NAFTA’s results are mixed, at best, forcing Maine to explore options to protect its businesses and workers.

Two years ago I received a letter from the owner of a small manufacturing company in Lewiston,.

The letter underscores some of the challenges and difficulties presented by international trade, particularly the North American Free Trade Agreement, on our community and our state.

“We are a steel fabrication shop located in Lewiston, we have done a number of smaller projects in the community, and yet the major jobs and the steel market are being cornered by the Canadians. About 50 percent or more of the largest jobs in the state are being contracted to the Canadian firms who, with the exchange rate, can give a much lower bottom line price than any of us can. These companies pay no state, payroll, or property taxes to Maine; they employ no Americans; and they are taking away business that could be generating monies for the state of Maine.

“Private projects are one thing, but when it is our tax dollars that are funding these projects that are supposedly designed for economic value as well as need, then that becomes a totally different aspect. You may not be aware that there have been two projects at the University of Maine at Orono, the new dorm at USM Gorham, the hospital in Lewiston, and many others that Maine companies have been passed over

in lieu of Canadian firms. …

“This letter is not meant to scare you, but we have seen this happen with other industries in the state, and we are fearful of what it is doing to us. Without any mediation from our legislative bodies, we will be out of business in a short amount of time.”

I began work to determine the impact of NAFTA on our state economy and to look for ways within the confines of federal law to help those Maine manufacturers and their employees who are finding it increasingly difficult to survive against foreign competitors.

I quickly learned that few people knew much about NAFTA’s impacts on Maine’s workers, business owners and economy. As a result, I sponsored legislation last session that called for the study of the effects of NAFTA on the Maine economy.

That study was recently completed by economist Charles Lawton. According to the report, the answer seems mixed at best and, at worst, Maine is a net loser under the trade agreement. The overall message I took from the report is that we, as a state, need to pay more attention and be mindful of export opportunities as well as potential economic threats from a rising tide of imports that compete against Maine businesses and jobs.

State officials have focused most of their attention on Maine exports to Canada and Mexico, but not enough attention on imports from NAFTA countries and other nations around the world. While I applaud efforts by Gov. John Baldacci and the Maine International Trade Center to expand export opportunities for Maine business, we must be mindful of imports.

The Lawton report indicates that Maine exports to Canada and Mexico grew from $413 million in 1993 to $874 million in 2002. At the same time, non-energy related imports from Canada and Mexico grew from $866 million in 1993 to over $1.9 billion in 2002. Most of these imports are from Canada.

There must be a public discussion about this growing trade deficit and its impact on our economy. We must keep track of foreign imports to Maine, what the trends are, and how these imports affect jobs and our state economy.

We must look carefully at our own state and local government purchasing practices to determine how they are contributing to a loss of business activity locally, as work is being shifted from Maine and New England firms to businesses in Canada.

We need to reconsider state procurement decisions in which lowest cost wins regardless of adverse economic impact on local small businesses.

Do we want the state to award building contracts to Canadian companies for taxpayer-funded projects such as schools and bridges when Maine manufacturers could do the work? Are our current policies counterproductive to sustaining a strong Maine economy?

“The issue is not whether nations should trade with each other but what the rules should be under which they trade,” writes Jeff Faux, an economist with the Economic Policy Institute.

In order for free trade to be fair trade, there needs to be parity among trading partners. Right now, Maine businesses face competitive disadvantages.

Canadian companies have lower workers compensation costs, liability insurance costs and government-funded health care for their employees. And exchange rates favor Canadian companies that compete against Maine businesses. The playing field is not level.

The Economic Policy Institute estimates that Maine has suffered a net loss of more than 2,700 jobs from 1993 to 2002 under NAFTA. Most were good paying, manufacturing jobs. Maine has led the nation with the highest percentage of manufacturing jobs lost in the past few years.

These statistics should serve as a wake-up call to all of us. As legislators, we need greater information about the impact of trade on our state economy so we can thoughtfully explore the options available to help our state’s small businesses and workers.

Trade is good for our state, but we must demand that the rules that govern that trade be fair and sensible.

Democratic state Sen. Peggy Rotundo represents the 21st District and is the chair of the State and Local Government Committee and serves on the Appropriations and Financial Affairs Committee. She lives in Lewiston.