We Need a New NAFTA
Trade agreement with Mexico and Canada kills jobs, lowers wages in state.
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.
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.