February, 13 2014, 02:49pm EDT
For Immediate Release
Contact:
Alisa Simmons (202) 454-5111
Lori Wallach (202) 454-5107 lwallach@citizen.org
Obama Mexico Visit Spotlights 20-Year Legacy of Job Loss from NAFTA, the Pact on Which Obama's Trans-Pacific Partnership Is Modeled
The 20-year record of job loss and trade deficits from the North American Free Trade Agreement (NAFTA) is haunting President Barack Obama's efforts to obtain special trade authority to fast track the Trans-Pacific Partnership (TPP), said Public Citizen as it released a new report that comprehensively documents NAFTA's outcomes.
WASHINGTON
The 20-year record of job loss and trade deficits from the North American Free Trade Agreement (NAFTA) is haunting President Barack Obama's efforts to obtain special trade authority to fast track the Trans-Pacific Partnership (TPP), said Public Citizen as it released a new report that comprehensively documents NAFTA's outcomes. Next week's presidential trip to Mexico for a long-scheduled "Three Amigos" U.S.-Mexico-Canada summit will raise public attention to NAFTA, on which the TPP is modeled, which is not good news for Obama's push for the TPP and Fast Track.
Numerous polls show that opposition to NAFTA is among few issues that unite Americans across partisan and regional divides. Public ire about NAFTA's legacy of job loss and policymakers' concerns about two decades of huge NAFTA trade deficits have plagued the administration's efforts to obtain Fast Track trade authority for the TPP. The TPP would expand the NAFTA model to more nations, including ultra-low-wage Vietnam. In the U.S. House of Representatives, most Democrats and a bloc of GOP have indicated opposition to Fast Track, as has Senate Majority Leader Harry Reid (D-Nev.).
Public Citizen's new report, "NAFTA's 20-Year Legacy and the Fate of the Trans-Pacific Partnership," compiles government data on NAFTA outcomes to detail the empirical record underlying the public and policymaker sentiment. It also shows that warnings issued by NAFTA boosters that a failure to pass NAFTA would result in foreign policy crises - rising Mexican migration and a neighboring nation devolving into a troubled narco-state - actually came to fruition in part because of NAFTA provisions that destroyed millions of rural Mexican livelihoods.
"Outside of corporate boardrooms and D.C. think tanks, Americans view NAFTA as a symbol of job loss and a cancer on the middle class," said Lori Wallach, director of Public Citizen's Global Trade Watch. "If you are a president battling to overcome bipartisan congressional skepticism about giving you special trade authority to fast track a massive 12-nation NAFTA expansion, it is really not helpful to be visiting Mexico for a summit of NAFTA-nation leaders."
The Public Citizen report shows that not only did projections and promises made by NAFTA proponents not materialize, but many results are exactly the opposite. Such outcomes include a staggering $177 billion U.S. trade deficit with NAFTA partners Mexico and Canada, one million net U.S. jobs lost in NAFTA's first decade alone, slower U.S. manufacturing and services export growth to Mexico and Canada, a doubling of immigration from Mexico, larger agricultural trade deficits with Mexico and Canada, and more than $360 million paid to corporations after "investor-state" tribunal attacks on, and rollbacks of, domestic public interest policies.
"The data have disproved the promises of more jobs and better wages, so bizarrely now NAFTA defenders argue the pact was a success because it expanded the volume of U.S. trade with the two countries without mentioning that this resulted in a 556 percent increase in our trade deficit with those countries, with a flood of new NAFTA imports wiping out hundreds of thousands of American jobs," said Wallach.
The study tracks specific promises made by U.S. corporations like Chrysler, GE and Caterpillar to create specific numbers of American jobs if NAFTA was approved, and reveals government data showing that instead, they fired U.S. workers and moved operations to Mexico.
"The White House and the corporate lobby sold NAFTA with promises of export growth and job creation, but the actual data show the projections were at best wrong," said Wallach. "The gulf between the gains promised for NAFTA and the damage that ensued means that the public and policymakers are not buying the same sales pitch now being made for the TPP and Fast Track."
The report also documents how post-NAFTA trade and investment trends have contributed to middle-class pay cuts, which in turn contributed to growing income inequality; how since NAFTA, U.S. trade deficit growth with Mexico and Canada has been 50 percent higher than with countries not party to a U.S. Free Trade Agreement, and how U.S. manufacturing and services exports to Canada and Mexico have grown at less than half the pre-NAFTA rate.
Among the study's findings:
Rather than creating in any year the 200,000 net jobs per year promised by former President Bill Clinton on the basis of Peterson Institute for International Economics projections, job loss from NAFTA began rapidly:
American manufacturing jobs were lost as U.S. firms used NAFTA's foreign investor privileges to relocate production to Mexico, and as a new flood of NAFTA imports swamped gains in exports, creating a massive new trade deficit that equated to an estimated net loss of one million U.S. jobs by 2004. A small pre-NAFTA U.S. trade surplus of $2.5 billion with Mexico turned into a huge new deficit and a pre-NAFTA $29.6 billion deficit with Canada exploded. The 2013 NAFTA deficit was $177 billion, representing a more than six-fold increase in the NAFTA deficit.
More than 845,000 specific U.S. workers, most in the manufacturing sector, have been certified for Trade Adjustment Assistance (TAA) since NAFTA because they lost their jobs due to offshoring to, or imports from, Canada and Mexico. The TAA program is narrow, covering only a subset of jobs lost at manufacturing facilities, and is difficult to qualify for. Thus, the TAA numbers significantly undercount NAFTA job loss. A TAA database searchable by congressional district, sector and more is available here.
NAFTA has contributed to downward pressure on U.S. wages and growing income inequality. There is broad consensus among economists that recent trade flows have been a significant contributor to growing income inequality; the only debate is about the degree of trade's responsibility. NAFTA's broadest economic impact has been to fundamentally transform the types of jobs and wages available for the 63 percent of American workers without a college degree. Most of those who lost manufacturing jobs to NAFTA offshoring and import competition found reemployment in lower-wage service sector jobs. According to the U.S. Bureau of Labor Statistics, two out of every three displaced manufacturing workers who were rehired in 2012 experienced a wage reduction, most of them taking a pay cut of greater than 20 percent. As increasing numbers of workers displaced from manufacturing jobs have joined those competing for non-offshorable, low-skill jobs in sectors such as hospitality and food service, real wages have also fallen in these sectors under NAFTA. The resulting downward pressure on middle-class wages has fueled recent growth in income inequality.
Scores of environmental and health laws have been challenged in foreign tribunals through NAFTA's controversial investor-state dispute resolution system. More than $360 million in compensation to investors has been extracted from NAFTA governments via "investor-state" tribunal challenges against toxics bans, land-use rules, water and forestry policies, and more. More than $12.4 billion is pending in such NAFTA claims, including challenges of medicine patent policies, a fracking moratorium and a renewable energy program.
The average annual U.S. agricultural trade deficit with Mexico and Canada in NAFTA's first two decades reached $975 million, almost three times the pre-NAFTA level. U.S. beef imports from Mexico and Canada, for example, have risen 133 percent. Over the past decade, total U.S. food exports to Mexico and Canada have actually fallen slightly while U.S. food imports from Mexico and Canada have more than doubled. This stands in stark contrast to projections that NAFTA would allow U.S. farmers to export their way to newfound wealth and farm income stability. Despite a 239 percent rise in food imports from Canada and Mexico under NAFTA, the average nominal U.S. price of food in the United States has jumped 67 percent since NAFTA.
The reductions in consumer goods prices that have materialized have not been sufficient to offset the losses to wages under NAFTA; U.S. workers without college degrees (63 percent of the workforce) likely have lost a net amount equal to 12.2 percent of their wages even after accounting for gains from cheaper goods. This net loss means a loss of more than $3,300 per year for a worker earning the median annual wage of $27,500.
The export of subsidized U.S. corn did increase under NAFTA's first decade, destroying the livelihoods of more than one million Mexican campesino farmers and about 1.4 million additional Mexican workers whose livelihoods depended on agriculture.The desperate migration of those displaced from Mexico's rural economy pushed down wages in Mexico's border maquiladora factory zone and contributed to a doubling of Mexican immigration to the United States following NAFTA's implementation.
Facing displacement, rising prices and stagnant wages, more than half the Mexican population, and more than 60 percent of the rural population, still falls below the poverty line, despite the promises that NAFTA would bring broad prosperity to Mexicans. Real wages in Mexico have fallen significantly below pre-NAFTA levels as price increases for basic consumer goods have exceeded wage increases. A minimum wage earner in Mexico today can buy 38 percent fewer consumer goods than on the day that NAFTA took effect. Despite promises that NAFTA would benefit Mexican consumers by granting access to cheaper imported products, the cost of basic consumer goods in Mexico has risen to seven times the pre-NAFTA level, while the minimum wage stands at only four times the pre-NAFTA level. Though the price paid to Mexican farmers for corn plummeted after NAFTA, the deregulated retail price of tortillas - Mexico's staple food - shot up 279 percent in the pact's first 10 years.
"Given NAFTA's damaging outcomes, few of the corporations or think tanks that sold it as a boon for all of us in the 1990s like to talk about it, but the reality is that their promises failed, the opposite occurred and millions of people were severely harmed and now this legacy is derailing President Obama's misguided push to expand NAFTA through the TPP," said Wallach.
The report is available at https://www.citizen.org/documents/NAFTAs-20-year-legacy.pdf.
Public Citizen is a nonprofit consumer advocacy organization that champions the public interest in the halls of power. We defend democracy, resist corporate power and work to ensure that government works for the people - not for big corporations. Founded in 1971, we now have 500,000 members and supporters throughout the country.
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Judge James D. Cain Jr. of the U.S. District Court for the Western District of Louisiana sided with more than a dozen Republican-led states that sued over the pause earlier this year, claiming it would harm their economies.
Cain wrote in his ruling that the pause, which temporarily halted the approval process for facilities exporting LNG to countries without a free trade agreement (FTA) with the U.S., was "perhaps the epiphany [sic] of ideocracy." The judge falsely characterized the pause as a "ban."
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Jamie Henn, the director of Fossil Free Media, called Cain's ruling an "absurd and nakedly partisan decision untethered from reality."
"There is no 'LNG Export Ban' for the court to overturn," Henn wrote on social media. "DOE has simply paused new licenses while conducting a review of LNG's impacts."
This is an absurd and nakedly partisan decision untethered from reality.
There is no “LNG Export Ban” for the court to overturn. DOE has simply paused new licenses while conducting a review of LNG’s impacts. https://t.co/4TQFjYal4M
— Jamie Henn (@jamieclimate) July 1, 2024
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The Washington Postreported late Monday that Cain's ruling "means the Energy Department must resume its consideration of permit applications for new LNG export projects." The administration's pause put at least 14 pending gas export projects on hold, according to Earthjustice.
Craig Segall, the vice president of Evergreen Action, argued Monday that Cain's "deeply misguided" ruling "should have no impact on the Department of Energy's statutory authority over what must be included in a public-interest determination." Segall added that "pause or no pause, the science is clear: No sound analysis that accounts for the climate and environmental harm inflicted by LNG exports could possibly determine that these deadly facilities are in the public interest."
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Climate advocates have argued that the United States' status as the world's largest LNG exporter is harmful to both consumers and the planet, pushing up domestic energy costs while threatening to lock in decades of potent emissions as fossil fuel-driven extreme weather intensifies and scientists warn the world is barreling toward devastation.
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Cain's decision to block the Biden administration's LNG export pause came after the U.S. Supreme Court handed down several rulings that could imperil federal agencies' ability to limit planet-warming pollution.
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"In all, anti-abortion rights politicians continue to act in defiance of the vast majority of their constituents who believe that the government has no right to control people's personal healthcare decisions with attacks on abortion, birth control, and gender-affirming care."
Despite Trump's ongoing legal battles, he is the presumptive Republican nominee to face Democratic President Joe Biden in November. Biden rescinded his predecessor's gag rule shortly after taking office in 2021. Reproductive freedom has been a key issue in not only that contest but races at all levels of U.S. politics this cycle, as GOP policymakers and candidates have set their sights on abortion care, birth control, and in vitro fertilization.
The gag rule was included in the appropriations bill for the Department of State, foreign operations, and related programs, which the House on Friday passed 212-200. The only Democrat who voted in favor was Rep. Marie Gluesenkamp Perez of Washington—who supports reproductive rights and has shared her own abortion story.
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Nearly 100 organizations, businesses, and thought leaders across Ohio are supporting the amendment. If the measure is certified for November's ballot and approved by voters, the new commission could draw maps for use as soon as the 2026 elections. Seven other states have similar independent commissions: Arizona, California, Colorado, Idaho, Michigan, Montana, and Washington.
After the delivery, hundreds of campaign staff, volunteers, and supporters rallied in the Statehouse Atrium to celebrate their achievement and send a message to gerrymandering politicians.
"This is our house, the people's house, and with today's signature turn-in, we move one giant step closer to ensuring that the citizens decide who serves here, not the politicians who just scheme and rig the game to stay in power," said retired Ohio Supreme Court Chief Justice Maureen O'Connor, a Republican who helped write the amendment. "This constitutional amendment will restore power to Ohio citizens and take it away from the self-serving politicians and their lobbyist friends and big-money donors."
Ted Linscott, a retired bricklayer from Appalachian Ohio, said: "Where I come from, we believe in fairness and working together to do what's right. For too long, career politicians and their lobbyist friends have manipulated our districts to serve their interests. It's time we put an end to this. We need a system that is open, transparent, and fair."
According to the Citizens Not Politicians campaign:
Nationally, Ohio is recognized as one of the worst states for gerrymandering, undermining proportional representation and leading to political stagnation and ineffective policy.
More than 9 million Ohioans, or 77% of the state population, live in districts where one party has a severe advantage in the 2024 Ohio House of Representatives elections, according to an analysis by the Brennan Center for Justice at the NYU School of Law.
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