Op Ed: We Need a New NAFTA » Urban Milwaukee
Op Ed

We Need a New NAFTA

Trade agreement with Mexico and Canada kills jobs, lowers wages in state.

By - Jan 16th, 2018 01:08 pm
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A dairy farm in Wisconsin. Photo by William Garrett / Creative Commons.

A dairy farm in Wisconsin. Photo by William Garrett / Creative Commons.

The U.S. Chamber of Commerce, the Farm Bureau (which represents corporate agri-business), and locally, Wisconsin Manufacturers and Commerce (WMC), have launched an all-out national campaign to preserve a pro-corporate version of the North American Free Trade Agreement (NAFTA), which the current Administration is “renegotiating”.

Their media campaign and lobbying arguments ignore both the damage that the current version of NAFTA has done to our state and nation as well as the best proposals for replacing it.

NAFTA and subsequent NAFTA-style trade agreements have made it easier for big corporations to shift jobs around the globe to wherever workers are exploited the most, are paid the least and environmental regulations are the weakest. Since NAFTA took effect, more than 79,000 specific Wisconsin jobs have been certified as lost to either direct outsourcing or displacement by imports — and that’s just those jobs counted under one narrow government program. More jobs are lost every month.

Trade-related job loss is also putting major downward pressure on the wages and benefits of the jobs that remain, due to the fact that American workers are forced to compete with Mexican workers who are paid little more than $3 an hour. One study by the Center for Economic and Policy Research found that, even after accounting for the “benefit” of lower-priced imported consumer goods, this downward pressure on wages equaled the loss of more than $3,300 per year for most working Americans.

A recent editorial in the Wisconsin State Journal stated that “when allies lower tariffs and allow more competition across international boundaries, all sides get to produce and sell more of what they do best.” That’s the WMC/Chamber of Commerce/Farm Bureau/neoliberal economics line–but it’s simply not true!

Pro-NAFTA pieces are full of statistics about the high level of Wisconsin’s exports to Mexico and Canada. It is true that Canada and Mexico are our two major trading partners. But while corporate interests crow about our exports to these countries, they say not a word about imports! Higher exports equal more jobs. But at the same time, increased imports equal the loss of existing and potential jobs.

So what really matters is our “balance of trade”: exports minus imports. If imports are greater than exports, we are losing jobs.

Take agriculture first. Since NAFTA took effect, more than 11,000 Wisconsin family farms have disappeared. As with job loss and wage stagnation, NAFTA isn’t the only cause — but it’s definitely an important one. Nationwide, the U.S. agricultural balance of trade with Canada and Mexico swung from a $2.5 billion trade surplus the year before NAFTA took effect to a $6.4 billion deficit last year. Wisconsin’s state-specific agricultural trade deficit with Canada and Mexico in 2016 was $12.6 million.

We don’t have state-specific data for goods and services, yet the fact is that while the U.S. had a combined goods and services $9.9 billion goods and services trade deficit with Canada and Mexico in 1993 (the year before NAFTA went into effect), we had an inflation-adjusted $124.4 billion deficit in 2015 (the last year for which we have services data)! That translates into a lot of jobs lost—not gained, as corporate NAFTA apologists argue.

The ongoing harm NAFTA is causing our state’s economy cannot be allowed to continue. Replacing NAFTA, however, does not mean ending trade with Mexico and Canada — something that would not happen even if NAFTA was eliminated entirely, as the WMC/Farm Bureau/Chamber of Commerce arguments imply.

What’s really needed, then, is a new trade agreement that ends NAFTA’s corporate outsourcing incentives (intensified by the recently-passed tax “reform” bill) and that adds strong labor and environmental standards with swift and certain enforcement. That would raise wages for working people at home and abroad and would allow Wisconsin producers to compete on a more level playing field.

(In fact, Canada has proposed that each NAFTA country be required to institute a “living wage” for all their workers, based on each country’s cost of living. Such a living wage would be determined as one which could support a family at a decent standard of living. That would be a tremendous step forward for both Mexico—and the United States!)

However, given the overwhelming corporate orientation of the current Administration, it’s going to take immense public demand to achieve these demands and overcome the added enormous influence of the Chamber of Commerce, the Farm Bureau, and the WMC .

It’s time to organize, folks!

David Newby, President, Wisconsin Fair Trade Coalition and President Emeritus, Wisconsin State AFL-CIO.

Categories: Business, Op-Ed, People

6 thoughts on “Op Ed: We Need a New NAFTA”

  1. Terry says:

    Sure, but first we need a new governor and a new president.

    Dump Trump!!
    Dump Walker!!
    Dump all republicans!!

  2. Mike says:

    Good one Terry! After we “dump all republicans” what is the next step?

  3. Ben says:

    Full agreement David Ndwby.

    NAFTA needs a reworking or a dumping. President Trump is one of the best for this….imagine if we still had Obama, he’d probably give Mexico a nuclear clearance and some billions of dollars a year. Oh wait, he already did that with Iran.

  4. Jim says:

    From the author:
    ***********************
    What’s really needed, then, is a new trade agreement that ends NAFTA’s corporate outsourcing incentives (intensified by the recently-passed tax “reform” bill) and that adds strong labor and environmental standards with swift and certain enforcement. That would raise wages for working people at home and abroad and would allow Wisconsin producers to compete on a more level playing field.
    ***********************

    I agree with this approach. I’ve always wondered why we have not used it more effectively in our negotiations. I want to see other nations grow and prosper (right along with us). I want to see environmental and living conditions improve for everyone. If we allowed free trade with other countries who upheld our same worker safety, working conditions, and environmental regulations, that would go a very long way to leveling the playing field.

    The challenge of verification and enforcement, however, will remain.

    From the author:
    **************************
    (In fact, Canada has proposed that each NAFTA country be required to institute a “living wage” for all their workers, based on each country’s cost of living. Such a living wage would be determined as one which could support a family at a decent standard of living. That would be a tremendous step forward for both Mexico—and the United States!)
    **************************
    This one feels like a harder one – maybe even a bridge too far. Confirming that the exits are not chained shut is hard enough. Regulating a “living wage” in another country sounds like a bureaucratic nightmare. We want to grow industry, not gov’t.

  5. Terry says:

    @Mike, Well first thing we return to the rule of law and we bring back basic decency. Then we get rid of the republican gerrymandering of the state and get all the big out of state money that corrupts our politics. That’s just the start.

  6. KLF says:

    A little off topic but you’ve got me thinking…Speaking of jobs in the trades (skilled trades that is), can you tell me where I can find employees? I keep hearing about all this job loss for skilled labor but for the life of me I can’t find employees for my tool and die shop. In fact, I would love if one of of the writers at UM or any of you op-ed writers to put time into writing about that. I personally believe we have the answer for the jobs sitting and waiting to be filled. Is there any way we can convince youth that attending a 4 year college isn’t the only key for success? I’m personally still paying off college debt. It’ll be paid off when I’m in my 40s. I now run a tool and die shop. I look at the dollars spent on education and wish I had know as a teen what a great option this would have been from the start. Yes, this is a little (very) off topic, but I’m brainstorming ways to get the word out. I have jobs for toolmakers, but nobody knows what that is. Pay is great, endless overtime, and the work is a form of art. I’ll fill out that dumb NAFTA paperwork and sell a massive plastic injection mold to Mexico, but I need staff here to design and build the thing. I have plenty of opinions on NAFTA as it applies to my daily life, but I can’t put the cart in front of the horse right now.

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