About NAFTA and TPP

LORI WALLACH, Public Citizen’s Global Trade Watch:

"Well, we really under predicted what the damage would be.

So there has been a large increase in trade. But a lot of it has been a flood of new NAFTA imports. NAFTA did include investor protections. Those incentivized offshoring of U.S. investments and jobs. So, while we have seen a flood of more trade, it’s 700 percent of that is actually the imports.

So we have had a growth in our trade deficit of almost 500 percent, 480 percent. So just the numbers, before NAFTA, we had a slight surplus with Mexico in trade. And with Canada, we have about a $30 billion deficit. The end-of-year U.S. International Trade Commission official government trade data came out last week. We have a $177 billion combined NAFTA trade deficit.

Using the administration’s old multiplier of what that means for jobs, that’s a net loss of accumulation of over a million jobs. And there’s a government database that has 845,000 specific NAFTA casualties to our manufacturing workers who have been certified for assistance.

Well, here’s the fluky thing. With these investment rules promoting the offshoring of the investment, our exports have actually declined as far as the growth rate. So, as our economies get bigger, export volumes increase. But just looking at the U.S. ITC data, our growth in exports in goods to the NAFTA countries is down to 62 percent of the level growth rate of what it was. For services, it’s even down actually in half.

So we have a trade agreement that’s actually been a penalty on our export growth. And the only reason I mention that is the whole premise of NAFTA, it promised 200,000 new U.S. jobs a year. Woo-hoo. But that was based on having an improved trade deficit reduction.

Instead, we have a huge new trade deficit. So we have hemorrhaged jobs. And, more importantly, the biggest effect of NAFTA is it’s fundamentally transformed the composition of jobs available, and therefore wages. But the 63 percent of Americans don’t have a college degree, those manufacturing jobs are gone. And the service sector jobs, says the Bureau of Labor Statistics, pay less by 20 percent.

Well, the heartbreak is that the TPP is basically NAFTA on steroids with nine more countries. So, the U.S., Mexico and Canada are in it. But then so is, for instance, 28 cents an hour minimum wage Vietnam. So is Malaysia.

And if you look at that whole bloc, all of the rules that were in NAFTA that promoted this downward pressure on wages — I mean, we lost 40,000 factories in those 20 years — it’s true there’s automation. But, in addition, we saw a whole shift in the composition of jobs and what kind of jobs are available for people in our economy.

And there’s economic consensus that actually trade is a major contributor to income inequality. We have the whole literature search of all of the studies from the Peterson Institute to across the spectrum on our Web site at TradeWatch.org. If people want to go read the studies, you can link back to all of these different think tanks.

The only debate is what percentage of income inequality is caused by trade. So, now you look at the TPP. At its heart are the same rules that were in NAFTA, the investor protections that promote offshoring, but to an even lower-wage country, Vietnam.

And so the companies are excited about this. They look at the ban and buy America procurement in there. They look at the right to import food and products that don’t meet our standards, the right to offshore to Vietnam. And you can see why they’re interested.

But the public opinion polling shows Democrats, Republicans, independents are against anything that even smells like a NAFTA expansion."