The North American Free Trade Agreement (NAFTA) has resulted in increased Unemployment in the U.S.
by Mark Vorpahl
July 27, 2010
On July 7, 2010, President Obama made the following remarks:
We’re also reforming our own restrictions on exports, consistent with our national security interests. And we hope to move forward on new agreements with some of our key partners. I’ve instructed U.S. Trade Representative Ron Kirk to begin discussions to help resolve outstanding issues with the pending Korean Free Trade Agreement before my visit to Korea in November. It’s an agreement that will create new jobs and opportunity for people in both of our countries.
We also want to deepen and broaden our relations with Panama and Colombia. So we’re working to resolve outstanding issues with the free trade agreements with those key partners, and we’re focused on submitting them as soon as possible for congressional consideration.
If President Obama’s promise that these Free Trade Agreements (FTA) will create new jobs conjures up a sense of deja vu to those hearing these words, this is entirely explainable. In 1993 President Bill Clinton said of the signing of NAFTA:
We will make our case as hard and as well as we can. And, though the fight will be difficult, I deeply believe we will win. And I’d like to tell you why. First of all, because NAFTA means jobs. American jobs, and good-paying American jobs. If I didn’t believe that, I wouldn’t support this agreement.
North American Free Trade Agreement’s (NAFTA) Results
President Clinton could not have gotten it more wrong. According to an analysis by the Economic Policy Institute (EPI), the number of U.S. jobs created by export expansion in relation to the number of U.S. jobs lost to the growth of foreign imports because of NAFTA in its first ten years resulted in a net loss of 879,280 jobs. (See “NAFTA – Related Job Losses Have Piled Up Since 1993” by Robert E. Scott.) This is not to mention the downward pressure on U.S. workers’ wages NAFTA created, which contributed to their relative stagnation since the mid 70s.
NAFTA allowed U.S. corporations to more easily move their investment funds across the Mexican/U.S. border to set up new production facilities, while closing down similar factories in the U.S. They were happy to do this because of Mexico’s cheap wages and less regulated labor and environmental standards. This created huge profits for the business elite but resulted in deteriorating conditions for workers on both sides of the border. U.S. workers were forced to face wage cuts or unemployment, and Mexican workers lost their traditional jobs, and farms and were forced to work in near slave labor conditions in U.S. corporate facilities within the economic zones called maquiladoras.
NAFTA’s free trade was a boon for Wall Street, but a bust for Main Street. President Obama is resurrecting President Clinton’s failed promise of NAFTA’s jobs creation in hopes of selling the public on the Korea, Colombia, and Panama FTAs. With nearly half of U.S. workers having lost a job or experienced a cut in wages since the recession started in 2007/2008, combined with a jobless “recovery,” the need for jobs is first and foremost on U.S. workers’ minds. However, this time around, after the experience of NAFTA, the promise of jobs creation comes off like a cheap gimmick used too many times, as if to sell a shoddy “lemon” used car as good coin. All three of the trade agreements Obama is pushing are modeled after NAFTA. There is absolutely no reason to expect different results when it comes to jobs creation.
New FTA Consequences