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Alisa Simmons (202) 454-5111
Lori Wallach (202) 454-5107 firstname.lastname@example.org
The 20-year record of job loss and trade deficits from the North American Free Trade Agreement (NAFTA) is haunting President Barack Obama's efforts to obtain special trade authority to fast track the Trans-Pacific Partnership (TPP), said Public Citizen as it released a new report that comprehensively documents NAFTA's outcomes.
The 20-year record of job loss and trade deficits from the North American Free Trade Agreement (NAFTA) is haunting President Barack Obama's efforts to obtain special trade authority to fast track the Trans-Pacific Partnership (TPP), said Public Citizen as it released a new report that comprehensively documents NAFTA's outcomes. Next week's presidential trip to Mexico for a long-scheduled "Three Amigos" U.S.-Mexico-Canada summit will raise public attention to NAFTA, on which the TPP is modeled, which is not good news for Obama's push for the TPP and Fast Track.
Numerous polls show that opposition to NAFTA is among few issues that unite Americans across partisan and regional divides. Public ire about NAFTA's legacy of job loss and policymakers' concerns about two decades of huge NAFTA trade deficits have plagued the administration's efforts to obtain Fast Track trade authority for the TPP. The TPP would expand the NAFTA model to more nations, including ultra-low-wage Vietnam. In the U.S. House of Representatives, most Democrats and a bloc of GOP have indicated opposition to Fast Track, as has Senate Majority Leader Harry Reid (D-Nev.).
Public Citizen's new report, "NAFTA's 20-Year Legacy and the Fate of the Trans-Pacific Partnership," compiles government data on NAFTA outcomes to detail the empirical record underlying the public and policymaker sentiment. It also shows that warnings issued by NAFTA boosters that a failure to pass NAFTA would result in foreign policy crises - rising Mexican migration and a neighboring nation devolving into a troubled narco-state - actually came to fruition in part because of NAFTA provisions that destroyed millions of rural Mexican livelihoods.
"Outside of corporate boardrooms and D.C. think tanks, Americans view NAFTA as a symbol of job loss and a cancer on the middle class," said Lori Wallach, director of Public Citizen's Global Trade Watch. "If you are a president battling to overcome bipartisan congressional skepticism about giving you special trade authority to fast track a massive 12-nation NAFTA expansion, it is really not helpful to be visiting Mexico for a summit of NAFTA-nation leaders."
The Public Citizen report shows that not only did projections and promises made by NAFTA proponents not materialize, but many results are exactly the opposite. Such outcomes include a staggering $177 billion U.S. trade deficit with NAFTA partners Mexico and Canada, one million net U.S. jobs lost in NAFTA's first decade alone, slower U.S. manufacturing and services export growth to Mexico and Canada, a doubling of immigration from Mexico, larger agricultural trade deficits with Mexico and Canada, and more than $360 million paid to corporations after "investor-state" tribunal attacks on, and rollbacks of, domestic public interest policies.
"The data have disproved the promises of more jobs and better wages, so bizarrely now NAFTA defenders argue the pact was a success because it expanded the volume of U.S. trade with the two countries without mentioning that this resulted in a 556 percent increase in our trade deficit with those countries, with a flood of new NAFTA imports wiping out hundreds of thousands of American jobs," said Wallach.
The study tracks specific promises made by U.S. corporations like Chrysler, GE and Caterpillar to create specific numbers of American jobs if NAFTA was approved, and reveals government data showing that instead, they fired U.S. workers and moved operations to Mexico.
"The White House and the corporate lobby sold NAFTA with promises of export growth and job creation, but the actual data show the projections were at best wrong," said Wallach. "The gulf between the gains promised for NAFTA and the damage that ensued means that the public and policymakers are not buying the same sales pitch now being made for the TPP and Fast Track."
The report also documents how post-NAFTA trade and investment trends have contributed to middle-class pay cuts, which in turn contributed to growing income inequality; how since NAFTA, U.S. trade deficit growth with Mexico and Canada has been 50 percent higher than with countries not party to a U.S. Free Trade Agreement, and how U.S. manufacturing and services exports to Canada and Mexico have grown at less than half the pre-NAFTA rate.
Among the study's findings:
Rather than creating in any year the 200,000 net jobs per year promised by former President Bill Clinton on the basis of Peterson Institute for International Economics projections, job loss from NAFTA began rapidly:
American manufacturing jobs were lost as U.S. firms used NAFTA's foreign investor privileges to relocate production to Mexico, and as a new flood of NAFTA imports swamped gains in exports, creating a massive new trade deficit that equated to an estimated net loss of one million U.S. jobs by 2004. A small pre-NAFTA U.S. trade surplus of $2.5 billion with Mexico turned into a huge new deficit and a pre-NAFTA $29.6 billion deficit with Canada exploded. The 2013 NAFTA deficit was $177 billion, representing a more than six-fold increase in the NAFTA deficit.
More than 845,000 specific U.S. workers, most in the manufacturing sector, have been certified for Trade Adjustment Assistance (TAA) since NAFTA because they lost their jobs due to offshoring to, or imports from, Canada and Mexico. The TAA program is narrow, covering only a subset of jobs lost at manufacturing facilities, and is difficult to qualify for. Thus, the TAA numbers significantly undercount NAFTA job loss. A TAA database searchable by congressional district, sector and more is available here.
NAFTA has contributed to downward pressure on U.S. wages and growing income inequality. There is broad consensus among economists that recent trade flows have been a significant contributor to growing income inequality; the only debate is about the degree of trade's responsibility. NAFTA's broadest economic impact has been to fundamentally transform the types of jobs and wages available for the 63 percent of American workers without a college degree. Most of those who lost manufacturing jobs to NAFTA offshoring and import competition found reemployment in lower-wage service sector jobs. According to the U.S. Bureau of Labor Statistics, two out of every three displaced manufacturing workers who were rehired in 2012 experienced a wage reduction, most of them taking a pay cut of greater than 20 percent. As increasing numbers of workers displaced from manufacturing jobs have joined those competing for non-offshorable, low-skill jobs in sectors such as hospitality and food service, real wages have also fallen in these sectors under NAFTA. The resulting downward pressure on middle-class wages has fueled recent growth in income inequality.
Scores of environmental and health laws have been challenged in foreign tribunals through NAFTA's controversial investor-state dispute resolution system. More than $360 million in compensation to investors has been extracted from NAFTA governments via "investor-state" tribunal challenges against toxics bans, land-use rules, water and forestry policies, and more. More than $12.4 billion is pending in such NAFTA claims, including challenges of medicine patent policies, a fracking moratorium and a renewable energy program.
The average annual U.S. agricultural trade deficit with Mexico and Canada in NAFTA's first two decades reached $975 million, almost three times the pre-NAFTA level. U.S. beef imports from Mexico and Canada, for example, have risen 133 percent. Over the past decade, total U.S. food exports to Mexico and Canada have actually fallen slightly while U.S. food imports from Mexico and Canada have more than doubled. This stands in stark contrast to projections that NAFTA would allow U.S. farmers to export their way to newfound wealth and farm income stability. Despite a 239 percent rise in food imports from Canada and Mexico under NAFTA, the average nominal U.S. price of food in the United States has jumped 67 percent since NAFTA.
The reductions in consumer goods prices that have materialized have not been sufficient to offset the losses to wages under NAFTA; U.S. workers without college degrees (63 percent of the workforce) likely have lost a net amount equal to 12.2 percent of their wages even after accounting for gains from cheaper goods. This net loss means a loss of more than $3,300 per year for a worker earning the median annual wage of $27,500.
The export of subsidized U.S. corn did increase under NAFTA's first decade, destroying the livelihoods of more than one million Mexican campesino farmers and about 1.4 million additional Mexican workers whose livelihoods depended on agriculture.The desperate migration of those displaced from Mexico's rural economy pushed down wages in Mexico's border maquiladora factory zone and contributed to a doubling of Mexican immigration to the United States following NAFTA's implementation.
Facing displacement, rising prices and stagnant wages, more than half the Mexican population, and more than 60 percent of the rural population, still falls below the poverty line, despite the promises that NAFTA would bring broad prosperity to Mexicans. Real wages in Mexico have fallen significantly below pre-NAFTA levels as price increases for basic consumer goods have exceeded wage increases. A minimum wage earner in Mexico today can buy 38 percent fewer consumer goods than on the day that NAFTA took effect. Despite promises that NAFTA would benefit Mexican consumers by granting access to cheaper imported products, the cost of basic consumer goods in Mexico has risen to seven times the pre-NAFTA level, while the minimum wage stands at only four times the pre-NAFTA level. Though the price paid to Mexican farmers for corn plummeted after NAFTA, the deregulated retail price of tortillas - Mexico's staple food - shot up 279 percent in the pact's first 10 years.
"Given NAFTA's damaging outcomes, few of the corporations or think tanks that sold it as a boon for all of us in the 1990s like to talk about it, but the reality is that their promises failed, the opposite occurred and millions of people were severely harmed and now this legacy is derailing President Obama's misguided push to expand NAFTA through the TPP," said Wallach.
The report is available at https://www.citizen.org/documents/NAFTAs-20-year-legacy.pdf.
Public Citizen is a nonprofit consumer advocacy organization that champions the public interest in the halls of power. We defend democracy, resist corporate power and work to ensure that government works for the people - not for big corporations. Founded in 1971, we now have 500,000 members and supporters throughout the country.(202) 588-1000
"I'm not happy with some of the things I'm hearing about," the Washington Democrat said, stressing that still needs to see legislative text.
Rep. Pramila Jayapal said Sunday that the Biden White House should be concerned about securing the Congressional Progressive Caucus' support for the newly announced debt ceiling agreement, given that the deal includes work requirements for aid programs and other provisions sure to infuriate the Democratic Party's left flank.
Jayapal (D-Wash.), the chair of the Congressional Progressive Caucus (CPC), toldCNN she is "not happy with some of the things" she's hearing about the tentative agreement but emphasized that she still needs to see legislative text, which is expected to be released Sunday afternoon.
Asked whether the White House and Democratic leaders still have to worry about whether the CPC—which has 101 members in the House—will support the final agreement, Jayapal responded, "Yes, they have to worry."
While noting that the spending cuts in the deal aren't nearly as large as the House GOP wanted, Jayapal raised concerns about the new work requirements for some recipients of Supplemental Nutrition Assistance Program (SNAP) benefits.
The White House-GOP agreement would reportedly impose work requirements on adult SNAP recipients who are up to 54 years old and have no children—up from the current age ceiling of 49. Under current law, as the Center on Budget and Policy Priorities explains, "non-elderly adults without children in their homes can receive benefits for only three months every three years, unless they are working at least 20 hours a week or can document they are unable to work."
The broadening of work requirements would sunset in 2030, according to the White House, and SNAP eligibility would be expanded for veterans and people who are homeless.
Jayapal said Sunday that SNAP work requirements are "absolutely terrible policy," adding that "we have seen reams of data that show that, when you put these work requirements in, they're really just administrative red tape that prevent the people who need help from getting help."
"I told the president that directly when he called me last week on Wednesday that this is saying to poor people and people who are in need that we don't trust them," Jayapal said, noting that people on SNAP receive an average of $6 per day in benefits. "I think it is really unfortunate that the president opened the door to this."
\u201cWork requirements are bad policy. They don\u2019t reduce spending, they create administrative burdens, and they simply don\u2019t work.\n\nThe fact that this is a GOP priority is cruel, and every American should know what they\u2019re trying to do to poor and working families.\u201d— Rep. Pramila Jayapal (@Rep. Pramila Jayapal) 1685284434
Outside advocates and economists have vocally condemned the debt ceiling agreement's real-term spending cuts, attacks on aid programs such as SNAP and Temporary Assistance for Needy Families (TANF), and cuts to IRS funding, but progressive lawmakers have been largely quiet since details of the tentative deal began emerging Saturday night.
House Minority Leader Hakeem Jeffries (D-N.Y.) wrote in a "Dear Colleague" letter on Sunday that Republicans will release legislative text at some point in the afternoon and top Biden administration officials will brief the Democratic caucus on the deal at 5:00 pm ET.
Politicoreported Sunday that "Democrats are pissed that Republicans got a briefing on the deal last night—and that they won't get the same until 5:00 pm tonight."
One unnamed senior Democrat told Politico that rank-and-file lawmakers are "furious that they will learn about [the details of the deal] from Republicans and Sunday talk shows."
Some members of the far-right House Freedom Caucus, meanwhile, have responded angrily to the tentative agreement, which would lift the debt ceiling until January 1, 2025 and put spending caps in place for 2024 and 2025.
Rep. Ralph Norman (R-S.C.) called the deal "insanity," complaining that it wouldn't cut spending aggressively enough.
During a press briefing Sunday morning, House Speaker Kevin McCarthy (R-Calif.) downplayed the Freedom Caucus outrage, saying he's confident that a majority of House Republicans will vote for the agreement.
The Treasury Department warned Friday that the U.S. government will run out of money to pay its obligations on June 5 unless Congress lifts the debt ceiling.
"For no real reason at all, hungry people are set to lose food while tax cheats get a free pass."
The text of the legislation, titled the Fiscal Responsibility Act of 2023, is now available here.
Progressive economists and advocates warned that the tentative debt ceiling agreement reached Saturday by the White House and Republican leaders would needlessly gash nutrition aid, rental assistance, education programs, and more—all while making it easier for the wealthy to avoid taxes.
The deal, which now must win the support of both chambers of Congress, reportedly includes two years of caps on non-military federal spending, sparing a Pentagon budget replete with staggering waste and abuse.
The Associated Pressreported that the deal "would hold spending flat for 2024 and increase it by 1% for 2025," not keeping pace with inflation.
The agreement would also impose new work requirements on some recipients of Supplemental Nutrition Assistance Program (SNAP) benefits and Temporary Assistance for Needy Families (TANF) while scaling back recently approved IRS funding, a gift to rich tax cheats.
In exchange for the spending cuts and work requirements, Republican leaders have agreed to lift the debt ceiling until January 1, 2025—a tradeoff that House Speaker Kevin McCarthy (R-Calif.) is pitching as a victory to his caucus, which includes far-right members who have demanded more aggressive austerity.
President Joe Biden, for his part, called the deal "a compromise, which means not everyone gets what they want."
"After inflation eats its share, flat funding will result in fewer households accessing rental assistance, fewer kids in Head Start, and fewer services for seniors."
Lindsay Owens, executive director of the Groundwork Collaborative, said in a statement Saturday night that "this is a punishing deal made worse only by the fact that there was no reason for President Biden to negotiate with Speaker McCarthy over whether or not the United States government should pay its bills," alluding to the president's executive authority.
"After inflation eats its share, flat funding will result in fewer households accessing rental assistance, fewer kids in Head Start, and fewer services for seniors," said Owens. "The deal represents the worst of conservative budget ideology; it cuts investments in workers and families, adds onerous and wasteful new hurdles for families in need of support, and protects the wealthiest Americans and biggest corporations from paying their fair share in taxes."
The agreement comes days before the U.S. is, according to the Treasury Department, set to run out of money to pay its obligations, imperiling Social Security, Medicare, and Medicaid payments and potentially hurling the entire global economy into chaos.
House Republicans have leveraged those alarming possibilities to secure painful federal spending cuts and aid program changes that could leave more people hungry, sick, and unable to afford housing, critics said.
"For no real reason at all, hungry people are set to lose food while tax cheats get a free pass," wrote Angela Hanks, chief of programs at Demos.
While legislative text has not yet been released, the deal would reportedly impose work requirements on adult SNAP recipients without dependents up to the age of 54, increasing the current age limit of 49. Policy analysts and anti-hunger activists have long decried SNAP time limits and work requirements as immoral and ineffective at boosting employment. (Most adult SNAP recipients already work.)
"The SNAP changes are nominally extending work requirements to ages 50 to 54. In reality, especially as the new rule is implemented, this is just an indiscriminate cull of a bunch of 50- to 54-year-olds from SNAP who won't realize there are new forms they need to fill out," said Matt Bruenig, founder of the People's Policy Project.
Diane Yentel, president and CEO of the National Low Income Housing Coalition, wrote on Twitter that the agreement is "cruel and shortsighted," pointing to the work requirements and real-term cuts to rental assistance "during an already worsening homelessness crisis."
"House Rs held our nation's lowest-income people hostage in exchange for lifting the debt ceiling," Yentel continued. "The debt ceiling 'deal' could lead to tens of thousands of families losing rental assistance... Expanding ineffective work requirements and putting time limits on food assistance adds salt to the wound, further harming some of the lowest-income and most marginalized people in our country."
The White House and Republican leaders also reportedly agreed to some permitting reforms that climate groups have slammed as a boon for the fossil fuel industry. According toThe New York Times, the agreement "includes measures meant to speed environmental reviews of certain energy projects," though the scope of the changes is not yet clear.
And while the deal doesn't appear to include a repeal of Biden's student debt cancellation plan—which is currently before the U.S. Supreme Court—it does reportedly contain a provision that would cement the end of the student loan repayment pause, drawing fury from debt relief campaigners.
\u201cResuming student debt payments will crush working families and is simply bad policy\u2014but agreeing to codify the pause\u2019s end into law before the Supreme Court decides on broad-scale relief is criminal.\u201d— The Debt Collective \ud83d\udfe5 (@The Debt Collective \ud83d\udfe5) 1685241461
The deal must now get through Congress, a difficult task given potentially significant opposition from progressive lawmakers who are against attacks on aid programs and Republicans who want steeper cuts.
As the Times reported, "Lawmakers in the House Freedom Caucus were privately pillorying the deal on Saturday night, and the Congressional Progressive Caucus had already begun to fume about it even before negotiators finalized the agreement."
Amy Hanauer, executive director of the Institute on Taxation and Economic Policy, said Sunday that "it's a relief to see that congressional leaders and the president have come to an agreement to raise the debt limit and avert an economic disaster."
"But by instituting work requirements for critical assistance programs and rescinding important funding to crack down on wealthy tax cheats, this deal will rig the economy even more in favor of the most well-off Americans while failing to fix the real structural problems that led to the current debt crisis in the first place," said Hanauer. "The deal avoids the elephant in the room: it includes no new revenues even though tax cuts of the past few decades were a primary driver of deficit growth."
"And next up, many Republican lawmakers want to double down on tax cuts by pushing through many more tax cuts that would most help wealthy families and corporations," Hanauer added. "They should do the opposite."
"The GOP claims doing so is necessary in the interest of $11 billion in deficit reduction. But at the same time, they have doubled down on tax cuts skewed to the rich and special interests."
The Biden White House late Friday accused Republicans of attempting to "take food out of the mouths of hungry Americans" by imposing new work requirements on recipients of federal nutrition assistance, a public rebuke of the GOP that came as negotiators worked to finalize a debt ceiling agreement.
Additional work requirements appear to be among the final sticking points in the time-sensitive talks, with the GOP insisting on their inclusion in any agreement to raise the debt limit.
In a statement Friday night, White House spokesperson Andrew Bates said the GOP's proposed work requirements for the Supplemental Nutrition Assistance Program (SNAP) are "designed to tie the most vulnerable up in bureaucratic paperwork" and "have shown no benefit for bringing more people into the workforce."
"The GOP claims doing so is necessary in the interest of $11 billion in deficit reduction," said Bates. "But at the same time, they have doubled down on tax cuts skewed to the rich and special interests that would add $3.5 trillion to our debt."
House Republicans have demanded new work requirements for recipients of SNAP, Medicaid, and Temporary Assistance for Needy Families (TANF)—many of whom already work.
Asked Friday whether the GOP would be willing to drop its push for work requirements, Rep. Garret Graves (R-La.)—the party's lead negotiator—said, "Hell no."
"Hell no," he repeated. "Not a chance."
The White House has spoken out against new work requirements for SNAP and Medicaid, but it's unclear whether it opposes fresh work mandates for TANF, which replaced the more generous Aid to Families With Dependent Children program under the Clinton welfare reform law that Biden supported as a senator.
Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus, welcomed the White House's statement against SNAP work requirements, which analysts say could strip food aid from millions of people amid a worsening hunger crisis.
"The president is calling out MAGA GOP hypocrisy of refusing to raise the debt ceiling so the economy doesn't crash simply to take food from hungry people," Jayapal tweeted Saturday. "When you count admin[istrative] costs of bureaucratic red tape, this would produce ZERO savings. Isn't and has never been about saving money."
The White House issued its statement amid growing progressive concerns over the concessions the Biden administration has reportedly granted to GOP hostage-takers.
On Friday, watchdogs, Democratic lawmakers, and policy analysts responded with outrage to reports that the Biden White House is leaning toward accepting Republicans' demand for IRS funding cuts—a giveaway to rich tax cheats.
Progressives have also voiced alarm over reports that the emerging debt ceiling deal includes a two-year cap on non-military federal spending, which would result in cuts to key domestic programs.
"Any deal is a disaster since most government departments and agencies are currently severely underfunded," warned Jeff Hauser, executive director of the Revolving Door Project.