Writing from the swing state of Michigan, in the wake of the latest Democratic primary debates, it appears that, despite a quarter century of experience since the North American Free Trade Agreement (NAFTA) was signed, many candidates and members of the press do not understand why NAFTA harmed so many workers in all three countries of North America.
During the 2016 presidential campaign, Donald TrumpDonald TrumpOvernight Defense & National Security — The Pentagon's deadly mistake Overnight Energy & Environment — Presented by Climate Power — Interior returns BLM HQ to Washington France pulls ambassadors to US, Australia in protest of submarine deal MORE portrayed NAFTA as a terrible deal for American workers that he’d either rewrite or exit. This promise was a key contributor to his narrow victories in manufacturing states like Michigan. Now, he is pressing Congress to approve revisions to NAFTA that his trade team negotiated.
Has Trump kept his election promise? The short answer is no. But there is still time for Trump to fix an agreement that harmed workers in all three countries and continues to do so today.
NAFTA shifted the balance of economic and political power in favor of transnational corporations at the expense of workers, their unions and their governments. It did this in many ways, but most importantly NAFTA’s foreign investor protections made it easier for footloose corporations to outsource production to Mexico.
NAFTA’s lack of enforceable labor rights meant these corporations could freely export goods back to the U.S. and Canada, where most of their customers live and work, even as Mexico’s government suppressed unions and worker’s rights to lure investors with artificially low wages.
This led to Canada and the United States losing many well-paid, union manufacturing jobs. Almost 1 million U.S. jobs have been certified by the government as lost to NAFTA just under one government program.
For every U.S. or Canadian factory outsourced to Mexico, two or three factories stayed open but demanded – and got – wage cuts as the price of staying, so that wage declines rippled through the manufacturing sectors of these countries. Those who lost jobs to NAFTA joined the glut of workers without college educations competing for non-outsourceable jobs, driving down wages in the service sectors as well.
When NAFTA was signed, Mexican wages in U.S. and Canadian transnationals were typically about one tenth of U.S. levels. And despite the new Mexican jobs resulting from transnationals shifting their production to that country, typical Mexican manufacturing sector wages (contrary to predictions) fell in U.S. dollar terms. Why? Because Mexican governments – federal, state and local -- suppressed workers’ efforts to form autonomous, democratic unions capable of delivering wage increases. Mexican manufacturing wages are now 40 percent lower than in China.
NAFTA also resulted in a dramatic drop in the price paid Mexican farmers for corn, even as consumer prices for staple food tortillas increased. The Mexican government reports that NAFTA drove several million small farmers off the land.
Sweatshop wages in manufacturing, combined with rural displacement, fueled waves of migration to the United States – just the opposite of what NAFTA supporters predicted.
The revised NAFTA deal that Donald Trump signed last year will not reverse this because it does not include clear labor standards or effective workers’ rights monitoring or enforcement provisions. It also lacks strong environmental standards to prevent firms from outsourcing to Mexico simply to avoid more stringent Canadian or U.S. requirements. NAFTA 2.0 also grants pharmaceutical companies new monopoly rights to charge consumers more in all three NAFTA countries.
Under Trump’s NAFTA 2.0, wages will continue to stagnate or decline, and health care costs will continue to rise.
Congressional Democrats, unions, environmental and consumer groups, family farmers, and many others are united in ensuring: No Vote Until NAFTA 2.0 Is Fixed!
The Democratic majority in the House of Representatives means this coalition can stop any deal that fails to halt NAFTA’s ongoing damage. They demand that the Big Pharma giveaways are eliminated, a loophole for Big Oil is closed, and labor and environmental standards and their enforcement are significantly strengthened to counter outsourcing. That sort of agreement could pass Congress with a wide bipartisan majority.
It’s going to be a tough battle. Pharmaceutical firms are funding a corporate campaign to ram NAFTA 2.0 through Congress as-is because the deal would undermine the changes Congress is trying to make to bring down drug prices. Oil and gas corporations are also pushing for ratification, having secured a loophole that enables them to use NAFTA’s Investor-State Dispute Settlement system (largely eliminated in the rest of the agreement) to attack Mexican climate and environmental policies. And, the U.S. Chamber of Congress has just published a letter arguing for the ratification of NAFTA 2.0, signed by more than 600 business organizations.
The time has come for Trump to decide: will he stick with Big Pharma, Big Oil and the Chamber of Commerce or deliver on his election promise to help American workers by working with the Democrats to create a more worker and environment-friendly approach to continental economic integration? If he makes the wrong choice, we must defeat NAFTA 2.0 in Congress and then hold Trump accountable for his betrayal of working people in the 2020 elections.
Ian Robinson is a Lecturer and Research Scientist in the Department of Sociology at the University of Michigan-Ann Arbor. He is also President of the Lecturers Employee Organization, AFT-MI 6244, and the Huron Valley Area Labor Federation, AFL-CIO.