NAFTA 3 1/2 Years Afta
by Jim Callis & Valli Sharpe-Geisler
NAFTA 3 1/2 Years Afta
by Jim Callis & Valli Sharpe-Geisler
NAFTA Overview:
The North American Free Trade Agreement, or NAFTA, has been portrayed as a simple agreement to lower tariffs and increase trade between the U.S., Canada and Mexico. In fact, the main features of NAFTA establish a comprehensive set of rules that guarantees to multinational manufacturers that their plants in these countries will be protected and that they will have unlimited, free access to the U.S. retail markets for their products. NAFTA guarantees an investors private right of action against a country, state or locality. These rules are enforced by a multinational Secretariat with authority to impose large financial sanctions to force member countries to comply even when federal or state laws differ. It is ironic that this supernational regulation of U.S. commerce has been introduced in the name of "Free Trade". NAFTA has led to a sharply increased flight of manufacturing from the U.S. to Mexico where there is an abundance of capable workers who learn very rapidly and whose wages were only one-seventh of the wages of American workers doing the same job.
NAFTA Results:
The effects of NAFTA on the U.S. have been almost totally negative. The results include a significant loss in U.S. manufacturing capability and tax base. Manufacturers have also been able to negotiate give - backs in both direct wages and benefits from U.S. workers under the threat of expatriating their plant to Mexico. Today, a high school graduate with 5 years experience earns 27% less than his counterpart did in 1979. When experienced manufacturing workers making $17/hr loose their job, they typically are only able to get a service industry job at $11/hr. Since this isn't enough to keep a household afloat a second job is then needed. While in 1975 the compensation of U.S production workers was the highest in the world, today the average U.S. total compensation of about $17/hr is lower than that of Germany, Japan and others. The first major result of the so- called "Free Trade" movement has been to drive down wages even in a period in which productivity and corporate profits have risen greatly.
Summary of NAFTA's Impact on the United States
U-Turn Exports:The NAFTA Lobby points to the strong increase in goods exported to Mexico as proof of the benefits of NAFTA to the U.S. The facts are that only 7% of the goods imported by Mexico in 1995 were consumer goods purchased by Mexicans.These were more than 20% below the pre-NAFTA levels. In fact, 81% of all Mexican 1995 imports were "intermediate goods" the bulk of which were exported after further processing. The balance of Mexican imports were capital goods being used to expand Mexican production capability. These of course will lead to further trade losses in future years. Thus the surge in exports to Mexico are not the beneficial consumer sales the NAFTA Lobby promised, but rather the flow of "U-Turn" parts and plant equipment which was formerly the substance of U.S. based manufacturing. That is, the great export surge represents not an increased in our cash sales, but a loss of U.S. jobs and manufacturing capability. We have a phrase describing this type of surge in exports; ..... " A GIANT SUCKING SOUND ".
NAFTA and Mexico:
While the effects of NAFTA on the United States seem drastic, the effects on Mexico have actually been much more severe. The strains placed on Mexico's monetary system by the need to borrow money for NAFTA's industrial expansion and the political necessity to maintain the illusion of a bustling Mexican economy prior to the GATT vote in the U.S. Congress led to the peso debacle. The results have been devastating to the Mexican people.
Summary of NAFTA's Impact on Mexico
Summary of NAFTA's Impact on Mexico
During the 1992 election, Clinton pledged to implement NAFTA only after amending the agreement to ensure the protection of the environment and labor standards. However, these were implemented in the form of sham Secretariats which had no enforcement powers and whose objectives are routinely ignored by both corporations and government officials. Clinton's assurances to the contrary, the Maquiladoras continue to be supplied with a labor force which averages less in wages than their counterparts in domestic Mexican factories and who are prevented from joining independent unions.
The NADBank was touted as the means of providing leveraged funding for several of the $20 billions the environmentalists estimated were required to bring water and air quality to minimum health standards in the Border region. While originally adopted as a means of bartering for the votes of Hispanic and environmentalist legislators, the NADbank was then touted as the key mechanism for funding a desparately needed border cleanup that never happened. In fact not until the specter of the 1997 Congressional votes approached did NADbank make any loans at all.
April Fools Day Announcement NO Joke:
In April about 150 Michigan schoolchildren come down with symptoms of the hepatitis A mild liver infection. Officials said that schoolchildren in six states may have been exposed after being served Mexican-grown berries believed tainted with the virus. A food processor in San Diego bought strawberries from Mexico and sold them to the school districts.
Federal law prohibits any school district from buying any food not produced in the U.S. The interesting thing is that this law is in direct conflict with NAFTA's rules. In theory the US could be fined for enforcing our own food safety federal law.
The most notable are the multinational corporations of all three NAFTA countries whose profits and stock values have soared while the cross border production has cut costs. These members of the U.S. Business Roundtable were the same multi-national corporations who formed USA*NAFTA who, working with the group of Mexican corporations called COECE, were the main business groups funding the NAFTA lobbying effort.
The benefits of NAFTA are not limited to North American companies. The number of Maquiladoras owned by Asian companies has tripled since the passage of NAFTA. Thus Mexico, while having no domestic TV industry, has become the world's largest exporter of TV sets, courtesy of the Japanese plants many of which are centered near Tijuana.
The problems which NAFTA has inflicted on the people of both the United States and Mexico are severe and traceable to basic flaws in the agreement itself. The major flaws involve the guarantees protecting multinational plant operators (including "National Treatment") in a Mexico in which wages are controlled by government "Pacts" to levels far below those of U.S. workers. Maquiladora wages as low as $5 per day are rationalized as "necessary" to prevent manufacturing flight to even lower wage Central America countries and to control inflation. This in turn helps to drag down U.S. wages and further accelerates the transfer of U.S. plants to Mexico where the number of workers in all Maquiladoras now exceeds one million. We must resolve not to form the close economic associations (of the type that are in NAFTA) with other countries until the labor standards of those countries have been raised. Our trade policy should be aimed at raising the labor standards of our trading partners, not degrading our own. In the formation of the European Union, strict requirements for comparable standards for new members were imposed. These included a prescription that new members must first achieve a GDP per capita equal to at least half that of the average of the existing members. This and similar conditions on infrastructure meant that the entry of countries such as Spain and Greece was delayed for more than a decade while the requirements were met. In the end, the goal of our trade policy must be to improve the condition of all of the people, not to drag our labor standards down in a "race to the bottom". If this means that we must put additional trade constraints on imports from other low wage countries until they too raise their labor standards, then that is our indicated course.
The Clinton Adminstration gave Americans their assurances that NAFTA would include multinational Secretariats which provided for the "upward harmonization" of Labor and Environmental standards of the member countries. In addition, the NADBank was touted as providing funding for the critically needed cleanup of the poisoned Border water systems. All three of these promises have been revealed as transparent shams. "Dirty" U.S. industries charged with toxic waste violations in the U.S.have simply fled to Mexico where the enforcement of these regulations was sporadic or non-existent. NADBank provided no funding at all for badly needed water treatment projects through the first two years of its existence. The Labor Secretariat dismissed two clear cases of Maquiladora owners violating labor standards by claiming it had no jurisdiction. An unmistakable signal that they would do nothing to relieve the suppression of labor standards in Mexico.
It is no longer possible to believe in promises to correct the serious failings of NAFTA after the people's representatives have approved them. We must demand that the corrections be made before the FTAs are approved. At a minimum we should demand that no further extensions of NAFTA to new regions are approved until the flaws which have produced such disastrous consequences are proven to have been fixed.
Stop "Fast Track"! Don't expand NAFTA, Fix it! (Click here to see Action Plan)
Who are the beneficiaries of NAFTA?:
Conclusions: Take Action:
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Copyright © 1997 | Reform Party of California | Revised: September 16, 1997