequences, including lower-than-expected growth in the U.S. border economy and continued high transportation costs.

Are we better off with NAFTA than without it? I think the answer lies not in the agreement itself but in the integrity of its implementation.