No Fast Track To TPP: Fix NAFTA First

Dave Johnson

The big corporations and the Obama administration are trying to push through a giant new trade treaty that gives corporations even more power, and which will send even more jobs, factories, industries and money out of the country. This is the Trans-Pacific Partnership (TPP) and they are pushing something called “fast track” in Congress to help push it through.

We have to stop this, and we should take the momentum we have generated in our push-back on this to demand Congress and President Obama instead fix NAFTA first. Then fix all of our trade relationships to help working people on all sides of our borders.

TPP, Fast Track And NAFTA

There has been a lot of news about the upcoming TPP trade agreement. The agreement is being negotiated in extreme secrecy in a corporate-dominated process that appears to be leading to an agreement that would give corporations even more power than they already have. Now there is a push to pass a process called fast track through Congress in order to enable the large corporations to strong-arm TPP into law mobilized organizations around the country to sound the alarm.

Those resisting this TPP/Fast Track effort have put out a lot of good, solid information detailing the problems that previous trade agreements have caused. For example Public Citizen’s Global Trade Watch issued a report, “NAFTA at 20: One Million U.S. Jobs Lost, Mass Displacement and Instability in Mexico, Record Income Inequality, Scores of Corporate Attacks on Environmental and Health Laws“. This report compared the promises with which NAFTA was sold to the results we can measure 20 years later. Some of the effects of NAFTA that are highlighted in the report include:

  • a $181 billion U.S. trade deficit with NAFTA partners Mexico and Canada,
  • one million net U.S. jobs lost because of NAFTA,
  • a doubling of immigration from Mexico,
  • larger agricultural trade deficits with Mexico and Canada,
  • and more than $360 million paid to corporations after “investor-state” tribunal attacks on, and rollbacks of, domestic public interest policies.

The data also show how post-NAFTA trade and investment trends have contributed to:

  • middle-class pay cuts, which in turn contributed to growing income inequality;
  • U.S. trade deficit growth with Mexico and Canada 45 percent higher than with countries not party to a U.S. Free Trade Agreement,
  • U.S. manufacturing and services exports to Canada and Mexico that have grown at less than half the pre-NAFTA rate.

Former Michigan Congressman and Democratic Whip David Bonior made these points in a recent New York Times op-ed titled “Obama’s Free-Trade Conundrum“:

  • In 1993, before NAFTA, the United States had a $2.5 billion trade surplus with Mexico and a $29 billion deficit with Canada. In 2012, the combined NAFTA trade deficit was $181 billion, even as the share of that deficit made up of oil imports dropped 22 percent.
  • The companies that took the most advantage of NAFTA — big manufacturers like G.E., Caterpillar and Chrysler — promised they would create more jobs at their American factories if NAFTA passed. Instead, they fired American workers and shifted production to Mexico.
  • A 1997 Cornell University study ordered by the NAFTA Commission for Labor Cooperation found that as many as 62 percent of union drives faced employer threats to relocate abroad, and the factory shutdown rate following successful union certifications tripled after NAFTA.
  • [S]ince NAFTA’s implementation, the share of national income collected by the richest 10 percent has risen by 24 percent, while the top 1 percent’s share has shot up by 58 percent.
  • American workers without college degrees had most likely lost more than 12 percent of their wages to NAFTA-style trade, even accounting for the benefits of cheaper goods.
  • This means a loss of more than $3,300 per year for a worker earning the median annual wage of $27,500.

Jeff Faux of the Economic Policy Institute (EPI), in “NAFTA’s Impact on U.S. Workers,” laid out the four ways NAFTA hurt US workers:

By establishing the principle that U.S. corporations could relocate production elsewhere and sell back into the United States, NAFTA undercut the bargaining power of American workers, which had driven the expansion of the middle class since the end of World War II. The result has been 20 years of stagnant wages and the upward redistribution of income, wealth and political power.

NAFTA affected U.S. workers in four principal ways. First, it caused the loss of some 700,000 jobs as production moved to Mexico. …
Second, NAFTA strengthened the ability of U.S. employers to force workers to accept lower wages and benefits. As soon as NAFTA became law, corporate managers began telling their workers that their companies intended to move to Mexico unless the workers lowered the cost of their labor. …

Third, the destructive effect of NAFTA on the Mexican agricultural and small business sectors dislocated several million Mexican workers and their families, and was a major cause in the dramatic increase in undocumented workers flowing into the U.S. labor market. This put further downward pressure on U.S. wages…

Fourth, and ultimately most important, NAFTA was the template for rules of the emerging global economy, in which the benefits would flow to capital and the costs to labor.

NAFTA has done harm to our economy and our jobs. But it is hardly just NAFTA that is hurting us – using the NAFTA template for other trade deals like our trade deal with China have compounded the damage. (The 2012 Korea-U.S. trade agreement has already cost 40,000 jobs and increased our trade deficit by $5.8 billion.)

The resulting loss of millions and millions of jobs, tens of thousands of factories, entire industries and continuing, enormous, humongous trade deficits now in the vicinity of $500 billion a year have done and are doing tremendous economic damage. This is wiping out our middle class and contributing to (if not being the major cause of) the terrible inequality that is tearing the country apart.

The public instinctively understands that these one-sided, giant-corporation-favoring trade deals have harmed the country and hurt many people’s ability to make a decent living. To the public “NAFTA” is shorthand for all of them. This is why TPP is called “NAFTA on steroids” by the opposition: It cuts to the point.

We Have Waited

President Obama understood this during in the 2008 campaign when he promised over and over again to renegotiate NAFTA.

But then, just after taking office, he said we would have to wait. A February 20, 2009 Washington Post report, “NAFTA Renegotiation Must Wait, Obama Says,” tells the story:

President Obama warned on Thursday against a “strong impulse” toward protectionism while the world suffers a global economic recession and said his election-year promise to renegotiate the North American Free Trade Agreement on behalf of unions and environmentalists will have to wait.

We have waited. We have waited and waited. It is February 2014 and we have been waiting for five years. And by some coincidence jobs and the economy have not really recovered – and not at all for regular, working people. But instead of renegotiating NAFTA and other agreements to fix the problems that are sending jobs, factories, entire industries and $500 billion a year out of the country, we instead see the administration pushing the Trans-Pacific Partnership and fast track, which we all know will just make things worse.

The poor economy, decline of the middle class and incredible level of inequality have raised awareness that these trade deals have hurt us. Even with a near-complete media “blackout” of news about TPP and fast track, more and more people are “getting it” that the past trade agreements have driven wages down.

A recent poll asking the public their opinion of the fast track legislative push found “strong opposition,” “with a strong majority of Americans indicating their belief that trade agreements make the country worse off.” Sixty-two percent say they oppose fast track versus 28 percent who say they favor it. Also from the poll’s press release:

In households where a voter either owns or works for a small business, the verdict is clear: 64 percent say they expect TPP to hurt more than help small business.

On wages and jobs, the environment and food safety, voters clearly believe that TPP will make things worse. By a 35 point margin, voters believe that TPP would make things worse in terms of American wages (56-21). By a 30 point margin, voters believe that TPP would make things worse environmentally, not better (48-18). Among voters under age 35, 54 percent say that TPP would have an adverse environmental impact. A full 63 percent believe that TPP would make U.S food safety worse.

The public “gets it.” People “get it” that big companies have been using “NAFTA-style” trade agreements to cross democracy’s borders to escape democracy’s regulation and decent wages. People “get it” that big companies have been using these “trade” agreements to drive down wages here, pressuring people to accept concessions or lose their job and pressuring communities to give tax concessions.

The last thing people want is any more of this. And in our country decisions should be based on what the people want.

Fix NAFTA First

Once again we are rushing to do more of something that hurts the country, because it benefits a few people who have tremendous political influence. This time, instead of pushing through yet another job-killing treaty that enriches the billionaires at the expense of the rest of us, let’s stop. Take a breath. Take control of the process. Then continue the momentum and understanding this fight has generated to demand our leaders actually fix some problems before rushing to make things worse. This time.

It is not only the wrong time to bring fast track up for a vote in Congress, it is time to scrap the TPP agreement. Instead we need to fix NAFTA first.

Fix NAFTA first. It is time to renegotiate NAFTA and set it up as a new kind of trade template that works for the 99 percent here and in other countries. Then fix the rest of the trade regime and make it work for We, the People instead of a very few wealthy people.

Trade is a good thing, but not the way we have been doing it. Trade done right can lift people on all sides of all borders. It can and does increase prosperity. But the way the giant corporations have captured and rigged the current negotiating process is hurting our country – and the rest of the world. It is creating terrible inequality and terrible economic imbalances around the globe.

What should trade-done-right look like? That’s for another post. But here is a hint: In an agreement negotiated by a democracy, wouldn’t it be a trade violation to threaten to move someone’s job out of the country if they ask for a raise or don’t accept a wage cut?

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