NAFTA: A Clear Failure of Public Policy

Date: 11 Mar 1996 | posted in: From the Desk of David Morris, The Public Good | 0 Facebooktwitterredditmail

NAFTA: A Clear Failure of Public Policy

by David Morris

March 11, 1996

A little over two years ago the North American Free Trade Agreement (NAFTA) went into effect. NAFTA constituted an unprecedented experiment in social and economic policy. Never before had two nations with such unequal economies been so forcibly integrated.

NAFTA opponents forecast disaster. The public believed them. Public opinion polls in both the U.S. and Mexico consistently found a majority of people opposed to NAFTA. Arrayed against the people were the White House, the leaders of the Republican Party, big business, virtually all economists and 99 percent of the country’s media.

President Clinton won a come from behind victory. “I courted some of these congressmen longer than I courted my wife,” boasted Treasury Secretary Lloyd M. Bentsen. Yet it was not Democrats that put NAFTA over the top. Sixty percent of the Democrats in the House voted against Clinton. It was Newt Gingrich’s aggressive intervention and Republican votes that made the difference.

Two years later the results are in. The people were right. The pundits, the business leaders, the economists, the White House and Newt Gingrich were wrong.

Let’s look at the facts. Bill Clinton promised 200,000 additional jobs because of NAFTA “by 1995 alone”. In fact, over 200,000 jobs have been lost because of NAFTA. The Global Trade Watch project of Public Citizen reviewed the job creation promises of dozens of corporations and found that every one of those companies has already “laid off workers because of NAFTA”. In 1993 a vice president of Mattel Corporation assured a Congressional subcommittee that NAFTA would have “a very positive effect” on that company’s 2,000 U.S. employees. Two years later 520 workers in Mattel’s Medina, New York plant were laid off. Why? Because of “increased company imports from Mexico” that resulted from NAFTA.

In 1993 NAFTA supporters used sophisticated statistical models to prove that the $1.7 billion U.S. trade surplus with Mexico in that year would soar to $9 billion by the end of 1995. In fact, in 1995 the U.S. had a trade deficit with Mexico of about $15 billion.

In 1993 Clinton administration officials promised that NAFTA would slow the move of U.S. factories to the Mexican side of the border. In fact, Mexico approved 300 new such branch plants in 1995, an 80 percent increase over 1994.

The impact of NAFTA north of the border has been disturbing. The impact of NAFTA south of the border has been shocking. A million people have lost their jobs. Mexico’s Secretary of Social Development estimates that 2.5 million Mexicans have crossed the line from poverty to extreme poverty. They cannot satisfy their daily nutritional needs. The daily wage in Mexican factories in the border area has dropped by 50 percent since l993. Whole industries such as truck making and construction have virtually shut down.

The social fabric of Mexico is disintegrating, a phenomenon law professor Raphael Ruiz calls “the pulverization of a society”. The crime rate in Mexico City, which had declined from 1930 through the 1970s, has doubled since 1990 and increased by about 50 percent in 1995. Mexico has had more cholera cases the past year than in the whole century. Drug trafficking is rampant.

NAFTA, far from being forgotten, may become a major issue in this year’s election. Pat Buchanan’s surprising victories in the early primaries reminded us of the widespread anger about NAFTA. Clinton is already taking actions to avoid possible flash points in an election year. In December, citing safety concerns, Clinton announced an indefinite delay in the NAFTA provision that would have allowed Mexican trucks to travel freely in southwestern border states, including politically important California and Texas. U.S. trade representative Mickey Kantor recently tightened restrictions on Mexico tomato imports to placate tomato growers in Florida, another key election state.

In the House, Marcie Kaptur (D-Ohio) has introduced HR 2651, a bill that would force the U.S. to withdraw from NAFTA if targets in such areas as job growth, public health and the trade deficit are not met. Fifteen Republicans have signed on as co-sponsors. The bill may have 80 supporters in the House.

The NAFTA experiment has failed. The evidence is overwhelming. The challenge now before us is how to withdraw from NAFTA and design a new relationship between Mexico, Canada and the United States. A relationship that can truly strengthen communities and economies on both sides of the border.

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David Morris

David Morris is co-founder of the Institute for Local Self-Reliance and currently ILSR's distinguished fellow. His five non-fiction books range from an analysis of Chilean development to the future of electric power to the transformation of cities and neighborhoods.  For 14 years he was a regular columnist for the Saint Paul Pioneer Press. His essays on public policy have appeared in the New York TimesWall Street Journal, Washington PostSalonAlternetCommon Dreams, and the Huffington Post.