Failed Promises Are Turning the Tide Against NAFTA

While the majority of Mr. and Mrs. America was convinced that NAFTA would result in the loss of industries and jobs to Mexico, no fewer than five U. S. presidents, the majority of House and Senate members (including Bob Dole) and legions of academic economists, bankers and multinationals all swore to the contrary: The North American Free Trade Agreement, they promised, would be a “win-win” for American and Mexican workers. They ridiculed those who held any lesser view, particularly Ross Perot and his “sucking sound” of jobs going south.

Unfortunately, all policies face their hour of accountability. In the case of NAFTA, it is taking the form of bills by Rep. Marcy Kaptur (D-Ohio) and Sen. Byron Dorgan (D-N.D.).

Kaptur represents the industrial Toledo area, which has suffered massive plant shutdowns and the loss of a great many of those jobs to Mexico. The Almanac of American Politics calls her “probably Congress’ most vocal and dedicated opponent of NAFTA,” and when Bill Clinton’s campaign train rumbled through the Rust Belt on the way to the Democratic convention, Kaptur was out front giving the president hell.

When Congress returned from its convention break, Kaptur’s bill, called the NAFTA Accountability Act, already had 108 cosponsors. Basically, it points out that NAFTA was passed on promises to the American people that it would increase their (and Mexicans’) standard of living, reduce illegal immigration, improve environmental and health conditions on the border and slow the drug trade. Now it is time to assess results. The bill would require the administration to certify that these goals have been achieved. If they haven’t, then the U.S. must renegotiate or withdraw from NAFTA.

The proposal is sending shock waves through the ranks of NAFTA supporters who realize that such an audit would probably not pass muster. In fact, there is sufficient data showing that economic, immigration, drug trafficking and environmental conditions on both sides of the border have deteriorated, not improved.

The proponents of the Kaptur and Dorgan bills are pressing for the following promise/reality check:

* NAFTA will create American jobs. Before NAFTA’s implementation, the U.S. had a positive trade balance with Mexico of $1.7 billion. In 1995, two years after NAFTA, the U.S. was running a net trade deficit of $15 billion. Since every $1 billion of exports or imports creates or destroys about 23,000 jobs, one can see that the U. S. has suffered a direct net job loss of approximately 391,000 jobs. An indication of this loss is evidenced by the 43,000 displaced workers who have already been certified to receive dislocation benefits under the NAFTA Trade Adjustment Relief Act, the government’s program for workers whose jobs have been lost.

Another indicator lies in the figures for the Big Three automakers’ exports to Mexico, which rose to a meager 19,000 cars and trucks in 1995, while imports of vehicles made in Mexico topped out at 495,674.

* Environmental problems along the border will improve. Proponents of NAFTA felt sure that much of the manufacturing being done in existing border free-trade zones, or maquiladoras, would move to the interior of Mexico, thus reducing environmental pressures on the border. However, the Mexican Commerce Ministry reported last January that the maquiladora work force actually grew 26% in NAFTA’s first two years, from 546,588 to 742,700.

* NAFTA will reduce illegal immigration. The thesis here was that NAFTA would so improve the standard of living in Mexico that Mexican workers would no longer want to come to the U.S. The opposite has happened: Economic mismanagement and the resulting chaos have driven many thousands of desperate Mexicans north.

The Kaptur and Dorgan bills seek to assess this reality gap. They call for the president to renegotiate NAFTA if the U.S. trade deficit with any of the other parties exceeds 10% of U.S. exports to that country. They direct the president to mitigate any adverse effect of rapid changes in currency exchange rates, as has happened with the peso. They direct the president to renegotiate the terms of trade for agricultural commodities. They require certification of gains in U. S. jobs and living standards attributable to NAFTA; certification that conditions affecting public health have improved along the U.S.-Mexican border; and certification that human and political rights are respected and that increased imports do not result in increased importation of drugs. Finally, they bar expansion of NAFTA until these conditions are met. And if they are not, the U.S. is to renegotiate or withdraw from NAFTA.

It’s a good bet that both the Kaptur and Dorgan bills will pass and an equally good bet that the president will never be able to certify compliance. The end of NAFTA? The first major challenge to U.S. free trade philosophy? It will be interesting to watch.