Pros and Cons: NAFTA Debate Reaches a Crescendo NAFTA --NO 'The No-Brain, Low-Wage Road'

A nation that hopes to lead the world into the next century with a high-skill, high-tech economy cannot afford to take the no-brain, low-wage road paved by the proposed North American Free Trade Agreement.

A trade agreement should recognize economic disparities, anticipate the likely human impact and advance the well-being of citizens in each country. NAFTA does none of the above.


The agreement would help U.S. companies invest more freely in Mexico, essentially to allow multinationals to exploit that country's cheap labor and lax environmental and safety enforcement. It is an investment agreement, not a trade agreement. It would destroy jobs and depress wages in the industrialized United States and Canada while doing nothing to advance the poverty-level wages and living conditions paid by U.S. employers to workers in Mexico.

Domingo Gonzalez, of the Coalition for Justice in the Maquiladoras, may have said it best: "If NAFTA passes, Mexicans will be eating beans and rice, Americans will be flipping burgers, and a few folks on Wall Street will be trading on our sweat and blood."


That has been the experience in the development of maquiladora plants owned by U.S. companies that operate south of the border and exploit more than 500,000 Mexican workers. These workers, who make less than workers make elsewhere in Mexico, often live in shacks made of packing material and draw their drinking water from streams polluted by the plants.

Not only does NAFTA promise to turn all of Mexico into a huge maquiladora, it would be the death knell for U.S. manufacturing, moving more U.S. workers into low-wage service industries. More companies would follow Zenith, General Electric, Ford, American Telephone & Telegraph and others to invest in Mexican plants, including some Japanese and European multinationals that would use Mexico as an "export platform" to ship goods to the United States, further undercutting U.S. jobs.

NAFTA represents an unprecedented, high-risk experiment in which countries at far different stages of economic development and democratic rights attempt to merge their economies. Mexico's poverty rate is at 40 percent, its unemployment rate in excess of 20 percent and its gross domestic product one-twentieth that of the United States. The average Mexican family simply cannot afford to purchase the products they make themselves, much less buy goods made in the United States.

So how is it that the United States enjoys a modest trade surplus with Mexico? It's because capital goods and intermediate goods account for 85 percent of all imports into Mexico -- goods that go into developing maquiladora plants, not supplying Mexican consumers.

Once the export platform is fully established, the vast majority of finished products will flow tariff-free across the border into the United States, and the trade surplus would soon become a deficit under NAFTA, made even larger by an inevitable devaluation of the peso against the dollar. The United States went through a similar cycle of trade with China, which now enjoys a huge trade surplus with the United States.

The "fast-track" railroading of NAFTA stands in stark contrast to the European Community's efforts at economic integration, which included a carefully developed 20-year plan to narrow the economic gap among the 11 countries with billions of dollars in "structural adjustment funds" to help the poorer nations. EC nations also signed a "Social Charter" to ensure that prosperity from increased trade would be shared with workers.

The North American governments, by contrast, only agreed to address the overlooked issues of labor rights and standards and the environment after the 2,000-page NAFTA was signed -- and after the good fortune of a change in U.S. presidents.

But these "side agreements" are woefully lacking, as Democratic House leaders Richard Gephardt and David Bonior have pointed out.


They would provide no effective remedy to protect worker rights and labor standards, in contrast to NAFTA's specific provisions to protect holders of patents and copyrights. In fact, they limit the scope of labor complaints to three issues -- child labor, minimum wage and job health and safety -- effectively scuttling remedies available under current U.S. trade laws. And they create a bureaucratic nightmare that would keep labor and environmental complaints tied up in endless consultation process with no remedy in sight.

The problem of enforcement is further evidenced by a federal judge's ruling that NAFTA should require an environmental impact statement because it "may worsen the environmental problems already existing in the U.S.-Mexico border area."

The problem is not Mexico's environmental laws, which like its labor standards look good on paper -- as good if not better than U.S. laws. They simply are not equally enforced, as the environment and workers' safety and health are sacrificed to capital development.

The side agreement negotiations never addressed the dilemma of integrating the economies of countries at such different levels of economic development and democratic freedom. NAFTA simply will not provide an equitable distribution of the benefits of expanded trade.

The United States has an obligation -- even a self-interest -- to assist in the development of Mexico. But that should start with a program of debt relief, so that Mexico can invest at home to improve the living standards of its people. It should not rush into NAFTA, leaving workers on both sides of the border and in Canada at the mercy of exploitation.

Consideration of workers was not in the mix when NAFTA was drawn up to help the rich get richer, and the resulting agreement almost certainly would make the poor much poorer.


Thomas R. Donahue, secretary-treasurer of the AFL-CIO, is chairman of the Labor Advisory Committee of the U.S. Trade Representative.