January 1, 2014 not only beckons the beginning of a new year but also represents the twentieth anniversary of the North American Free Trade Agreement (NAFTA). The significance of this is that the Obama Administration is currently pressing for an expansive new trade pact with 11 countries, mostly in the Pacific Rim that will make NAFTA seem like child's play. The emerging pact, the Trans Pacific Partnership (TPP), will apply to 40 percent of the world economy and has been described as NAFTA on steroids.
While most of the focus around dinner table conversation in the average American home does not include a discussion of international trade, the consequences of the TPP for the legions of un- and underemployed workers and the increasingly shrinking middle-class could not be more pertinent. And if trade deficit analyses, off-shoring of jobs, "Buy America" provisions, and prevailing wages do not capture your imagination or command the lion's share of the discussion, the extreme secrecy surrounding the process of the current negotiations surely should raise a red flag of caution.
The current negotiations have been conducted and written by a large cadre of corporate lobbyists, nearly 600 in all, with little to no consultation or input from Congress. We are all aware of the corrupting effect of money on the contemporary political system, but when corporate interests have a seat at the table in determining provisions that will directly benefit their bottom lines one has to seriously question the efficacy of an agreement that so lopsidedly favors management over labor.
At a time when income inequality has sparked rhetorical inspiration from the Pope to the President and is on the minds and tongues of a broad cross-section of ideological and political thinkers, policymakers, and ordinary individuals we are staring at a repeat of a failed and flawed economic experiment. An experiment that will result in further loss of jobs, greater inequality, higher trade deficits, and a host of non-trade provisions that will lead to higher healthcare costs, loss of internet freedom, environmental degradation, and the incredible specter of investors being able to override governmental sovereignty.
These are not specious or speculative arguments; we have twenty years' experience with a model of trade inefficiency as our guide. A new report by Public Citizen's Global Trade Watch entitled "NAFTA at 20" meticulously documents the colossal failure of NAFTA to fulfill even the most modest claims. Just a few highlights:
• NAFTA promised 170,000 jobs created per year, yet by 2004 increased trade deficits had equated to a net loss of 1 million jobs.
• Pre-NAFTA trade surplus of $2.5 billion with Mexico and deficit with Canada of $29.1 billion has morphed into a combined deficit of $181 billion. Representing an inflation-adjusted increase of 580 percent.
• Real wages in Mexico have fallen dramatically. A minimum wage earner in Mexico today can buy 38 percent fewer consumer goods than pre-NAFTA. This has contributed to a doubling of Mexican immigration to the U.S. since NAFTA's implementation.
• U.S. manufacturing workers displaced by NAFTA see a 20 percent drop in earnings when re-employed. The shift in employment to low-paying service jobs has contributed to wage stagnation.
• Under "investor-state" provisions multinational corporations can sue governments for loss of expected profits. Under NAFTA more than $360 million in compensation for challenges to toxics bans, land-use rules, water and forestry policies and other environmental laws have been awarded and more than $12.4 billion in claims are currently pending. This subverts national and state sovereignty and places profits over people's rights.
• Under "investor-state" only commercial interests have standing to challenge a wide range of decisions from consumer health and safety to environmental and other public interest policies. Appeals are made to a tribunal composed of three private sector attorneys. These cases have increased by tenfold from 2000-2012.
• In an ongoing case a U.S. pharmaceutical corporation is demanding $481 million for Canada's revocation of its medicine drug patents.
These are illustrative of what can be expected if the Administration is successful in ramming the TPP through Congress and in order to enhance its chances for passage the President is asking for a Nixon-era legislative mechanism entitled Trade Promotion Authority, or fast-tracking that will severely limit Congress' ability to modify or amend provisions of this enormous trade pact. There is growing resistance in Congress and among the populace to this chicanery. A bipartisan group of 178 Members of Congress have already expressed their opposition to fast track. But 218 votes are needed. It is time for the people to speak out.
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