What will the new global trade deals mean for the South?
This week, President Obama renewed his push for two global economic accords, the Trans-Pacific Partnership with Asian countries and the Transatlantic Trade and Investment Partnership with Europe. On Monday, Dec. 1, Institute Executive Director Chris Kromm joined a forum hosted by the North Carolina AFL-CIO to discuss the potential consequences of such deals for workers, the environment and consumers in North Carolina and the South; here is an edited version of his comments.
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In the coming weeks, President Obama and top-level officials will be pushing for Fast Track authority to rush through the Trans-Pacific Partnership pact involving 11 countries. After missing a mid-November deadline, Obama is turning up the heat on Congress to approve Fast Track authority, which allows major trade deals like the TPP to be signed with limited congressional and public input.
The current campaign reminds me of the push to approve the North American Free Trade Agreement, or NAFTA, two decades ago.
Just like with NAFTA, the current "trade" deals are coming with a host of promises about jobs and economic prosperity, in the U.S. and overseas. It's interesting to look back at the wild claims and rosy predictions that boosters of NAFTA put forward to push it through Congress in November 1993. We now have 20 years of experience to evaluate the claims and see if the promsies came true.
As the watchdog group Public Citizen detailed in a report on the 20th anniversary of NAFTA [pdf], the U.S. public was told that deal would create hundreds of thousands of jobs -- "170,000" in the first two years, according to one source, and up to 200,000 a year in the most extravagant projections.
We were told exports would boom, helping U.S. workers and farmers. We heard that NAFTA would transform Mexico into a vibrant, prosperous First World country. We were told environmental standards to protect our air, water and land would improve.
The reality, of course, has been much different. And the reason is because, as all of us now know, NAFTA wasn't really a trade agreement. It was, like the rest of the global deals that followed and are being proposed now, mostly a big business deregulation agreement. The driving purpose is to free big companies from laws protecting workers, the environment and consumers, stripping down standards to the least common denominator.
So it's no surprise that deals whose purpose is to push us faster and faster on a race to the bottom has put us in a situation where our jobs, our communities and our environment are in a more precarious position
The effect on jobs and the livelihoods of workers in this country has been devastating. According to official reports, the U.S. has experienced a net loss of at least 700,000 jobs, and up to 1 million depending on which numbers you use. The increases in jobs have been very localized, in areas such as service and trucking industries along the Mexico/U.S. border, and have been greatly outweighed by job losses.
NAFTA hit Southern states, including North Carolina, especially hard. While the impact of these deals are felt at every level of the economy, it's been especially devastating in Southern states, where a greater share of jobs are in manufacturing.
Since 1994, North Carolina has lost nearly 370,000 manufacturing jobs. That represents more than 45 percent of the state's manufacturing employment. In the South, these jobs don't always pay great, but they have paid better than the jobs that have replaced them, largely in sectors like hospitality and food service. According to the Bureau of Labor Statistics, about two-thirds of displaced manufacturing workers who were rehired in 2012 saw their wages go down, the majority by more than 20 percent.
Worse yet, when workers have tried to organize in their workplaces for fair wages and adequate benefits, companies have used these deals as a form of job blackmail -- threatening to pick up and move if employees form a union or agitate too much. This has contributed to growing inequality, where the share of income held by the richest 1 percent has shot up 58 percent since NAFTA was implemented, while the economic situation of many working families has grown more tenuous.
The results were even worse in Mexico. Investment in Mexico shot up -- by 435 percent in 10 years. But a lot of that was in low-paying, dangerous jobs in the maquiladoras along the border, where assembly plants sprung up for cars, appliances and electronics. And once companies found they could get cheaper jobs in Asia and China, these footloose companies moved again, leaving behind massive dislocation.
One consequence of this has been uprooted workers and families who have crossed the border to this country in search of a better life. By one estimate, the flooding of Mexico with U.S. corn under NAFTA undermined the livelihoods of more than 1 million campesino farmers, which has fueled problems like the drug wars in Mexico, forcing more families to flee and head north.
Wages and inequality have increased in the U.S. And in Mexico, workers continue to make about 30 percent of the wages of workers in the U.S., even adjusting for the difference in living costs.
In fact, in the era of global corporate investment deals, it's hard to find many winners. Small and medium-sized businesses didn't benefit much either. NAFTA and other deals are geared to help big multinational companies that have a lot of money sitting around for overseas investment and international contacts and channels to penetrate global markets.
Unfortunately, despite the failures of NAFTA, they've used the same playbook for a host of new deals that have followed, and the two key accords that are now on the table: the Trans-Pacific Partnership with Asia and Latin America, and the Transatlantic Trade and Investment Partnership with the European Union.
They're driven by the same low-road economic policy. They set up the same one-sided system, where the benefits largely accrue to a handful of the biggest and wealthiest companies, while workers and the broader public are expected to absorb the cost, in the form of stripped-down consumer, environmental and worker standards. And they're being negotiated in the same undemocratic way, leaving out key voices that could make the deals better.
But there's a key difference between the current push for global deals and the fight around NAFTA: The public now has 20 years of experience to evaluate the claims made by boosters of global economic deals. People are more skeptical -- and fearful -- about what these deals mean for their communities.
In Congress, there's genuine bipartisan opposition to the TPP and TTIP deals, as well as the idea of giving Obama Fast Track authority to push them through -- what some Republicans have labeled "Obamatrade."
But the divide between anti-trade populists and the pro-trade pressure of the business lobby has forced many leaders to walk a tight line -- especially those with bigger political aspiration. As The Huffington Post detailed, U.S. Sen. Rand Paul (R-KY) has "taken every conceivable position" on the TPP, at one point demanding Obama sign the deal by the end of 2014, then scheduling a press conference to oppose "Obamatrade."
For those who are concerned about the impact of the TPP and TTIP, these political divisions -- along with the documentary record we have of what happened with NAFTA over the last 20 years -- provide big openings to either stop these deals, or at least force negotiators to open up the process, make it more democratic and ensure any future accords protect the environment, the rights of workers and the broader interests of the public, at home and abroad.
Chris Kromm is executive director of the Institute for Southern Studies and publisher of the Institute's online magazine, Facing South.