No More Trickle-Down Trade Deals

Leo Gerard

Free trade be damned.

People don’t need any more free trade. They need jobs. And not just any jobs. They need good jobs with living wages and decent benefits.

That’s what negotiators from the United States, Canada and Mexico must prioritize as they begin talks this week to rewrite the reviled and failed North American Free Trade Agreement (NAFTA). Negotiators must focus on improving the lives of people, not boosting the profits of corporations.

NAFTA betrayed the citizens of the United States, Canada and Mexico because it was based on the same servility to the rich that trickle-down economics was. Under trickle-down, the wealthy and corporations got the biggest, fattest tax cuts. Everyone else supposedly was to benefit somehow someday.  A microscopic pinch of the immense monetary gift granted to the high and mighty was supposed to magically appear in everyone else’s pockets. It never did.

And that’s the problem with NAFTA. Its negotiators placed corporations on a pedestal, awarding them rights and privileges that no human, no labor organization, no environmental group got. Again, the wrong-headed idea was that if corporations made big bucks, some of the benefits would trickle down to workers. That never happened.

NAFTA was great for corporations. It provided incentives for them to move to the lowest-wage, lowest-environmental regulation location – that being Mexico. Profits, dividends and CEO pay all rose as corporations like United Technologies uprooted profitable American factories – like its Carrier plant in Indiana – and moved them to Mexico. There, dirt-poor wages and lack of environmental regulation provide even higher profits, dividends and CEO pay.

Workers in none of the three NAFTA signatory countries saw any benefits. Wages in the United States and Canada stagnated.  In Mexico, wages are actually lower than before NAFTA. The poverty rate in Mexico is almost exactly the same as it was in the mid-1990s, before NAFTA took effect.

NAFTA ensured there was no wall between the United States and Mexico for corporations to scale. Humans get stopped at the border, but not corporations. United Technologies faced no barriers this year when shipped manufacturing from Indiana to Mexico. It was the same for Rexnord, which closed its ball bearing plant in Indianapolis this year and sent it across the border to Mexico, no problem.

As the United States’ trade deficit with both Canada and Mexico skyrocketed in the 20 years after NAFTA took effect in 1994, the United States lost 881,700 jobs. That figure is three years old, so it does not include United Technologies and Rexnord moving 1,600 Indiana jobs to Mexico. Since NAFTA, more than 60,000 factories closed in the United States.

Clearly part of the lure is wages. While a manufacturer may pay $20 an hour in the United States, it’ll only pay $20 a day in Mexico, where the average manufacturing wage is $2.49 an  hour. Labor organizations there are almost always completely controlled by corporate employers, rather than by the workers. So securing raises is nearly impossible.

And while many formerly American manufacturers moved just across the border to special industrial areas, overall job growth in Mexico was not significant. That is because subsidized corn exported from the United States bankrupted huge numbers of small Mexican farmers and many corporations have moved their factories again, this time from Mexico to even lower-wage China and other south Asian countries.

That’s just great for rich investors and fat cat CEOs. It’s been horrible for workers in Mexico, Canada and the United States. What has trickled down has been toxic – lost jobs, stagnant wages and worry.

The difference in the way NAFTA treats corporations and workers is stark. Corporations get special perks in the main NAFTA document. The rights of workers are dealt with in an addendum. They’re an afterthought.

NAFTA gives corporations an extraordinary privilege. They can sue governments for what they contend are “lost profits” if they don’t like regulations or legislation. They don’t have to present their cases to real judges in open court, either. They get to go before a tribunal of corporate lawyers whose decision cannot be appealed by the governments ordered to pay unlimited billions of tax dollars to the corporations. Corporations can force governments to pay if lawmakers protect citizens by, for example, banning a neurotoxin or limiting sale of dangerous products.

There’s no counterpart for workers. NAFTA provides no way for the Carrier workers laid off in Indianapolis by United Technologies to sue. The workers can’t ask three hand-picked worker-jurists in a secret court for income lost because the corporation moved to Mexico to make even bigger profits on the backs of underpaid workers there. There’s no way for Mexican workers to sue when a corporation endangers worker health with pollution or when a company-controlled labor organization pushes down wages.

In fact, NAFTA’s labor addendum bows to corporations before even mentioning workers. The addendum’s preamble says the NAFTA signatories resolved to expand markets for goods and services and to enhance corporate competitiveness globally. Then, after that, the preamble says a goal is to create new jobs, improve working conditions and living standards, and protect “basic” workers’ rights.

Frankly, that’s offensive. Workers’ concerns must be primary in this renegotiation. That includes wages, working conditions and corporate pollution. Wages must rise in Mexico or the migration of U.S. and Canadian corporations to south of the border locations will never stop.

A renegotiated NAFTA that subordinates workers will meet the fate of the now-dead Trans-Pacific Partnership (TPP) free trade deal. An uprising and uproar from workers, environmentalists, faith organizations, community groups and others killed the TPP before it ever reached Congress. The humans in the United States, Canada and Mexico won’t be tricked or trickled down on again.

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