Opposition to Free-Trade Pact Grows

The much ballyhooed proposal for a U.S.-Mexico-Canada free-trade pact is being sidetracked--and may even be derailed--by the real threat that it will shift a million or more urgently needed U.S. and Canadian jobs to Mexico in the near future.

President Bush won a major political battle on the proposal last May when Congress foolishly agreed to put negotiations of the trilateral pact on a “fast track” so it wouldn’t be stalled by debate over such crucial issues as the threat of job losses and increased pollution.

By giving in to Bush’s demand for a “fast track,” Congress surrendered its right to modify any terms of the pact negotiated by the Administration. Congress will have to accept the pact or kill it outright--if Bush actually sends the proposal to Congress for a vote.

The United States and Canada already have such a bilateral free-trade agreement. That one is working to the disadvantage of the Canadians, and it could get worse for them if Mexico is added to the mix. But happily the proposed trilateral pact that would remove almost all trade barriers between the three countries is running into the political realities of this presidential election year.

It doesn’t take a political genius to know Bush’s reelection campaign won’t be helped if he tries to rush through the proposed pact because of the threat of more job losses. Proponents say, in the long run, the agreement will reduce the wage gap between the countries, expand U.S. exports and create more jobs for Americans. But that will take many years, and jobless workers in this country can’t wait that long.

Carla Anderson Hills, the U.S. trade representative, and her Mexican and Canadian counterparts are about to announce preliminary terms of an agreement to remove most of the trade barriers among their countries.

When they resolve their remaining differences, the pact could then be sent to Congress and the Canadian Parliament for approval. But because of growing opposition, that isn’t likely.

An increasing number of profit-hungry employers north of the Mexican border are already moving plants into Mexican border towns where wages are pathetically low, costly environmental controls are almost nonexistent and filthy living and working conditions are the norm.

U.S. corporations were encouraged to take advantage of those conditions in Mexico by a U.S.-Mexican deal that gave the companies generous breaks on tariffs, duties and taxes. As a result, an estimated 500,000 jobs were shifted from this country to the maquiladora plants just across the border in the past five years.

The proposed trilateral free-trade agreement would encourage more U.S. and Canadian corporations to expand their operations throughout Mexico, no longer limiting them to the maquiladora plants where they already get the advantages of free trade.

Yes, in time, a well-crafted free-trade agreement could help all three countries, just as the 12 nations in the European Community will be helped by their own carefully constructed single-market agreement that has been in the making for more than a decade.

The EC developed a “social policy” to make sure their workers are paid decent wages and have good working conditions. In other words, low wages and unsafe working conditions won’t be the basis for competition among EC companies.

But for the near future, a free-trade pact between the United States, Canada and Mexico will only encourage competition for jobs based on the low wages and the few environmental controls that are found in Mexico.

The situation could be improved if the proposed pact contained substantive protections for U.S. and Canadian workers, along with meaningful pollution controls.

That would mean such things as increased minimum wages in Mexico--now only $4.50 a day --health and safety laws comparable to those in this country, strict prohibitions against child labor and enforceable environmental protection laws.

But the trade agreement now being negotiated will not contain any reference to pollution or protection for workers. Separate discussions on those issues are continuing, and a proposal may come next month on some vague pollution control plan. But no protections are expected for U.S. and Canadian workers against low-wage competition from Mexico.

Even if agreement can be reached by the trade representatives on a bare-bones free-trade pact, few experts in Washington believe that Bush will risk submitting it to a vote of Congress this year. Why get into a debate during a recession over how many jobs it may cost the U.S. in the near future?

Approval by the Canadians is even more dubious. Since the U.S.-Canadian free-trade pact became effective in 1989, Canada has lost an estimated 300,000 manufacturing jobs, or 13% of its total, mostly to lower-wage plants in the U.S. Adding Mexico to the pact will only compound Canada’s problem.

Mexico, though, is ready to take anything that comes out of the trade talks because it has the most to gain. The Mexican government put up $10 million in 1991 to start a high-pressure public relations campaign in this country to push through the free-trade pact. After all, low-wage jobs from the U.S. and Canada are better than none in a country where unemployment and underemployment are close to 50%.

But the agreement will exacerbate the recession in the U.S. and Canada by further encouraging companies to move more jobs to Mexico.

A better beginning for expanding the already substantial trade between the three Western Hemisphere nations would be to clean up the mess in the maquiladora plants along the border.

If enforceable minimum standards for wages and working conditions are established in those border plants, and vastly improved pollution controls are put in place, we could then see how best to write a meaningful free-trade agreement for the Western Hemisphere.

Harry Bernstein’s column now appears in this space on alternate Tuesdays.