In 1993 the US, under the Clinton administration, negotiated a trade agreement with Mexico and Canada that eliminated tariffs between the three countries. For years the agreement was hailed as a bipartisan success story, proof that two parties can work together to do something good. Now NAFTA is a campaign issue, not because Hillary is touting her association with it. In fact, Hillary Clinton appears to be less than fond of her husband’s legacy.
Why NAFTA Isn’t Evil -
In continuing my previous post on NAFTA, I would like to turn my attention to some of Senator Obama’s objections to the trade agreement.
Senator Obama has said that “one million jobs have been lost because of NAFTA.”
First of all the numbers that Obama has been citing came from Dr. Robert Scott, an economist at the Economic Policy Institute (I won’t go into Scott’s dubious associations), and cannot be directly interpreted as job loss. According to Scott’s numbers the increased exports account for 1 million new jobs while the increase in imports due to NAFTA result in about 2 million fewer jobs, this means that 1 million jobs were displaced (not "lost"). However, Scott’s numbers do not take into account increases in jobs that are not directly related to trade.
We’ll say that Bill, Betty, and Bob are all working for Shoes Inc before NAFTA, but after NAFTA has been passed it is cheaper to make shoes in Mexico than it is to make them in the US. Shoes Inc still makes some shoes, but not many, so Bill keeps his job. Betty and Bob get fired.
Now the US is exporting candles to Mexico, and there is an increased demand for candles, so Betty gets a job at Candles Limited. But Bob is still without a job. You would think that Bob is going to get depressed and get on welfare and be a good-for nothing bum (All because of NAFTA), but you would be wrong. Bob can get a job at Wax Inc. because suddenly Wax Inc is facing a greater demand for wax.
The creation of Bob’s new job at Wax Inc would not be included in Dr. Scott’s numbers.
Furthermore, the increase in imports may not accurately reflect the number of jobs that were lost in one industry. The lower price of shoes will increase the number of shoes that people in the US buy, thus increasing the number of shoes imported into the US.
Shoes Inc may only have been employing Bob and Betty to begin with, but according to Scott’s numbers Bob is now unemployed because of NAFTA.
All of this results in confusion over the number of jobs that have truly been lost, and not merely displaced. Some economists report half a million jobs lost (think of half a million in terms of 300 million people in the US, or 0.0017% of the population), while others report a net gain.
Overall employment has grown since NAFTA came to be. Whether some of that growth is due to, or in spite of NAFTA is still a matter of some debate.
-m-
Job loss isn't the main problem with NAFTA, it's just an easy statistic to throw out there to upset the masses. The real problem is that NAFTA takes government out of the picture entirely, leaving private corporations to their own devices. This means less protection for workers and the environment. Any time economics takes priority above all else it's a bad idea.
What particular harm did NAFTA do to workers or the environment? Please site some examples.
NAFTA originally faced lots of dissent when it was first suggested, especially because of environmental concerns. The idea was that once NAFTA was in place, companies in the U.S. would move their companies or practices to areas where environmental laws were not as harsh and not nearly as enforced. When NAFTA was finally created, one of the conditions was to create environmental watchdog to make sure the countries were abiding by environmental standards. It's generally agreed that this watchdog, the Comission for Environmental Cooperation (CEC) hasn't lived up to its commitment. The amount of hazardous waste in Canada has increased fourfold, as the U.S. has shipped it there. Several companies have also moved to Mexico because their pollution standards are much lower. In this sense, NAFTA provides companies with grand opportunities to escape environmental laws and push waste and pollution around instead of finding ways to get rid of it.
as for workers...
"trade can't work if prices are distorted -- and prices are hugely distorted. Maquiladoras in Mexico don't pay taxes to handle their sewage or their toxic wastes. They don't support health care, education, or a decent living for their workers. Their artificially cheap products have an unfair trade advantage, and we buy more of them than we would if we had to pay their real costs." [Sustainability Institutue]
In this sense, American workers are laid off from jobs because workers in Mexico will do the same job for lower wages and virtually no benefits. This isn't progress for anyone. Further, agreements such as NAFTA, if they are to work, should promote environmental standars and worker protections in all countries under the agreement. Otherwise, the only large tangible benefits from NAFTA are going to individual companies. Where is the big picture?