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Leo W Gerard: NAFTA Negotiators Send Corporate Whiners Back to Swamp

Photo by Gerenme on Getty Images

Giant corporations, loyal to coin and faithless to country, staged a public display of blubbering in the run up to this week’s fourth round of negotiations to revise the North American Free Trade Agreement (NAFTA).

Whaa, whaaa, whaaaa, groups like the U.S. Chamber of Commerce sniveled into the swamp from which they crawled to conduct their press conferences. President Trump isn’t doing what corporations want, they wailed.

The President’s trade priorities, which he repeatedly stated on the campaign trail, do not include groveling to the whims and whining of corporations or their toady, the U.S. Chamber of Commerce. President Trump said he would create good, American jobs. To do that, he wants more stuff made in America and less stuff made in factories off-shored by greed-motivated American corporations.

“We’ve reached a critical moment,” Chamber of Commerce President Thomas Donohue sobbed this week. “The Chamber has had no choice but to ring the alarm bells.”

He said it, by the way, from Mexico City, where the Chamber, which calls itself the U.S. Chamber, had gone to scheme with Mexican government officials to subvert the NAFTA negotiation goals of the U.S. government.

Chamber Vice President John G. Murphy, meanwhile, was carping from the place the President calls the swamp, “So we’re urging the administration to recalibrate its approach and stop and listen to the business community, the agriculture community, the people who actually engage in trade.”

That is the crux of it, right there. The president had failed to place corporate profits over American workers.

Really, what Murphy and Donohue were saying is that the President should ignore the hundreds of thousands of Americans who lost their jobs because of NAFTA and concentrate instead on the profits to be made by wealthy CEOs and shareholders. Those are the guys who uprooted American factories and transplanted them in Mexico, where corporations can more easily exploit both workers and the environment.

United Technologies (UT) is a good example. UT had two perfectly profitable factories in Indiana where American workers manufactured Carrier gas furnaces and electronic controls. UT decided, however, that it could make even more money if it moved the factories to Monterrey, Mexico.

After Vice President Mike Pence, then governor of Indiana, handed UT $7 million of the state’s tax dollars, the corporation agreed to keep some of the Carrier jobs in the United States, but in the end, it moved all 700 electronic controls jobs to Mexico and 632 of the furnace jobs.

In Mexico, UT can pay its new workers a dime for every dollar in wages earned by its skilled American workers in Indiana. U.S. corporations like UT that transplant factories and kick their American workers to the curb pocket the difference in wages.

NAFTA, which encourages this kind of move, doesn’t benefit Mexican workers either. The poverty rate in Mexico is 52.3 percent, virtually the same as it was in 1994, when NAFTA took effect. Wages there rose just 2.3 percent. Economic development in Mexico has fallen behind that of most other Latin American countries.

But, whaa, whaaa, whaaaa, the Chamber of Commerce cries about the President’s intention to keep his campaign promise to build a trade wall to stop corporations from sneaking across the border.

Emily Davis, a spokesperson for the Office of the U.S. Trade Representative, gave the Chamber a good smack upside the head after Donohue and Murphy told the President that he should stop listening to workers and do exactly what the Chamber and corporations tell him to do.

Here’s what Davis said: “The president has been clear that NAFTA has been a disaster for many Americans, and achieving his objectives requires substantial change. These changes, of course, will be opposed by entrenched Washington lobbyists and trade associations. We have always understood that draining the swamp would be controversial in Washington.”

The Wall Street Journal explained the problem for the likes of Donohue and Murphy. The newspaper quoted an outside trade adviser to the administration. He said that the administration wants to “create more uncertainty and reluctance for U.S. businesses to invest in Mexico. . . They want to change the decision making around outsourcing and the offshoring of investment.”

The U.S. negotiators, for example, want to weaken, or maybe even eliminate, the NAFTA-created Investor State Dispute Settlement (ISDS) system. Corporations love this thing. It’s a secret court presided over by corporate lawyers where corporations can sue countries for passing laws that CEOs claim take a bite out of profits.

So, for example, a corporation could claim that a U.S. safety regulation prohibiting a cancer-causing chemical in plastic baby bottles diminishes expected future profits from its Mexican chemical factory. The corporate lawyers acting as judges in the secret NAFTA court can order the United States to compensate the corporation.  And, to top it off, the amount that the secret court can order taxpayers to hand over to corporations is unlimited.

The secret court reduces risk for corporations moving American factories to Mexico, where they might not have the same confidence that they would in American courts to protect their property rights.

Eliminating or curbing the secret court would reverse one of the NAFTA incentives for corporations to transfer manufacturing to Mexico. The administration wants to change several other aspects of NAFTA for the same result.

For example, it wants the government to be able to insist that more of what it buys be made in the United States. That would mean U.S. tax dollars would create more jobs in the United States. That discourages offshoring because the government is a super consumer.

The administration also wants a higher percentage of a product, such as a car, to be made in the United States, or at least in one of the three partner countries, for it to attain NAFTA duty-free status.  Right now, it’s 62.5 percent. The administration is talking about 85 percent, which would deter offshoring to Asian countries.

The administration is also demanding labor rights for Mexican workers. Enabling them to form real, worker-run labor unions would raise their wages, and, as a result, make transplanting U.S. factories in Mexico less profitable.

Murphy told the administration that it should do none of this. It should, he said, follow the administration’s own guidelines and “do no harm.”

Basically, big corporations and the Chamber want no change to NAFTA. They’re fine with all harm falling on U.S. workers’ shoulders ­ – 800,000 of whom lost their jobs because of NAFTA. And that doesn’t include the 1,600 lost at Rexnord and the two United Technologies factories in Indiana this year.

President Trump isn’t fine with that outcome, however. And that’s why his spokesperson at the Office of U.S. Trade Representative told the Chamber this week to waddle back down to the swamp and shut up.

Leo W Gerard: “Do No Harm” Still Hurts

Photo of locked gate at closed steel mill by Getty Images.

Promises were made.

And workers believed candidate Donald Trump when he pledged to stop corporations from exporting American factories. Workers cast votes based on Trump swearing he would end the trade cheating that kills American jobs.

This week, though, workers got bad news from Washington, D.C. President Trump proposed virtually eliminating funding for a Labor Department bureau that helps prevent U.S. workers from having to compete with forced and child labor overseas. In addition, the administration issued only vague objectives for renegotiating the job-killing North American Free Trade Agreement (NAFTA).

When NAFTA has cost at least 900,000 Americans their jobs, vague is unacceptable. Commerce Secretary Wilbur Ross said his first rule in negotiations for a new NAFTA would be to “do no harm.” That’s not good enough. That’s the status quo, and promises were made. The first rule should be to “do substantial good.”

Substantial good would start with clear, firm goals for renegotiating NAFTA. That would include returning those 900,000 jobs to the United States. That would include restoring the jobs the United States continues to lose, like the 350 that disappeared this year when Rexnord closed its Indianapolis ball bearing factory and moved production to Mexico. And like the 632 jobs at Carrier in Indianapolis that will begin vanishing this week when the first layoff notices are issued because the heating and air conditioning manufacturer shifted some production to Mexico.

In Monterrey, where both Rexnord and Carrier moved jobs, the minimum wage is $3.90 a day. Not an hour. It’s $3.90 a day. There is no way for American workers to compete with that. What they were looking for from the NAFTA renegotiation goals is some help.

Instead, they got pabulum. Yes, there’s a whole section on labor, and it says the labor provisions should be in the main document, not in a side agreement. But the fuzzy language doesn’t provide much hope for workers like those who just lost their jobs at Carrier and Rexnord.

It says, for example, that NAFTA countries should have laws regarding minimum wage, hours of work and occupational health and safety. That’s great. But Mexico has a minimum wage. It’s one so low that, as former presidential candidate Ross Perot would say, it sucks American factories right across Rio Grande.

The NAFTA negotiation targets don’t say that the minimum wage should be a living wage or specify how it would be policed to prevent forced and child labor.

Within the U.S. Department of Labor, there’s a section called the Bureau of International Labor Affairs that monitors compliance with labor provisions in international trade agreements and pays for programs to reduce child and forced labor internationally. The intent is to prevent American manufacturing workers earning family-supporting wages from competing with third world children paid with bread and blankets.

The administration has, however, said it wants to gut that program, cutting its funding by 80 percent. In addition to workers, American food and clothing corporations have objected. Nate Herman, a senior vice president for the American Apparel and Footwear Association, told the Washington Post that without the bureau’s efforts, “you’re saying, basically, that it’s okay for forced labor and child labor to run rampant, which undercuts our own labor force.”

Without specific protections in NAFTA and without even the Bureau of International Labor Affairs programs, U.S. workers are subjected to a no-win competition with exploited foreign workers. The Americans end up unemployed, like those at Carrier and Rexnord. The foreign workers continue to be abused.

Promises were made to American workers. They need to be kept. Big league, not halfway.

For example, the solution to Carrier, owned by United Technologies, moving out of Indiana was a half measure.

United Technologies spared about 700 jobs at the Indianapolis Carrier plant only after Vice President Mike Pence, then governor of the state, handed the corporation $7 million. None of the 700 jobs at the other United Technologies plant in Indiana was saved. All of those went to Mexico.

That’s not what Donald Trump promised on the campaign trail. At a rally in Indianapolis last spring, he pledged: “Here’s what’s going to happen. They’re going to call me, and they are going to say, ‘Mr. President, Carrier has decided to stay in Indiana . . . One hundred percent. It’s not like we have an 80 percent chance of keeping them or a 95 percent. 100 percent.”

But then, it was President-elect Trump who called Carrier. And it wasn’t 100 percent. It wasn’t even 80 percent. And, to make matters worse, United Technologies CEO Greg Hayes said that the millions he’d promised to invest in the plant would be spent on automation, further reducing jobs.

This is, according to the Trump administration, Made in America Week. It began at the White House Monday with a showcase of products produced in every American state, from fire trucks to door hinges. But to really revive American manufacturing, the administration must keep its campaign promises. And that means strong language in a renegotiated NAFTA and strong enforcement of other international trade deals and trade laws.

“No harm” is not enough for the administration that promised to cure the injury that international trade inflicted on workers.

NAFTA Failed to Live Up to Promises

By Arnie Alpert and Gabriel Camacho

In the twenty years since the North American Free Trade Agreement (NAFTA) went into effect, millions of Mexicans have been pushed by NAFTA to make the dangerous journey across the border into the United States, many without legal authorization.  The U.S. government has responded by turning the border into a militarized zone, jailing hundreds of thousands of people, and deporting record numbers back across the border.

Militarization of the border began in 1994 with Operation Gatekeeper, which erected fencing, walls, and other barriers between San Diego, CA and Tijuana, Mexico, forcing migrants into dangerous desert terrain.

This was not supposed to happen.

According to NAFTA’s backers, the agreement was supposed to promote prosperity in both countries and actually reduce the pressure to migrate.

President Bill Clinton asserted NAFTA would give Mexicans “more disposable income to buy more American products and there will be less illegal immigration because more Mexicans will be able to support their children by staying home.”

Mexico’s former President, Carlos Salinas, offered a similar opinion:  NAFTA would enable Mexico to “export jobs, not people,” he said in a 1991 White House news conference alongside President George H. W. Bush.

William A. Ormes wrote in Foreign Affairs that NAFTA would “narrow the gap between U.S. and Mexican wage rates, reducing the incentive to immigrate.”

So what happened?  As a precondition for NAFTA, the U.S. demanded drops in Mexican price supports for small farmers.  The agreement itself reduced Mexican tariffs on American products.  These changes meant that millions of Mexico’s small farmers – many of them from indigenous communities – could not compete with the highly subsidized corn grown by U.S. agribusiness that flooded the local Mexican market.

Dislodged from the places where their families had lived for generations, many people did in fact seek employment in export-oriented factories and farms.  But there were too few jobs to go around, and those jobs that were created did not generate the “disposable income” President Clinton had promised.

A 2008 report on “NAFTA’s Promise and Reality” from the Carnegie Endowment for International Peace concluded that while half a million manufacturing jobs were created in Mexico from 1994 to 2002, nearly three times as many farm jobs were destroyed.

As for Mexican wages, they went down, not up, during the same period.  “Despite predictions to the contrary, Mexican wages have not converged with U.S. wages,” Carnegie observed.

Unable to earn a living at home or elsewhere in their own country, Mexicans did what people have done for ages; they packed their bags and headed for places where they thought they could find employment.

The experts shaping NAFTA knew that the deal would disrupt the Mexican agricultural sector.  That’s why Operation Gatekeeper was implemented the same year as NAFTA.  It’s impossible to integrate national economies without disrupting local ones – something that should give pause to those proposing new trade agreements today.  The realities of NAFTA should not be replicated.

As the American Friends Service Committee outlines in “A New Path Toward Humane Immigration Policy,” the U.S. should advance economic policies that reduce forced migration and emphasize sustainable development.  Instead of policies like NAFTA that elevate rights of transnational corporations above those of people, we need alternative forms of economic integration that are consistent with international human rights laws, cultural and labor rights, and environmental protections.

Modern-day free trade agreements are basically arrangements that take rights away from citizens and bestow expansive benefits to multi-national corporations.

Workers on both sides of the border have one thing in common:  they need the ability to organize for higher wages and decent working conditions.   Without the opportunity for workers to benefit from the rewards agreements like NAFTA generate for corporations, “free trade” becomes just another driver of the widening gap between the ultra-rich and everyone else.

With the Obama administration pushing hard to create a new arrangement linking the economies of eleven Pacific rim countries, and another that ties the U.S. economy to that of the European Union, it’s time for a new path.

Arnie Alpert is the American Friends Service Committee’s New Hampshire program director. Gabriel Camacho coordinates the AFSC’s Project Voice in Cambridge, Massachusetts. 

(This Op/Ed was written by NHLN regular contributor Arnie Alpert and also appeared in the NH Business Review)

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