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FTAA and Workers' Rights and Jobs

Already under a decade and a half of NAFTA, family after family and community after community has suffered from the destruction of millions of good jobs. Manufacturing workers who have lost their jobs to NAFTA typically have only been able to find new work in the service sector at wages 23-77 percent less than their previous positions paid. Overall, 3 million U.S. manufacturing jobs have been lost since April 1998, many due to NAFTA or WTO-related factory closures. Under just one U.S. Department of Labor program to help NAFTA victims, 525,407 U.S. workers were certified to receive government assistance over the course of 1994-2004.

Under NAFTA, the very real threat to move a plant to Mexico has often been used to bust unions and depress wages. Fifteen years of NAFTA has shown that, when corporations are given these new rights and privileges, they often use them to pick up and move to another country with weaker labor rights — especially when U.S. workers demand safer working conditions, fair wages, or the right to form a union. A study by Prof. Kate Bronfenbrenner of Cornell University found that in union organizing or contract campaigns in the U.S. after NAFTA’s passage, over half of the firms threatened to close their plants if the union was successful. When forced to bargain with a union, 15 percent of the firms that had made threats actually closed all or part of a plant — triple the follow-through rate of threatened closures before NAFTA.

Meanwhile, there is a growing body of real-life data to support the prediction of trade theory that trade liberalization causes greater income inequality, with a larger share going to capital and a smaller share to workers. Using estimates made by pro-NAFTA economists of the impact of trade on income inequality and adding to it the indirect impact of trade on workers’ wages via de-unionization and other factors, economists from the Center for Economic Policy Research estimate that trade liberalization has cost the 75 percent of U.S. workers without college degrees an amount equal to 12.2 percent of their current wages. For a worker earning $25,000 a year, this loss would be slightly more than $3,000 per year!

U.S. median wages have not caught up to 1972 levels, even though the country enjoyed an unprecedented period of economic growth in the 1990s. Indeed, while U.S. median wages grew 85 percent from post-World War II to 1972, in the next three decades real wages grew only 7 percent while the share of GNP represented by trade doubled.

When confronted with these numbers, FTAA boosters argue that trade agreements like NAFTA, WTO or the proposed FTAA have nothing to do with this unacceptable situation. This is a lie: the draft FTAA and other international trade and investment agreements provide specific new rights and protections that drastically expand the power of multinational corporations vis-à-vis workers, unions, consumers and communities. Not only would an FTAA be without binding rules promoting labor rights, but many existing worker safety, fair wage and other policies could be attacked as illegal trade barriers.

For instance, under NAFTA investment, market access and services rules that are the models for FTAA, corporations are granted special new privileges if they relocate to another NAFTA country. These special benefits — such as an absolute right to open a new service company or acquire land or take over a factory without government interference — are included in the draft FTAA. Plus, draft FTAA rules would guarantee that the goods produced more cheaply overseas because of lower wages, and weaker environmental and safety standards are guaranteed special access back into the U.S. consumer market for sale. The result? A race to the bottom that has no end, where U.S. living wage jobs are transformed into dangerous starvation-wage sweatshop jobs in developing countries, and workers lose out on both ends.

Even the typical $4/day wage in Mexico’s maquiladora manufacturing plants is considered too high by many corporations. Before NAFTA, some 550,000 workers toiled in these plants. After seven years of NAFTA, that number peaked at almost 1.3 million. In mid-2003, the Financial Times reported that almost 500,000 of the 750,000 new maquila jobs that sprouted up after NAFTA had moved on to take advantage of $1/day wages in China, Vietnam and Indonesia. As General Electric’s head of Mexico operations Edmundo Vallejo told The Wall Street Journal in April 2003: “Mexico still has a lot to offer. But two of its advantages--low cost labor and cheap currency--are gone.” Mexican workers’ wages have not risen, rather GE, like so many other corporations, has moved on to countries with even lower wages, labor and environmental standards.

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