Lessons from 20 Years of NAFTA: Replace Failed Model with Good Trade Policy

by Stan Sorscher

Stan Sorscher

Stan Sorscher

The NAFTA model has failed.

When NAFTA (the North American Free Trade Agreement) took effect 20 years ago, we were promised mutual gain.

To be clear, everyone I know wants good trade policies that raise living standards at home and abroad. The question is not trade versus protectionism. It’s good trade policy versus bad trade policy.

NAFTA and numerous subsequent trade deals perform very well for investors and global businesses, while leaving most workers and communities at a disadvantage.

Since NAFTA, our trade deficits totaled over $8 trillion. We’ve lost millions of good manufacturing jobs and de-industrialized our economy.

Workers have lost bargaining power and wages stagnated. We see more part-time precarious work, and a decline in job security. Wal-Mart is the dominant domestic employer, becoming the face of new 21st Century jobs. Inequality is arguably the defining challenge of our time.

We did trade wrong.

We could have had a good trade policy that increased trade and raised living standards. We could export more soybeans, airplanes and software, and protect the environment around the world. We could have low-cost goods and encourage democracy, respect for human rights and improved working conditions.

The “deal” in a trade agreement is that other countries want access to our markets — to sell their products to us. We expect something of value in return. We could have asked for very basic enforceable labor protections: no child labor, no slave labor, the right to organize and protections from discrimination. We did not.

We could have asked for basic enforceable environmental protections for forests, clean air and clean water. We did not.

We could have insisted on access to medicines, food security, sanctions against currency manipulators, internet freedom, and prudent financial regulations to prevent extraordinary damage from repeated financial market failures. We did the opposite.

Let’s step back.

Our Constitution grants extensive political and social protections to people and communities. The Constitution never mentions corporations — not once. It has its flaws, but at its core, the Constitution balances political power. Our courts balance public interests with private property interests.

Trade agreements take the opposite approach to global governance. These deals look like a corporate Bill of Rights, full of protections for global investors and corporations, enforced by special courts or tribunals. The shadowy trade tribunals are fundamentally different from courts and legal principles we expect in modern democracies. They are completely one-sided — favorable to global corporations, but closed to citizens. Trade tribunals seek maximum possible trade and maximum opportunities for investors. They are indifferent to public good or public interest.

This looks more like the East India Company, which administered a century of corporate rule in India during an earlier age of globalization. The East India Company ran its own courts under its own authority, for its own interests. That was great for British colonialists. Not so good for India.

Since NAFTA, tribunals have heard over 500 challenges to various national policies. Trade sanctions threaten public health policies approved by Australia’s High Court and environmental decisions from courts in Canada and Ecuador. Trade sanctions can thwart actions of our own Congress and Supreme Court.

Last year, a trade ambassador predicted that trade deals would set the Gold Standard for global governance. They would facilitate the life of global business for a generation. These agreements would determine the way life is organized in 2050.

Trade agreements go far beyond tariffs and import duties. Trade deals are political, economic, social and moral documents. They define how we divide gains and how we determine winners and losers. They set rules at a global scale, bypassing the normal democratic processes that we used for generations to build a strong middle class in America.

Very soon, Congress will take up the Trans-Pacific Partnership (TPP) and a similar deal with Europe, known as TTIP. These two huge NAFTA-style trade deals will consolidate the failed NAFTA-style trade policy as a global standard. Collectively, trade deals define global power relationships in manufacturing, agriculture, pharmaceuticals, public health, patents, internet freedom, food safety, immigration, financial regulation, labor rights, and environmental protection.

Those power relationships will determine how we divide future gains from productivity and trade. Those with dominant economic, political, social and moral power will extract gains for themselves, and those without power will be fortunate to cling to what they have. No wonder that inequality is the defining challenge of our time.

“Free trade” failed. It’s not free — it will cost us our future.

It’s not trade — it’s about the power to divide gains.

It doesn’t work — the historical trajectory from NAFTA to TTP to TTIP leads to a lesser America.

We can have a good trade policy. It will look a lot more like our Constitution than NAFTA.

Stan Sorscher is Labor Representative at the Society for Professional Engineering Employees in Aerospace (SPEEA), a union representing over 24,000 scientists, engineers, pilots, technical and professional employees in the aerospace industry. He has been with SPEEA since 2000.

For other Talking Union posts by Stan Sorscher, click here.

One Response

  1. We responded to an excellent letter about current trade deals ( search under Cleveland.Com Pacific trade deal would be disastrous.) However , any discussions should be prefaced by the following response- if you agree, please forward to all interested and your congressional representatives. It is time to get real.

    tapsearcher Cleveland.Com
    We thank Albert A. Gabel for his great letter. However, free trade economics is not trade. Even discussing free trade as if it is really trade is a turn off. Even accepting the great points made by Mr. Gabel, in the end sanctions something that does not exist.

    Free trade is not trade as historically practiced and defined. It is more about separating investments from production and moving production anywhere in the world for the sake of cheaper labor down to wage slave and even child labor. The real commodities being traded are workers who are put on a global trading block to compete with one another for the same jobs. It lets corporations off the hook in their responsibilities for the dignity of workers in society for the sake of making money on money instead of making things. It smashes the common good for all in society into bits and pieces.

    In this setting, workers become tools of a free trade economic process where governments act as brokers and dealers in a global economic arena. Investments thrive on the value of workers and labor being degraded and deflated. This represents trillions of dollars in value lost forever. On top of this, the trade deficit which has broken records for years represent trillions of more dollars lost forever.

    Free trade economics has failed. Early on, President Clinton had to rush billions of dollars to Mexico to save the peso and the Mexican economy. This came after more than 4,000 U.S. factories were moved to Mexico. This bail out , which by t he way went to a foreign nation, actually foretold the coming of the massive bail out by President Obama in 2008 to save our economy. Free trade economics based on making money on money instead to making things had burned out. President Obama borrowed trillions of dollars from the future to bail out the failed system. This adds to the trillions of dollars of value lost forever as noted above. Both conservatives and liberals took the money in a new kind of corporate welfare game. President Obama bailed out big money interests, investment communities, banks, Wall Street and the “too big to fail” corporations. He ignored the suffering of millions who lost their jobs and businesses due to free trade economics. The “too little to save” businesses were left to fend for themselves in a global economic arena.

    Free trade economics has proven to be an economic cancer. President F. D. Roosevelt said – economic diseases are highly communicable. Any so call trade deal just spreads this disease further.

    The water level in the process comes down to this. There are more than a billion people in the world who are willing to work for practically nothing to survive. This is the measurement that should precede any discussion about free trade. It is indeed a race to the bottom.

    Our own Federal Government sponsored the moving of factories outside of the U.S. in 1956. It was a temporary program than never ended. And we do not need any conspiracy theories to know that free trade and globalization have not evolved in any natural economic fashion but has been driven by powerful forces outside the will of the people. For that matter, free trade bills would have never passed if they were subject to a popular vote.

    Finally note former Federal Reserve Chairman Ben Bernanke said the best way to stimulate our economy is to “buy domestically produced goods.”




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