Afta NAFTA

National Review, July 28, 1997 by Richard Nadler

As free trade erodes the power of organized labor, union leaders are beginning to fight back.

In Santiago on May 19, Commerce Secretary William Daley was at pains to reassure his Chilean hosts of the Clinton Administration's commitment to expanding the North American Free Trade Agreement. His task was complicated by the fact that during the 104th Congress, 110 representatives co-sponsored the NAFTA Accountability Act, a piece of legislation aimed at reversing the hemispherizing of free trade. Worse, its advocates included leaders of his own party.

The global capitalist transformation that President Clinton is overseeing faces strong opposition from both ends of the political spectrum. Lashed by Patrick J. Buchanan's blistering protectionist attacks during the 1996 primaries, Republicans distanced themselves from the trade-opening policies of Presidents Reagan and Bush.

Democratic strategists, aware that market globalization would weaken key labor constituencies, never embraced these GOP-negotiated pacts. "[D]rawn down by lower wages in Mexico," Rep. Dick Gephardt warned Congress, "our standard of living will continue to stagnate or decline.... the Agreement could exacerbate our worst economic problems: disappearing jobs and declining real incomes."

Thus were NAFTA and the Uruguay GATT round, products of a broad policy consensus, orphaned politically. Nevertheless, the orphans have thrived, Over the last three years, U.S. exports have increased 37 per cent. North American trade has increased 43 per cent, a gain of $127 billion annually. "If that gain in trade were a country," notes Heritage Foundation analyst Jack Sweeney, "it would be America's fourth largest trading partner."

During the NAFTA debate of 1993, the pact's proponents maintained that freer trade would, like any other tax cut, stimulate increased employment. These gains, concentrated in the high-wage export sectors of the economy, would exert a benign influence on Americans' income. Opponents countered that NAFTA, however it affected employment, would depress wages. Factor equalization in international labor markets would deindustrialize America.

Three years into globalization, it is no longer necessary to speculate: the free traders were right. In the triennium preceding NAFTA, worker compensation --wages plus benefits--registered only modest gains. Hourly cash compensation, adjusted for inflation, actually declined. But from 1993 through 1996, both hourly wages and total compensation increased in real dollars. Other measures of wealth--per-capita gross domestic product, disposable personal income, personal consumption expenditures--all rose substantially.

The best news came where the worst was predicted. After 1976, when 19.6 million Americans worked in manufacturing, U.S. industrial employment fell steadily. By 1982, 19.1 million were so employed; by 1992, 16.9 million. At the end of 1996--three years into the latest round of globalization--manufacturing employment had rebounded to, 18.3 million.

The correlation between the increasing prosperity of American workers and international tax-cut treaties such as NAFTA is clear.

Never has so much good economic news been greeted with such incredulity by leaders in both parties. "We have got to find a way to export products to Mexico, not just our jobs and capital," lamented Minority Whip David Bonior, following a year of record growth in U.S. exports to Mexico and sturdy industrial-employment gains. "American companies are closing factories here," said Pat Buchanan, "and from Monterrey to Mexico City a new Detroit is rising."

The statistical fabrications upon which the myth of NAFTA failure is built are readily traced. Organized opposition to the world trading system is financed by the institution that has the most to lose from the new prosperity: unions.

Labor attorney Mike Dolan is the field director of Global Trade Watch, an umbrella group formed by his direct employer: Ralph Nader's Public Citizen. He has been touring the nation, reactivating the 1993 anti-NAFTA coalition. His express intent is to block fast track, the cornerstone of Administration-negotiated agreements for freer trade.

Dolan's audiences include trade unionists, movement ecologists, and elements of the Catholic Left. A typical anti-NAFTA working session, "Exploring the Impact of Globalization," held in Kansas City March 7 and 8, was cosponsored by the Missouri AFL-CIO, United Autoworkers Local 249, Teamsters Local 41, the Roman Catholic Diocesan Office of Peace and Justice, and the Kansas Sierra Club. The majority of the 150 in attendance were union members. The focus of the conference was not the impact of NAFTA, but how to lobby congressmen and the press.

Dolan's chief presentation tool is a Global Trade Watch publication, NAFTA's Broken Promises: Failure to Create Jobs, which he co-authored. Against the blizzard of data proving the sector-by-sector success of trade liberalization, Dolan produces a flurry of anecdotes, liberally supplemented by outright lies. "The jobs that are being created [under NAFTA] are lower-paying jobs," he told his Kansas City audience. "The 500,000 laid off are not getting jobs equal to what they had. Why? Because the jobs being laid off are primarily in the higher-paying sectors--automotives, electronics, apparel."