NAFTA Is Bad for American Workers
Thousands of US jobs will be lost to Mexican labor; we should look to Europe's example
THE Bush administration has cast aside the long-term interests of the citizens of the United States, Canada, and Mexico, to get a short-term political deal on the North American Free Trade Agreement. To date, there exists no precedent for a free-trade agreement between countries with standards of living as divergent as the US and Mexico.
Still, George Bush preferred to rush through these negotiations. The president may think this agreement is just what he needs to keep his job. But what about thousands of US citizens who will lose their jobs under this agreement? And what about the millions of Mexican citizens who won't be able to earn a decent wage nor earn enough to buy what they make?
The concept of a US trade partnership that includes Mexico makes sense. Mexico is the US's third largest trading partner. But any agreement must be predicated on the principles of respect for human rights and enlargement of democratic freedoms. Mexican access to the US market must be viewed in a broader context of enlarging freedoms for all citizens of the continent.
The agreement must acknowledge the propensity of many US companies and certain transnational corporations to cut costs by heading south of the border. I have seen firsthand how this pattern has already been established in the maquiladora program - the existing Mexican "free trade" initiative - which has drawn thousands of US companies to relocate all or part of their operations in Mexico, where wages average 57 cents an hour.
It is estimated that 1,700 US companies have located in Mexico and employ 500,000 workers. About 68 percent of all foreign investment in Mexico is by US firms that then ship back nearly half of what they make or grow to the US market. This is not creation of a new market. Rather, it is a corporate escape to a low-wage sanctuary.
In our nation's industrial and agricultural heartland, thousands of workers have lost their jobs. Hundreds of thousands more will lose their jobs if the administration does not properly address the allure of cheap labor available in Mexico. The Mexican people have a right to higher standards of living, decent wages and benefits, and the economic power to buy what they make.
The Economic Policy Institute has just released a study entitled "The Effect of George Bush's NAFTA on American Workers: Ladder Up or Ladder Down." The alarming findings of this report are that the agreement proposed by President Bush, as presently designed, will harm the US's long-term economic competitiveness and put in jeopardy the jobs of hundreds of thousands of American workers. It will also put downward pressure on the wages of millions more Americans working in sectors not directly affected by th e agreement.
Corporations seeking to maximize profits will locate production where costs are lower.
This includes labor costs, corporate taxes, and the costs related to complying with environmental or safety regulations. Why wouldn't a company relocate in order to pay $1.50 an hour wages with no benefits rather than $10 an hour wages with benefits?
THERE is ample evidence that this is exactly what is happening in the Mexican maquiladoras. The real advantage of producing in the maquiladora sector does not lie in avoiding tariffs, but rather in taking advantage of ultra-cheap wages and lax environmental and labor standards. Wages in the maquiladora sector are approximately one-tenth to one-fourteenth of US manufacturing wages, and the Mexican government has lacked both the resources and the will to enforce even basic worker-safety or environmental re gulations.
The Economic Policy Institute's study reinforces what we have already known for some time. That is, that nothing in the Bush administration's NAFTA strategy suggests that workers dislocated as a result of this new trade agreement will fare any better than dislocated workers have fared in the past.
Moreover, the consensus of long-range public and private forecasters is that growth in the US economy will be considerably slower over the next decade than in the last, suggesting that the fortunes of trade-dislocated workers in the US will suffer more. NAFTA
was negotiated by an administration that has continually zeroed-out
funding for trade adjustment assistance programs.
Europe's acceptance of Spain and Portugal into the Common Market in 1986 was the culmination of a 40-year process of economic integration - although the per capita income gap was only one-seventh as wide as the one between the US and Mexico.
The European agreement contains a supranational political structure - the European Parliament - as well as a "Social Charter" and three special development funds setting rights to social assistance, collective bargaining, vocational training, and health and safety protections. It also directed $76 billion in regional development funds to narrow the gap between rich and poor countries.
A "Common Market of the Americas" should apply a similar approach. Private companies that will benefit from doing business in the "American Common Market" should help build the Americas of the 21st century. The US should follow Europe's example in creating a supranational economic and political framework to guide market integration. Free elections, political freedoms, human rights, individual and labor rights, decent standards of living, environmentally safe working and living conditions - these should b e fundamental, enforceable precepts underpinning any workable economic negotiation.
If North American integration is not done properly, we risk leaving to our children a country of declining wages, increasing exploitation, and unemployment in entire sectors of our work force. We must be sure that any agreement will raise incomes and expand jobs in the US, Canada, and Mexico. Nothing less will do.