Job Losses Only Thing Nafta Created

Back in 1993, in a typical declaration of faith in the projected glories of the North American Free Trade Agreement, a vice president of Mattel Corp. named Fermin Cuza assured a congressional subcommittee that NAFTA would result in the creation of new jobs at Mattel and have “a very positive effect” on the 2,000 men and women already employed by Mattel in the United States.

Cuza’s was just one of many promises made during that season of devotion to free trade. The consumer group Public Citizen took a look back at them.

Let’s start with Mattel. Not only have no jobs been created, but a check of federal records by Public Citizen found that 520 workers at Mattel’s Fisher-Price facility in Medina, N.Y., have been certified as laid off specifically because of “increased company imports from Mexico” that resulted from NAFTA.

Public Citizen’s Global Trade Watch unit surveyed the job creation promises of dozens of staunchly pro-NAFTA corporations. They included, in addition to Mattel, Allied Signal, General Electric, Procter & Gamble, Scott Paper and Zenith.

In a report released last week, Public Citizen noted that every one of those companies has already “laid off workers because of NAFTA.”

Of the companies surveyed, 89 percent had failed to take any significant step toward fulfilling their promises of job creation or export expansion.

In November 1993, President Clinton asserted, “If this trade agreement passes - NAFTA we estimate America will add another 200,000 jobs by 1995 alone.”

He was mistaken. There has been no meaningful job creation from NAFTA, which has been in effect for 20 months. But the U.S. Department of Labor, through its NAFTA Trade Adjustment Assistance program, which was designed to help people thrown out of their jobs by NAFTA, has certified that 38,148 workers lost their jobs by mid-August.

An additional 30,000 workers have filed for assistance under the program, which is not well known and not available to most workers who are at risk.

It is expected that the true job loss under NAFTA will reach 1 million by the end of the year.

It is fashionable now for NAFTA supporters to blame the end-of-the-year peso crash for problems that were inherent in the trade agreement. During the first year of NAFTA, before the big devaluation in December, the value of the peso relative to the dollar had already declined by nearly 15 percent.

That wiped out any advantage the United States would have realized from NAFTA’s lower tariffs. The average tariff decline was just 10 percent. In other words, the “market access advantage” that the United States was supposed to enjoy had vanished before the peso crash.

Proponents of NAFTA are quick to note that U.S. exports to Mexico increased during the first year of NAFTA. True. But what they fail to mention is that imports to the United States from Mexico increased even faster, with automobiles and other high-technology items increasing twice as fast. We were well on our way to a trade deficit with Mexico (and the big job losses that would entail) before the crash of the peso.

Worse, much of the increase in exports to Mexico came from items that boomerang back to the United States in the form of imports - for example, component parts shipped to Mexico for assembly into finished goods and infrastructure equipment for use in the building of factories.

And then there’s the small matter of the wages of American workers. In NAFTA’s first year, before the collapse of the peso, America’s 77 million production workers endured a 3 percent drop in their real hourly wages - the steepest one-year decline ever recorded.

That, of course, was directly related to the overall expansion of the labor pool under NAFTA, and the fact that the number of companies choosing to relocate to Mexico has, as expected, accelerated. The chilling effect of these developments on wage demands should be obvious.

The peso devaluation has dried up the consumer market in Mexico. That simply means that as bad a deal as NAFTA was originally, Mexicans are now even less able to buy American goods.

But it was NAFTA that put us on this highway to nowhere in the first place. The collapse of the peso just increased the speed.

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