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"What Price Economic Growth?", Jonathan Schlefer (December, 1992)
Dire early predictions, based on Canada's experiment in free-trade with the United States, about a free-trade agreement with Mexico.
Free trade isn't all its cracked up to be
by Jack Beatty
July 2, 1997
The North American Free Trade Agreement (NAFTA) was signed into law three years ago. In the fight to pass the legislation the Clinton Administration and its business allies claimed that NAFTA would create more than 200,000 U.S. jobs. In fact the Clinton Labor Department now concedes that 109,000 jobs have been officially lost to NAFTA. Public Citizen, Ralph Nader's organization, released a report this past February that calculated NAFTA job losses at 600,000. Public Citizen arrived at that number by applying the pro-NAFTA job-creation formulas to the $15 billion 1995 U.S. trade deficit with Mexico -- the idea being that if exports to Mexico were supposed to create U.S. jobs, imports from Mexico cost U.S. jobs.
The report convincingly disputes the Labor Department's official count of jobs lost to NAFTA. Since the creation of NAFTA the percentage of its clothes that Guess Inc. makes in Los Angeles has fallen from 97 percent to 35 percent. A thousand Guess workers lost their jobs in just two months last year, yet the Labor Department did not include them in its estimate of job losses due to NAFTA -- possibly because few of the laid-off workers applied to the Department's little-known Trade Adjustment Assistance (TAA) program, set up under NAFTA.
Another example: Before NAFTA, Florida tomatoes were a $700-million industry; they are now a $400-million industry. One hundred Florida tomato companies have been wiped out by Mexican growers paying low wages. Thus far only one company has filed for TAA assistance. It laid off a thousand employees. Yet the thousands of other employees laid off by the hundred failed companies are not included in the Labor Department's estimate of NAFTA-caused job losses.
Public Citizen has also gathered information on the U.S. companies who took the most public role in lobbying for NAFTA in 1993. These companies made a total of sixty-six company-specific promises about the U.S. jobs that NAFTA would create. Fifty-nine of these sixty-six promises have been broken, Public Citizen found. For example:
A business coalition calling itself USA*NAFTA got thirty-five Fortune 500 companies to serve as "captains" in the lobbying drive for NAFTA. The captains contributed a total of $7.2 million in "soft money" to both parties in the most recent election cycle. Seven captains -- including representatives from DuPont, BankAmerica, United Technologies, American International Group, and AT&T -- were invited for coffee at the White House by President Clinton. Many of these same corporations will soon be joining President Clinton in a campaign to extend NAFTA to other countries in Latin America.
Since the creation of NAFTA employment in the maquiladora plants along the U.S.-Mexico border has increased 48 percent. Through a NAFTA subsidy program U.S. corporations setting up shop in the maquiladoras can get away with paying their Mexican workers three dollars a day instead of the standard five dollars a day.
A recent House bill, The NAFTA Accountability Act (HR-978), gives opponents of NAFTA a cause to rally to: the bill would apply a do-no-harm certification process to NAFTA and would require the President to renegotiate NAFTA with Mexico in areas -- such as U.S. jobs and the environment -- where NAFTA is doing harm.
NAFTA was a massive betrayal of working American families on the part of the American corporate, political, and journalistic elites. NAFTA must not be extended further into Latin America until HR 978 is passed and until NAFTA can be certified as doing no harm to American society.
Copyright © 1997 by The Atlantic Monthly Company. All rights reserved.