Labor opposes NAFTA-like plan to cover Western Hemisphere

The latest international trade agreement that ignores labor and environmental standards is the Free Trade Area of the Americas (FTAA), and is being negotiated in secret right now.

Trade ministers from 34 countries in the Western Hemisphere took the stage in Quebec City, Canada, April 18, to hash out an expanded trade agreement. Among them was President George W. Bush.

"So what better time to remind global corporations and government trade negotiators that the people don't want agreements that ignore the impact of global trade on human rights, working conditions and the environment," said the Washington State Labor Council, in announcing a "March at the Arch" Saturday, April 21, at the Canada-U.S. border in Blaine, Wash., to stop FTAA.

The rally at Peace Arch Park also will express opposition to granting President Bush "fast track" trade negotiating authority.

The Bush Administration has cleverly renamed the process "trade promotion authority," but the national AFL-CIO says it is still opposed under any name unless the new trade deals have provisions on labor and the environment that make sure U.S. workers don't have to compete with workers in low-wage countries.

The Bush Administration has said it is open to considering new ways of including labor and the environment in trade agreements as long as those efforts don't carry trade sanctions, which Republicans and their business allies view as a backdoor way to erect protectionist barriers. March at the Arch is co-sponsored by the Vancouver and District Labour Council, and the Whatcom County Labor Council, AFL-CIO, in association with the Peace Arch Coalition, a group of Canadian and American labor, environmental, human rights, religious and student groups.

The FTAA is said to be based on the North American Free Trade Agreement (NAFTA) but expands its application to 34 countries of the Western Hemisphere from Canada to Chile, and further expands its scope into utilities, education and health care. Leaked reports indicate that, like its predecessors, the FTAA contains no labor and environmental provisions, and in fact, continues to encourage business practices that ignore such standards.

"NAFTA [is] a model that, in our view, has utterly failed to deliver the promised benefits to ordinary citizens in any of the three North American countries," declared the AFL-CIO Executive Council in a Feb. 14 statement.

When NAFTA was up for approval in U.S. Congress in the fall of 1993, supporters promised it would bring prosperity and jobs to all three countries. Television ads created by the business-backed lobby group USA*NAFTA said opening trade would save 700,000 U.S. jobs. The Clinton Administration predicted that NAFTA would add 200,000 U.S. jobs within five years.

The pro-NAFTA Institute for International Economics argued that a free trade agreement with Mexico would create a more favorable balance of trade for the United States.

Seven years later, NAFTA critics point out, none of these predictions have come true. The United States lost 400,000 manufacturing jobs, Canada 200,000. Mexico added roughly 800,000 manufacturing jobs in its "maquiladora" sector of production for export, but no increased prosperity, in part because massive increases in U.S. corn imports displaced hundreds of thousands of Mexican farmers, who then bid down wages in manufacturing and left for the United States in search of survival.

And the Economics Institute couldn't have been more wrong. The $475 million trade surplus the U.S. enjoyed with Mexico in 1993 had become a $16 billion-a-year trade deficit by 1998, and has spiraled upward since then.

How NAFTA Works

NAFTA is a union between two industrialized First World nations and a Third World nation with widespread poverty, corruption, and human rights abuses, including limited freedom to organize independent labor unions.

Canada and the United States had already become a free trade area at the beginning of 1989, so the real significance of NAFTA was in bringing in Mexico. In effect, NAFTA's elimination of restrictions on trade and investment made it easier for companies to shift production to Mexico, a low-wage country with lax environmental regulations, while still selling to consumers in the U.S. and Canada.

NAFTA has two key elements: elimination of tariffs and trade barriers, and protections for investors. Prior to NAFTA, Mexico levied tariffs of 10 percent, on average, for U.S. goods, while the U.S. had tariffs of 4 percent, on average, for Mexican goods. Under NAFTA, tariffs on manufactured goods are being phased out over a 10-year period, and tariffs on agricultural goods over a 15-year period. The second key element, which some analysts regard as the more important of the two, is a set of guarantees for investors. Under NAFTA, foreign investors must be treated the same as domestic ones. And, significantly, NAFTA prohibits direct or indirect expropriation of investments without compensation to the investor.

NAFTA's Effects

Just how many American workers have lost their jobs to NAFTA is not an easy thing to determine, said Robert Scott, international economist at the Economic Policy Institute, a labor- supported think tank, who has been studying the question for five years.

Since NAFTA began in January 1994, the U.S. Department of Labor has certified 346,578 U.S. job losses as NAFTA-related, including 8,258 in Oregon. But NAFTA critics say the Labor Department measures only a portion of the NAFTA-related job losses - those who apply and are eligible for NAFTA-related dislocated worker benefits.

When the U.S. General Accounting Office reviewed the NAFTA dislocated worker program last year, it reported complex eligibility procedures and a failure to adequately get the word out to workers of it existence.

And only manufacturing workers are covered by the NAFTA benefits. The Labor Department doesn't tally, or assist, workers who lose jobs in retail, service sector, or government service due to layoffs in manufacturing.

Skip Kyes, a business representative for United Food and Commercial Workers Local 555, says the retail industry is very sensitive to layoffs in other industries, so much so that within a week of any industrial downsizing, area grocers begin laying off courtesy clerks and other store employees.

"When people get laid off," Kyes said, "they immediately start saving their discretionary income. They still eat, but they stop eating meat and potatoes and start eating soup and crackers."

It's difficult to know exactly how many grocery and retail workers lose work to NAFTA's ripple effects, Kyes said.

"Lost" jobs are just the tip of the iceberg in terms of the impact on workers, Scott said: "The deeper effects are on wages and income."

NAFTA is eliminating the kind of high-wage, high-skill manufacturing jobs that are available to non-college-educated workers. According to a report published by the U.S. Trade Deficit Commission, when these workers find new jobs, they face, on average, a one-sixth reduction in their wages, and a quarter of them lose health care insurance coverage.

Also, as the commission report explained, as workers lose jobs in the manufacturing sector, they add to the supply of workers looking for jobs in the service sector which (added to the impact of young workers not able to find manufacturing jobs) drives down the wages of those already holding service jobs.

Then there's the "threat" effect. According to a series of Cornell University studies of labor organizing campaigns in the late 1990s, over half of employers faced with union organizing drives made threats to close all or part of their plants. Given the ease with which companies can now shift production to Mexico, such threats appear to be effective in keeping unions out - unions won 38 percent of the time when employers made such threats, compared with 51 percent where no such threats were made. Employers also use the threat of plant closure and capital flight at the bargaining table as a way to win wage concessions or fend off demands for increases.

For union workers in manufacturing, statistics like the above are backed up by volumes of anecdotal experience.

Jim Ellis, Jr. was making $13.50 an hour as a union forklift driver at a Portland plant that makes truck parts for Freightliner and other Class A trucks until he was laid off in November, a casualty, in part, of a shift in production to Monterrey, Mexico, by his company, Consolidated Metco.

About 126 people still work at Consolidated Metco's Rivergate plant, down from 400 before the layoffs began last March.

Ellis, 57, is learning cabinetry and taking classes in welding and computers through a government program so that he can work a few more years before retiring.

But he sees his experience as part of a larger picture.

"When they started shipping molds down there, I said, 'That's it. We're done.'"

"The company will say it's about survival," said Broc Greif, a business representative for Machinists District Lodge 24. "If you ask me, they're running away from the wages they're paying here."

Joe Hamblin, a 29-year employee at a Klamath Falls plywood mill and a member of the Machinists-Woodworkers Union, got his pink slip last October, one of 346 workers laid off over a seven-month period due to competition from cheaper Canadian wood. Now he works with the Oregon Bureau of Labor and Industries to help his co-workers adjust to the layoff.

The majority of the workers let go in October are over 40, Hamblin said, and many spent 25 to 30 years at the mill, where they were making $13 to $18 an hour, plus benefits. Now, those who have found work make $6.50 to $8 an hour. Asked what has become of his former co-workers, Hamblin goes down a mental list: "A lot of them have been looking for work for five months. You've got separations, divorces ... We've got eight that moved out of the county and we don't know what happened to them.

"They said NAFTA would increase jobs," Hamblin said. "It hasn't created any jobs that I can see."

(Editor's Note: Labor Press Staff Reporter Don McIntosh conducted interviews and research for this article.)

April 20, 2001 issue

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