Any NAFTA benefits come at high price
The North American Free Trade Agreement recently turned 10 years old, having proved thus far to be a lot of pain for very little gain.
While overall job losses have not been as dramatic as its initial critics feared, NAFTA's almost negligible impact on U.S. job growth has kept the debate on trade at center stage during the primary election season. And most of those who did lose a job correlated to NAFTA are worse off than they were before.
NAFTA looks good "from 30,000 feet," wrote Arizona Republic columnist Jon Talton last June, but not at ground level, where it worsened poverty in Mexican rural areas - driving up illegal migration, not fixing it, as NAFTA supporters promised at its outset - and caused major disruptions in U.S. manufacturing.
One frequently cited advocate for retaining or expanding NAFTA is Daniel Griswold of the Center for Trade Policy Studies, a branch of the Cato Institute. The CTPS says on the front of its Web site its mission is to "increase public understanding of the benefits of free trade," so it's safe to assume any facts that don't fit with that plan don't make their reports.
The Griswold camp argues that trade tripled between the United States and Mexico since NAFTA. But something else also tripled: the U.S. trade deficit with both Mexico and Canada. Economist Robert Scott of the Economic Policy Institute notes that when a company imports more than it exports, it's effectively shipping jobs overseas - at a rate that works out to "about 10 or 11-thousand jobs per billion dollars of imports or exports."
While Mexican President Vicente Fox's election, ending decades of one-party rule, was seen as a positive sign during the post-NAFTA environment, Fox's approval rating has recently dipped, in large part due to unfulfilled promises on a struggling economy. Over half of all Mexicans today live in poverty, with the number living on less than two dollars a day increasing by four million since NAFTA began, according to a January 2001 report by the Institute for Policy Studies.
Mexican agricultural workers in that country's southern states, for example, cannot compete with high-productivity areas such as the United States, where a few counties in the state of Iowa alone out-produce Mexico's total corn output. This competitive imbalance puts pressure on low-wage workers, which increases illegal worker migration, meaning NAFTA has had a negative impact on U.S. border regions.
The contention that the U.S. jobless rate is lower now than the year before NAFTA was approved needs to be placed in the context that underemployment - people finding work for less compensation than they were making previously, often despite additional working hours - is the real story of the current U.S. economy, according to a recent report in the Los Angeles Times. Unemployment figures also don't take into account the number of people who have been looking for work for so long that they don't even qualify to be counted among the "unemployed" the way the government keeps its statistics.
The Raleigh News-Observer did a series of reports highlighting not only the disappearance of manufacturing jobs, but the ineffectiveness of NAFTA's retraining programs for displaced workers. Roughly 70 percent of participants either found no work or were working for less, earning $23,332 on average before the layoff and $17,100 one year afterward.
Unemployment and under-employment, the reports noted, created a ripple effect throughout North Carolina, with workers going from paying taxes to receiving public assistance, causing budget emergencies in cash-strapped counties and municipalities.
While the CTPS says the U.S. economy has created a net of 18 million new jobs since NAFTA, those jobs cannot be correlated to NAFTA. In fact, the Commerce Department "canceled its biannual surveys of American companies intended to document NAFTA-related job creation because the results were so piddling," wrote BusinessWeek Online in May 2001.
One jobs study that took all external factors into account, such as profits made overseas, found NAFTA had only a slight impact on job growth overall. Sandra Pilatski, of the Carnegie Endowment for International Peace, told NPR that NAFTA was responsible for a net gain of 270,000 U.S. jobs since its inception.
Put in perspective, that's roughly equal to the number of jobs created "in one month in normal times in the United States," Pilatski said.
In other words, entire industries have been uprooted, hardships have been placed on families, and people at the low end of the wage scale - the ones that government policy should in principle strive to have the least adverse effects on - have been displaced or now earn less all for what is essentially a wash.
Asked about that report, Griswold himself admitted to NPR that it didn't surprise him. "Really, NAFTA was a modest net-positive for the U.S. economy," he said.
That's hardly a resounding roar with which to silence one's critics.
David Nash is a copy editor and
page designer for The Sun.