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NAFTA @ 20 – Some perspectives from planet earth

It’s 2014, which means it’s NAFTA’s 20th anniversary, which means expect fairly regular commentary for a few months on how Canada, Mexico and the United States would be worse off without their free trade treaty. There are some examples here, here, here and from the federal government here. It’s a convenient theory, both impossible to prove or disprove. NAFTA was an experiment in social and economic reorganization that cannot be reversed. The question we are stuck with, which is not such a bad one, is in what ways are we better off. And in what ways might we, as in we the people of North America, be worse off than two decades ago?

The following articles, which ran over the holiday period, try to answer that question for the three NAFTA countries. In general they find that the promises of good jobs across the region, higher working standards and wages in Mexico, and better environmental stewardship under NAFTA were totally empty. More than half of Mexico’s population remains in poverty and wages are competing downward with those paid in China. This is used as a threat by companies in the United States and Canada to try to force wage cuts from workers. Part-time and temp work is replacing full-time employment in Canada and the United States, with migrant workers taking precarious jobs, with fewer rights, in the fields (tomato and oil).

Canada has no energy or resource strategy other than getting the stuff out of the ground to market as quickly as possible, with proceeds shooting up to the top as corporate profits (and the environmental costs, in the tarsands, literally falling to earth as poisonous mercury). All three countries forfeited the right to require some of those resources to be turned into more valuable products domestically. Canada specifically forfeited any right to turn off the taps (of oil and gas) or redirect U.S. exports for conservation purposes, or Canadian upgrading. Make the slightest move to capture more value from resources (e.g. Newfoundland and Labrador’s profit-sharing law for offshore oil) or second-guess a mega-project (e.g. Quebec’s partial moratorium on fracking in the St. Lawrence) and risk a NAFTA corporate lawsuit asking hundreds of millions of public money in compensation.

Anyway, here are the articles. They give us many good reasons to organize actions during a January 31 Intercontinental Day of Action against the TPP (the NAFTA expansion pack in the Asia-Pacific) and Corporate Globalization. Sign up for more information, or register to organize an event in your community, at the Trade Justice Network website here. A map of actions across North America will be available at the same place soon.

Free trade’s tarnished silver anniversary, by Bruce Campbell (Canadian Centre for Policy Alternatives) in The Toronto Star, December 30

…Post-FTA/NAFTA, Canada has regressed to its traditional status as a resource exporter. Exports of unprocessed and barely processed resources now account for almost two-thirds of Canada’s goods exports, from 40 per cent just before the turn of the century. Value-added products have shrunk from almost 60 per cent of exports to roughly one-third in 2012… Between 1950 and 1990, there was a steady drop in the share of national income appropriated by capital (profits) and a rise in labour’s share. In the wake of the FTA/NAFTA, that relationship reversed. Capital’s share rose dramatically; workers wages and salaries’ share fell in lockstep…

NAFTA at 20: State of the North American Worker, by Jeff Faux (Economic Policy Institute) in Foreign Policy in Focus, December 19:

…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. In the midst of collective bargaining negotiations with unions, some companies even started loading machinery into trucks that they said were bound for Mexico. The same threats were used to fight union organizing efforts. The message was: “If you vote to form a union, we will move south of the border.” With NAFTA, corporations also could more easily blackmail local governments into giving them tax breaks and other subsidies, which of course ultimately meant higher taxes on employees and other taxpayers…

At 20 years, NAFTA boosted trade, did little for wage gap, environment in Mexico, by Mark Stevenson (The Associated Press) in the Globe and Mail, December 31:

On the plus side, trade between the three countries vastly increased, to about 3.5 times the 1994 levels, though U.S. trade with China and other Asian nations has grown even faster in the last two decades. More foreign automakers have set up plants in Mexico, which now produces about 3 million vehicles per year. Mexico has increased auto-sector jobs by around 50 per cent since 1994. But Mexico’s auto jobs are notoriously low-paying, and little progress has been made in closing the wage gap with the U.S. Average manufacturing industry wages in Mexico were about 15 per cent of U.S. wages in 1997. By 2012 that figure had risen only to 18 per cent. In some sectors, China’s wages have actually outstripped Mexico’s...

How Beer Explains 20 Years of NAFTA’s Devastating Effects on Mexico, by Timothy A. Wise (Global Development and Environment Institute, Tufts University) in Global Post, January 2:

…Here is a case where NAFTA has gotten the United States to open its market to something of value that Mexico can export, and Mexico can’t even capture the value from it. The industry’s growth benefits US barley growers and US malt makers. Mexico can’t even import the barley and make the malt themselves. So the country is basically a maquiladora for beer bottling. I guess Mexico contributes the water. Which it doesn’t have enough of. This has been Mexico under NAFTA in a nutshell. Giving away everything of value, then deluding yourself that your farm sector is doing fine because your Corona beer, bottled from US ingredients, is a big hit in the States. Meanwhile, hungry corn farmers wait for their government to invest in producing more of its own food.

NAFTA: 20 years of regret for Mexico, by Mark Weisbrot (Center for Economic and Policy Research) in The Guardian UK, January 4:

…Since 2000, the Latin American region as a whole has increased its growth rate to about 1.9% annually per capita – not like the pre-1980 era, but a serious improvement over the prior two decades when it was just 0.3%. As a result of this growth rebound, and also the anti-poverty policies implemented by the left governments that were elected in most of South America over the past 15 years, the poverty rate in the region has fallen considerably. It declined from 43.9% in 2002 to 27.9% in 2013, after two decades of no progress whatsoever. But Mexico hasn’t joined in this long-awaited rebound: its growth has remained below 1%, less than half the regional average, since 2000. And not surprisingly, Mexico’s national poverty rate was 52.3% in 2012, basically the same as it was in 1994 (52.4%). Without economic growth, it is difficult to reduce poverty in a developing country. The statistics would probably look even worse if not for the migration that took place during this period. Millions of Mexicans were displaced from farming, for example, after being forced into competition with subsidized and high-productivity agribusiness in the United States, thanks to NAFTA’s rules.