FREE ESSAY ON NAFTA 5 YEARS OF FAILURE

NAFTA 5 YEARS OF FAILURE

NAFTA
Five Years of Failure
In December of 1992, Presidents Salinas (Mexico), Bush (U.S.) and Prime Minister Brian
Mulroney of Canada signed the North American Free Trade Agreement (NAFTA). The Mexican
legislature ratified NAFTA in 1993 and the treaty went into effect on January 1, 1994,
creating the largest free-trade zone in the world.
NAFTA's promoters promised 200,000 new jobs per year for the U.S., higher wages in Mexico
and a growing U.S. trade surplus with Mexico, environmental clean-up and improved health
along the border. The reality of the post-NAFTA surge in imports from Mexico has resulted
in an $14.7 billion trade deficit with Mexico for 1998. By adding the Mexican trade
deficit to the deficit with Canada, the overall U.S. NAFTA trade deficit for the year
1998 is $33.2 billion dollars. In the last five years we have gone from a pre-NAFTA trade
surplus of $4.6 billion with Mexico to a $14.7 billion deficit. Using the Department of
Commerce trade data in the formula used by NAFTA proponents to predict job gains, the
real accumulated NAFTA trade deficit would translate into over four hundred thousand U.S.
jobs lost.
A number of companies that specifically promised to create new jobs actually laid workers
off because of the agreement. Allied Signal, General Electric, Mattel, Proctor and
Gamble, Scott Paper and Zenith all made specific promises to create jobs, and all have
laid workers off because of NAFTA as certified by the U.S. Department of Labor's special
NAFTA unemployment assistance program (NAFTA TAA). (1) These are not the only companies
who broke their promise of new jobs. In February 1997, Public Citizen's Global Trade
Watch conducted an investigation of companies that had specifically promised that they
would create jobs if NAFTA were enacted in 1993. Of the 67 companies studied, 60 had not
created jobs or even increased their exports to Mexico.
When we look at the goods exported from the U.S. to Mexico, we must understand that the
figures used do not mean goods to be sold in Mexico. Most of the figures released by the
government include what is termed as "industrial tourism". This means we send goods to
Mexico to be assembled in their low wage plants and then re-imported into the U.S. as
finished products. (2)
A significant portion of the jobs lost to Mexico due to NAFTA are in the higher wage
sectors of manufacturing. Many of these are in the automobile and electronics industries.
The latest government data shows that 70% of the jobs lost were in manufacturing. The
U.S. has gone from a pre-NAFTA manufacturing trade surplus of $4.6 billion with Mexico in
1993 to a $8.9 billion deficit in 1998. Imports from Mexico have increased 129% since
NAFTA went in to effect. (3) 
According to the U.S. Department of Labor, approximately 214,902 American workers have
been certified as having been laid off due to NAFTA. These numbers do not take into
account the workers displaced out side of the factories. When a plant closes and moves to
Mexico it is not only the line worked who is affected but also the entire community. One
must look at the retailers who have to layoff works due to decreased sales; restaurants
and all service industries tied to the consumer are affected. These workers are not
considered by the government as being displaced by NAFTA. 
The wages paid in the new high tech plants being built in Mexico, are so low there is not
a single U.S. worker who could take enough of a pay adjustment to compete. The average
hourly compensation for a U.S. manufacturing job is approximately $18.74/hour,) and the
average wage in Mexico is $1.51 per hour. (4) NAFTA is directly responsible for the wage
stagnation being experienced in the U.S., this is largely due o the threat of closing the
business and moving to Mexico every time workers try to organize and negotiate a wage
increase. Kate Bronfrenbrenner of the Cornell University School of Industrial Relations
found that the percentage of U.S. companies following through on threats to close in
response to union drive tripled under NAFTA. NAFTA was supposed to raise the standards of
living in Mexico so that the Mexican citizens would be able to buy U.S. goods and stem
the flow of illegal immigration into the U.S. Unfortunately since NAFTA's enactment;
7,771,607 Mexican workers in 1997 were documented as earning less than Mexico's legal
minimum wage of $3.40 a day, a 20% increase from pre-NAFTA figures taken in 1993. By 1997
Mexico's working class was earning 40% less than they were in 1994. (5) 
Manufacturing jobs are not the only jobs lost to NAFTA, the American farmer has suffered
greatly under the program. American exports to Canada and Mexico have risen 35%, but net
farm incomes have remained the same. In fact, 45% of small and medium farms in the U.S.
have had dramatic decreases in income. American farmers are finding it difficult to
compete with the cheap labor cost across the Mexican border. The average wage paid to
migrant workers in the U.S. is $6 hour, while across the border farmers pay $6/day. There
is no way a U.S. farmer can cut production cost enough to compete against such cheap
labor. Tomatoes are a prime example of produce being imported from Mexico and costing
American jobs. Under NAFTA, Mexican tomato imports have increased 63%.) Between 1993 and
1998, over 100 Florida tomato farmers have closed up shop and 24 packing houses have
closed. The loss of the tomato farms has cost Florida agriculture $1 billion. During this
same period prices for tomatoes have risen 16%, this shows there has been no savings
passed on to the consumer only higher margins for the retailers. (6)
How safe the food is we are importing is as big a concern as the jobs lost to imports.
Agricultural imports from Canada and Mexico have risen 57% since 1993. 52% of the
imported fruit and vegetables coming to the U.S. are from Mexico. Since NAFTA went into
effect Food and Drug Administration inspections of imported food has declined from 8% to
less than 2%. NAFTA has no requirements for member countries to maintain a minimum
standard for food safety. The flood of fruit and vegetables from Mexico coincides with
cuts in Mexico's food inspection budget. Mexico spent US$25 million, in 1992 on food
inspections; this had declined to US$5 million by 1995 under NAFTA. With the decreased
inspections, U.S. children participating in the federal school lunch program have been
exposed to Hepatitis A. Frozen strawberries imported from Mexico in 1997 caused an
outbreak of the deadly Hepatitis A. More than 250 people in five U.S. states were
exposed, 130 of them were children in Michigan. The children had received the
strawberries through the federal school lunch program. As early as 1993 imported
strawberries from Mexico were found to contain harmful and potentially fatal strands of
bacteria. There have also been documented cases of the deadly e-coli being found on
lettuce and other produce imported from Mexico. Cases of illness caused by contaminated
Mexican produce have risen 23% since 1993. (7) 
It is clear that NAFTA has been a dismal failure on all counts. There is not a single
example of NAFTA producing positive results since it inception in 1993. 
END NOTES
1. Briones,J.,(1995,September 4) . NAFTA's Broken Promises. Public Citizen Publication,
p.10
2. International Trade Commission, Production Sharing : The Use of U.S. Components and
Materials in Foreign Assembly Operations, April 1997.
3. Louis Uchitelle, "The Economy Grows. The Smokestacks Shrink," New York Times,
11/29/98
4. U.S. Bureau of Labor Statistics, Division of Foreign Labor Statics, "Comparative
Hourly Compensation Cost for Production Workers in Manufacturing Industries, Selected
Countries: 1997.) 
5. Bronfenbrenner, Kate. Final Report : The Effects of Plant Closing or Threat of Plant
Closing on the Right of Workers to Organize, Submitted to the North American Commission
for Labor Cooperation, September 30, 1996.
6. USDA Foreign Agricultural Service, "US Agricultural Consumption Imports," January 1993
to December 1997.
7. " New Dangers Make Way to US Tables", Boston Globe, September 20, 1998.