Study: Many Affected Negatively From NAFTA

[Andem]

By Victoria Hirschberg
The Monitor

McALLEN — In the 10 years since its inception, the North American Free Trade Agreement may have been good for business, but that has not been the case for workers who have felt its impact, according to a newly released study.

Workers from Mexico, Canada and the United States have been losers in the game of free trade, the study conducted by the Labor Council for Latin American Advancement contends.

The study, Another America is Possible: The Impact of NAFTA on the U.S. Latino Community and Lessons for Future Trade Agreements, asserts that U.S. Latinos in particular are seeing adverse effects on their job security, health and environment in the wake of NAFTA.

Wages have decreased for workers in Mexico in the 10 years since NAFTA took effect and there has been a displacement of workers on both sides of the border, maintains the study report released Monday.

This report comes out less than one year after the 10 th anniversary of NAFTA and on the eve of CAFTA, a new trade agreement between several Central American nations and the United States.

"The North American Free Trade Agreement was made into law where three countries … agreed to abide by this agreement," said Jaime Martinez, president of Texas LCLAA at a news conference Monday in Corpus Christi. "What happened was this agreement was one-sided."

He said the agreement that aimed to foster free trade among Mexico, Canada and the United States protects only big corporations, not workers.

The report contends that the U.S. manufacturing sector has lost more than 2 million jobs since NAFTA’s implementation. Most of those jobs were lost by Latino workers at industries in United States’ western and border regions.

The closure of many U.S. apparel plants has caused a displacement of many workers throughout the county since NAFTA began Jan. 1, 1994, the reports says.

In the Valley, textile companies like Levi Strauss & Co. and Haggar have closed all plants, leaving thousands of area workers without jobs. Many textile plants closed in the U.S. to take advantage of cheap labor in other countries like Mexico.

The report contends that NAFTA has caused Mexican workers to migrate to large industrial cities — such as Reynosa — and has led to a decline in wages.

The Mexican maquiladoras located in cities along the U.S.-Mexico border employ millions of workers, often at lower wages, according to the LCLAA.

"They were making wages that were inferior to workers who lost their jobs in the United States," Martinez said. "I disagree that economic conditions that those workers are facing today … they have not improved."

However, the issue of maquilas is more complex than looking at the pay scale, said John Sargent, associate professor of International Business at the University of Texas-Pan American in Edinburg.

"They actually do pay a lot for professional and technical positions," he said. Sargent pointed at that in many cases a bilingual Mexican engineer who went to a good school could be making the same as a U.S. engineer after 10 years working for a maquila.

Although the wages for maquila workers are less than U.S. minimum wage, Sargent said jobs at the border provide good opportunities for farm workers or workers in cities like Veracruz that are deeper south in Mexico.

"I don’t think you can really say maquilas are a bad thing," he said. "We have lower class people in Veracruz that think they could better themselves."

Veracruzano workers make up a significant part of the Reynosa work force, thus necessitating a union specifically for Veracruz workers, said Dr. Patricio Mora Dominguez, president of the union.

Overall, NAFTA has been good for Mexico although changes are needed to make the 10-year-old agreement applicable to presentday Mexico, Mora said,.

He said government and economic officials should recruit higher-end maquilas that pay more and perhaps offer housing benefits. He said while China, which has begun wooing plants away from Mexico, might support low wages and cheap labor, Mexico is working to better itself.

"I think there are with any trade agreement … winners and losers," Sargent said.

Martinez of LCLAA said his organization, which advocates Latino workers achieving the American Dream, is for free trade but fair trade.

"We do not want NAFTA to expand to CAFTA," Martinez said. "We are not against trade, but there needs to be fair trade."

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Victoria Hirschberg covers business, economics and general assignments for The Monitor.You can reach her at (956) 683-4466.

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[Andem]

I think this is a good article as it shows a certain side of NAFTA that has not really been discussed around here before.

We all know how NAFTA has affected our oil industry, how Canada is required to provide the US with oil first before ourselves. We've seen what it's done to our softwood lumber industry, how unfair that is. We've also seen Canadian companies sold outright to American corporations.

How does it affect Mexico? They seem to have benfitted very much from the free trade agreement since they never really had anything to begin with. It's much cheaper to run factories south of the US border. That's a no brainer.

So, how does it affect workers? As this article says, it's been mostly negative on all sides.

NAFTA seems more bad than good, and this is just one side.

 

[peapod]

I live in the West, so I know many people affected by free trade in a negative way. Greenpeace has some interesting articles on Nafta.

WORLD ECONOMY: Free trade puts workers on the global treadmill
BY SEAN HEALY

Ever watched a mouse run around and around on a treadmill? Well, that’s the position of workers under the terms of “free trade” agreements — except rather than one mouse per treadmill, it’s billions of us, all competing against each other to get our feet on the next rung.

That, of course, is not the official view of “free trade” coming from corporations or capitalist politicians. Orthodox liberal economic theory says that “free trade” will mean that everyone comes out a winner: nations’ needs are met, profit rates are high, goods and services are produced efficiently, consumers get cheap goodies, workers get well-paid and trade fosters international cooperation.

The secret, the theorists argue, is trade. Countries should not build economies and industrial bases capable of providing all (or most of) their needs domestically. To do so is inefficient, because it involves unnecessary duplication and wastage of resources on what in any case are substandard industries.

Instead, countries should specialise. They should concentrate on their “comparative advantage”, the goods or services which they produce well and most efficiently. If a country has rich soil, this might be agricultural products; if a country has abundant minerals, then coal might be the best to concentrate on. It should trade these with other countries for the goods and services it lacks.

While some workers may lose jobs in those inefficient industries which downsize or close down, they can always find new, better ones in the “comparative advantage” industries.

In the end, everyone comes out ahead: bosses, workers, consumers.

This, then, is the justification for “free trade” policies: protectionist measures, such as tariff barriers, quotas or other restrictions, interfere with trade and therefore with prosperity. They should be removed.

`Race to the bottom’
But it doesn’t work like that. By adopting the policies of “free trade”, countries commit to perpetual competition with each other, because there’s rarely only one country with a “comparative advantage” in something.

Coffee growers compete against each other, garment manufacturers compete against each other, software designers compete against each other, and not just across a national economy but across the whole world.

As a result, what you get is not universal prosperity, but a “race to the bottom”. Whichever country can produce most efficiently — churn out the most, turn over the quickest, pay the least — wins. Workers in one country are set against workers in another, to the disadvantage and demeaning of both.

In some particularly mobile industries, like light manufacturing, giant multinationals even have the option of shutting operations in loser countries and migrating to winner countries — and back again if conditions change.

The experience of workers in the three countries covered by the North American Free Trade Agreement — Mexico, the United States and Canada — is the classic proof of this.

NAFTA’s proponents, the giant multinationals and their politicians, claimed it would do exactly what orthodox trade theory promises: NAFTA would be “win-win-win”. There have certainly been winners (big business especially), but there have been millions of losers: namely, the working men and women of the continent.

In the United States, NAFTA has directly eliminated some 766,030 job opportunities, primarily for non-university-educated workers in manufacturing, according to an Economic Policy Institute briefing paper, “NAFTA at Seven”. These jobs have migrated, primarily to the maquiladora factory zones on the Mexican side of the US-Mexico border.

Rather than getting better jobs, those Americans who lost work ended up in lower-paying, more unstable, less secure work, primarily in the US service sector: their earnings were on average 13% lower than before.

For those who got to keep their jobs, the bosses’ threats to pack up and go to Mexico have undermined their collective bargaining power and kept their pay and conditions down.

According to one 1999 study, in 68% of union organising drives in industries prone to flight (like manufacturing), the company threatened to shut down part or all of their operations if the union won certification in its plants; win rates were 19% lower, at 32%, in those plants where such threats were made.

What has happened to US manufacturing has had economy-wide repercussions. According to one study by Dean Baker and Mark Weisbrot, “Will New Trade Gains Make Us Rich?”, released on October 3, for the three-quarters of US workers who lack university degrees, “the negative distributional effects of trade over the last two decades almost certainly outweighed the positive growth effects, causing them a net loss of real income”.

They assess that, if you include indirect effects, such as the weakening of unions’ bargaining power, trade liberalisation may have reduced the hourly wages of three-fourths of the labour force by between 12.2% and 12.6%.

The experience of Mexican workers has been just as bad. Economy-wide, exports have grown massively, as have company profits, but unemployment has remained high, the income of waged workers has fallen 25% between 1991 and 1998 and the number of regular, waged jobs has also fallen, from 73.9% to 61.2% over the same period.

Employment in the maquiladora zones has expanded enormously, from 420,000 in 1990 to 1.3 million. But these jobs are badly paid (16% less than an average manufacturing job in Mexico), unions are repressed and living conditions are appalling.

The maquiladora have undercut Mexico’s whole manufacturing industry. Despite the growth in jobs, under NAFTA, Mexican manufacturing workers’ wages have actually declined, by 20.6% between 1993 and 1999.

Nor is that the end of it, as free trade zones and maquiladora are now springing up in other parts of Central America, where labour costs are even lower, and Mexican manufacturing workers are threatened with losing their jobs to workers in Guatemala and Nicaragua. The treadmill just keeps getting larger and faster.

The traditional response of trade unions to this disaster would be to call for the reimposition of protectionism: restrict trade, reimpose tariffs and quotas and keep imports out.

But not only is this now near-impossible in many globally integrated industries, but many unionists are also realising that such a policy will not end, or even much restrict, competition between workers in one country and workers in another. It will simply export unemployment; in the North American case, US manufacturing workers will (maybe) regain their jobs but only at the expense of their Mexican neighbours.

Instead, unionists are turning to cross-border solidarity and cross-border organising — and it has started to pay off.

International union action has already proved highly effective against employer threats to decamp in several cases. During a bitter dispute with its South African work force, for example, DaimlerChrysler threatened to close its operations and move them back to Germany. German DaimlerChrysler workers immediately responded, saying that they would not accept any production transferred from South Africa — a response which eventually helped South African automobile workers win a 9% pay rise at the end of August.

On a larger scale, unionists worldwide have also started to come together in protest against the whole machinery of “free trade” and corporate-led globalisation: on November 9, the first day of the World Trade Organisation summit in Qatar, thousands of unionists took part in an international day of action alongside environmentalists, anti-poverty campaigners, small farmers and indigenous communities.

Rather than chasing each other on the global treadmill, unionists are starting to chase their employers: into the global sphere. If corporations can be internationally mobile and coordinated, then so should we be, they argue, with impeccable logic.



From Green Left Weekly, November 14, 2001.