DECEMBER 1998 · VOLUME 19· NUMBER 12

January 1, 1999 marks the five year anniversary of the implementation of the North American Free Trade Agreement (NAFTA). While it has unquestionably been a profitable half decade for multinational corporations, NAFTA critics claim that their NAFTA fears are coming true.

A December report card from Public Citizen's Global Trade Watch gives NAFTA a failing grade in U.S. job creation and job quality, agriculture, the environment, public health, U.S. and Mexican wage levels, economic development and living standards in Mexico, sovereignty and democratic governance and highway safety.

On the central issue of jobs and wages, the report card highlights the fact that a single narrow U.S. government measure of trade-related job loss has now certified the loss of more than 200,000 specific U.S. jobs due to NAFTA. Proponents are unable to point to offsetting jobs created as a result of NAFTA. Indeed, the Public Citizen report card notes, "several years ago the U.S. Commerce Department canceled its program of bi-annual surveys of U.S. companies to document NAFTA job creation because the data was so embarrassing -- fewer than 1,500 specific jobs could be documented."

There is good reason to believe the actual figure for U.S. job loss is far worse than the government figures suggest. Under NAFTA, the U.S. $1.7 billion trade surplus with Mexico has flipped into a massive trade deficit, estimated at $14.7 billion for 1998. While the unemployment rate in the United States is now quite low, at least by recent historical standards, the Public Citizen report card suggests that NAFTA has contributed to a situation where good-paying manufacturing jobs have been rapidly replaced by low-wage service jobs -- cashiers, janitors, retail clerks.

Remaining manufacturing jobs are under severe pressure. While factory jobs in the United States pay, on average, more than $18 an hour, maquiladora workers in high-tech foreign plants in Mexico earn about a buck and a half an hour.

U.S. employers have made explicit use of the threat to move to Mexico to beat back union organizing efforts, as well as to deny demands for wage increases. Cornell researcher Kate Bronfenbrenner has documented a tripling of employer plant-closing threats during union organizing drives since NAFTA's adoption.

Equally damning is the evidence suggesting that NAFTA has simultaneously failed to deliver the development benefits for Mexico that NAFTA proponents promised. It is hard to view the Mexican nationwide export processing zone model as anything other than a failure. There are few linkages between the export factories and the rest of the economy. Small Mexican business has collapsed. Workers' productivity is up 36 percent since NAFTA went into effect, but Mexican wages have fallen by 29 percent.

Though the story is less stark in other areas, the Public Citizen report card makes the case that NAFTA deserves an "F" in every subject.

Challenging the notion that U.S. consumers benefit from lower prices as a result of cheap imports, the report card argues that lower production costs are often not passed on to consumers as lower prices.

In the case of tomatoes, for example, Mexican imports into the United States have increased 63 percent under NAFTA. As a result, more than 100 Florida tomato farmers have gone out of business, and 24 packing houses have closed. Florida agricultural interests say the resultant loss to Florida is approximately $1 billion. However, the shift to Mexican tomatoes has not been accompanied by a drop in consumer prices -- in fact, U.S. tomato prices have risen by 16 percent during NAFTA's five years.

NAFTA, the report card concludes, "fails to pass the most conservative test of all: a simple do-no-harm test. Under NAFTA, conditions have deteriorated in many areas in which gains were promised."

-- Robert Weissman