NAFTA - A Bad Trade Agreement

Race to the Bottom of the Economic Ladder

Mar 2, 2008

US presidential candidates are arguing about the destruction caused by the North American Free Trade Agreement. Make it fair or get rid of it, is their claim.

The North American Free Trade Agreement (NAFTA) is a much bigger problem than the loss of jobs in certain sectors. The Economic Policy Institute, Common Dreams and marketing professors around the continent agree it fails Mexicans, Americans and Canadians with flawed data, flawed assumptions and partial interpretation.

However, NAFTA has become a tool for US presidential candidate Barack Obama. Pointing out his rivals' short-comings on the issue, he is doing as well among manufacturing workers in Ohio as he did with garment workers in South Carolina and farmers in Iowa. His stalwartness has revived Ross Perot’s argument of a “giant sucking sound” of jobs heading to Mexico. Furthermore, the media is now focusing on key areas of the agreement.

Environment – A 2000 CRS report for congress states the agreement: “…only obligates parties to enforce their own environmental laws.” It continues that “lax enforcement of environmental laws in Mexico would provide an added incentive for U.S. industries to relocate.” This is not an abstract hypothesis: according to the Economic Policy Institute on July 13th 2001, “10.9% of foreign exports [since 1993] were designated as ‘environmental release’ imports…”

Safety – this has become a large concern by many NAFTA watchers. The agreement has allowed corporations to by-pass USA laws. An example is the Trucking Domicile Laws. In 2001, a NAFTA tribunal ordered the U.S. to fully open its border to Mexico-domiciled trucking companies. According to Public Citizen (who has filed suit over expansion of the program): “…the system designed to ensure that Mexico-domiciled carriers comply with U.S. motor vehicle manufacturing safety standards is incomplete, and it is not clear whether the drug and alcohol testing program is functional, the inspector general found.”

Immigration – according to Professor Lorraine Eden of Texas A&M University in her spring 1999 argument; a positive by-product of the agreement was to create jobs in Mexico, thereby stemming the flow of illegal immigration northward. “NAFTA would lead to an immediate and continuous reduction in Mexican immigrants,” Eden argues. “[It] would lead to a steady reduction in the flow of undocumented workers from Mexico to the US.” However, subsidized US corn and other agri-business has forced “…some 2 million Mexicans…out of agriculture….Meanwhile corn-based tortilla prices climbed by 50%,” according to data provided by Roger Bybee and Carolyn Winter in a July 2006 Common Dreams report. “…firms like Wal-Mart…enter the Mexican market and, [sell] low-priced goods made by ultra-cheap labor in China, to displace locally-based shoe, toy, and candy firms. An estimated 28,000 small and medium-sized Mexican businesses have been eliminated.” Yet, people must still survive. There were 2.5 million illegal Mexicans in 1995; 8 million have crossed the border since then, according to the report.

Jobs – the giant sucking sound has traveled both ways and while Wal-Mart, Archer Daniels Midland, General Motors, Jack Sr. & Sons Inc garment factory and Wall Street have benefited from the agreement, few citizen workers in Mexico, Canada and America have been so lucky. Jeff Faux of the EPI, reported in his April 2001 article: NAFTA at Seven: “Corporations cut costs, restructure. On the corporate level…[corporations] rationalize their cost cutting and restructuring through takeovers, downsizing, closure, and relocations as the only means to stay competitive against their NAFTA partners….government adds corporate breaks, drops worker and environmental protections…[while] macro policy tilts to capital, away from labor."

Until now the politicians of North America thought “what was good for Wall Street was good for Main Street.” The problem is Main Street is now Avenue de la Revolución and the businesses are gone from many Main Streets - as the race to the bottom of the economic ladder continues.

The copyright of the article NAFTA - A Bad Trade Agreement in US Trade Policy is owned by Frank W. Hardy. Permission to republish NAFTA - A Bad Trade Agreement in print or online must be granted by the author in writing.