North or South, Benefits of NAFTA Add Up to Nada

When the North American Free Trade Agreement, better known as NAFTA, was being debated in Congress, some of its critics argued it would be bad for U.S. workers. Others said it would hurt Mexican workers. Their concerns were shouted down by the treaty’s proponents, who optimistically predicted that a rising tide of profits and productivity would raise all boats.

Now, after a decade under NAFTA, it’s clear the picture isn’t so rosy. Working people and the poor, on both sides of the border, have paid a high price for trade liberalization, while benefits have been reaped only by a tiny clique that promoted the treaty in the beginning.

Successive secretaries of the U.S. Department of Labor have kept close track of the treaty’s high cost in U.S. jobs. By 2002, the department had certified that 408,000 workers qualified for extensions of unemployment benefits granted under the act for job losses attributable to employers’ moving work south to Mexico. Most observers believe this is a vast undercount of the U.S. workers who’ve lost jobs to NAFTA. According to NAFTA at Seven, a report by the Economic Policy Institute, “NAFTA eliminated 766,030 actual and potential U.S. jobs between 1994 and 2000 because of the rapid growth in the net U.S. export deficit with Mexico and Canada.”

You might think that the U.S. worker’s loss would be the Mexican worker’s gain, but you would be wrong: While the job picture for U.S. workers has been grim, NAFTA’s effect on Mexican jobs has been devastating. Before leaving office in 1995, President Carlos Salinas de Gortari promised Mexicans they would gain the jobs the U.S. lost under NAFTA. In the U.S., he promised that these job gains, although painful for U.S. workers, would halt the northward flow of Mexicans seeking work.

NAFTA’s first year saw instead the loss of more than a million jobs all across Mexico. Part of the problem was a general economic crisis, but NAFTA, too, played a large role in the losses. To attract investment, NAFTA-related reforms required the privatization of factories, railroads, airlines and other government-owned enterprises. This led to waves of layoffs. And as unemployment and economic desperation in Mexico increased, the number of undocumented workers crossing the border rose.

For a time, it seemed that the growth of maquiladora factories along the border would make up for at least part of the job losses. By 2001, more than 1.3 million workers were employed in more than 2,000 plants along the U.S.-Mexico border, according to the Maquiladora Industry Assn. But tying the jobs of so many Mexicans to the U.S. market, for which the plants were producing, proved disastrous.

When U.S. consumers stopped buying as the recession took hold in 2001, the maquiladoras began shedding workers. The Mexican government estimates that more than 400,000 jobs disappeared in the process; as the saying goes on the border, when the U.S. economy catches a cold, Mexico gets pneumonia. A two-year public relations campaign by the maquiladora association and the Mexican government attempted to blame the loss in border jobs on Chinese competition. But the fact was that the plants produced far more goods than a recession-plagued market in the U.S. could absorb.

Another serious consequence of NAFTA has been its failure to protect the rights of workers as its supporters had promised it would. To attract investment to the maquiladoras, Mexican government authorities cooperated with investors and compliant unions in maintaining a low-wage economy, reinforced with a system of labor control.

According to Martha Ojeda, director of the Coalition for Justice in the Maquiladoras, the government-mandated minimum wage for workers on the border is about $4.20. She estimates that a majority of maquiladora workers earn close to this wage. A study by the Center for Reflection, Education and Action, a religious research group, found that at the minimum wage, it took a maquiladora worker in Juarez almost an hour to earn enough to buy a kilo (2.2 pounds) of rice, and a worker in Tijuana 1 1/2 hours. Another study, by the economics faculty of the National Autonomous University in Mexico City, says Mexican wages have lost 81% of their buying power in the last two decades.

To enforce this system, maquiladora workers are required to belong to unions that have no intention of raising those low wages or helping them end exhausting and dangerous working conditions. Throughout NAFTA’s 10-year history, workers have sought to break free from their toothless unions in a long labor war waged from plant to plant along the border. They have organized independent unions, willing to fight for a larger share of the enormous wealth the factories produce. But these efforts have been met with firings, plant closures and even physical violence.

Under the North American Agreement on Labor Cooperation, a side agreement to NAFTA, the treaty’s signers agreed to enforce their labor laws and to generally affirm workers’ rights in their countries. But 10 years of hearings held under the side agreement have documented extensive violations of labor rights. In those few instances in which workers have successfully formed independent unions, as they did at Tijuana’s Han Young plant in 1998-99, their strikes were broken, despite guarantees under Mexico’s Constitution and federal labor law.

NAFTA’s sponsors promised that the labor side agreement would protect workers, even though the treaty itself was intended to demolish all barriers to foreign investment. The side agreement has proved toothless. In 10 years, not one fired worker has been returned to his or her job, and not one independent union has gained legal status and a contract as a result of the NAFTA process.

Instead, the historical labor protections built into Mexico’s legal system have been systematically undermined and eliminated as obstacles to investment. Even when Mexican judges have held that strikes were legal, their decisions were defied with impunity by government authorities. Under NAFTA, breaking strikes and unions on the border has become an integral part of economic development, and legal protections for workers have been swept away.

The Bush administration now hopes to establish a Free Trade Area of the Americas, which would export NAFTA’s principles to South and Central America and to the Caribbean. But President Bush found last month in Miami that the NAFTA example has trade ministers in Brazil, Ecuador, Argentina and Venezuela rejecting the plan. If he wants to understand why, Bush might consider the words of Zwelenzima Vavi, head of the South African Congress of Trade Unions. “In the pursuit of profit,” he said four years ago, “governments are told to remove worker protections, and then use that as an inducement for investment. But development is a wider concept. It includes social development, and the living conditions of the people. Development can’t exist with mass unemployment and poverty.”