A Model for Disaster: Report details NAFTA’s impact over 20 years

NAFTA drew protests in Minnesota before its implementation (left), but debate surrounding the model for trade it established 20 years ago continues with the TPP today (right).

NAFTA drew protests in Minnesota before its implementation (left), but debate surrounding the model for trade it established 20 years ago continues today with the TPP (right).

In the early 1990s, Doug Williams was serving as president of Local 1140 of the International Union of Electrical Workers, an industrial union that has since folded into the Communications Workers. Williams and other union activists, particularly in the industrial sector, were in full campaign mode at the time, handing out fliers during shift changes, staging public rallies and demonstrating in the streets.

But it was neither an election nor a strike that had them fired up. Rather, it was a looming trade pact – the first of its kind – with Mexico and Canada. The agreement would do away with most tariffs and economic protections.

“What little we knew about the trade agreement at the time, it did not appear to be something that was going to be of benefit to folks who had to work for a living,” Williams, now on staff with the IUE-CWA, remembered. “We were doing our best to stop what appeared to be a corporate power grab.”

Unions like the IUE joined a broad coalition of environmental, family-farm and other community organizations urging Congress to stop the trade deal. They “tried to engage people around the state,” Williams said, and even worked in collaboration with allies in Mexico and Canada. “Anybody who was willing to participate, we were looking to work with.”

Despite the protests – and over warnings from economists that it would depress wages, uproot jobs and drive farmers off their land – the North American Free Trade Agreement went into effect Jan. 1, 1994.

What’s happened in the 20 years since is the subject of a report released in March by the AFL-CIO, the nation’s largest labor federation. “NAFTA at 20” finds the fears surrounding NAFTA shared by Williams and other trade unionists 20 years ago were largely warranted, and they’ve played out with disastrous implications for workers’ rights, income inequality and democracy in all three nations.

But equally damaging, according to both the AFL-CIO report and trade watchdogs based in Minnesota, is the model for expanded corporate power that NAFTA established – one the U.S. would copy and “enhance” in global trade negotiations over the next two decades. NAFTA remains the template negotiators are working off of in talks for the Trans-Pacific Partnership, the latest – and largest – attempted free-trade deal to date.

“There is no success story for workers to be found in North America 20 years after NAFTA,” AFL-CIO President Richard Trumka said. “The NAFTA model focuses on lifting corporations out of reach of democratic governance, rather than solely reducing tariffs. This report should serve as a cautionary tale to the Obama Administration and Congress as they consider negotiating and implementing new trade deals.”

Activists in Northfield protested NAFTA more than 20 years ago in this Union Advocate file photo.

Activists in Northfield protested NAFTA more than 20 years ago in this Union Advocate file photo.

Fears came true

Proponents of NAFTA 20 years ago – like those who defend the agreement today – argued that by reducing tariffs and other barriers to trade, NAFTA would increase trade among the three North American countries. Increased trade, it followed, would result in job growth throughout the free-trade zone. While lobbying Congress to approve the pact, President Bill Clinton claimed NAFTA would create 200,000 new jobs per year in the U.S. alone.

In hindsight, Clinton and other NAFTA backers were only half right.

The volume trade flowing among the U.S., Canada and Mexico surged from $291 billion in 1993, the year before NAFTA went into effect, to $1.1 trillion in 2012. Trade patterns, however, shifted dramatically and unequally, with disastrous ramifications for workers in all three countries.

Before NAFTA, the U.S. actually had a small trade surplus with Mexico – meaning it exported more goods than it imported. But that changed quickly after 1994, as the U.S. trade deficit with its NAFTA partners has ballooned to $181 billion.

According to the AFL-CIO report, NAFTA allowed companies to move labor-intensive components of their operations to locations with weak labor laws and lax enforcement of wage, environmental and other standards. Manufacturers took advantage, displacing an estimated 682,900 U.S. jobs to Mexico.

Minnesota has lost about 14,000 jobs to Mexico in the last two decades, Minnesota Fair Trade Coalition Director Josh Wise said.

“And it’s still happening,” Wise added. “A company in Mankato called Midwest Electric just moved last summer. This practice of outsourcing over the last 20 years is actually still happening at a fairly rapid pace.”

Challenge to collective bargaining

With the job losses came a new wave of challenges for unions, which saw their membership rolls decline sharply, as manufacturing has been a traditional base of strength for organized labor.

Rick Ryan, a business representative for District 77 of the International Association of Machinists, can point to several employers that have outsourced Machinists’ jobs to Mexico, including the Danish company Nilfisk, which manufactures industrial floor-cleaning equipment at a facility in Plymouth.

Machinists Local Lodge 1037 used to represent more than 500 Nilfisk workers, Ryan said. After several rounds of outsourcing, only about 80 Machinists are left working in the facility.

“We built a lot of the components for the machines there – we’d take raw sheet metal, form it, bend it, weld it and make the components,” Ryan said. “Now they’ve outsourced all that work to wherever, and they’ve taken and outsourced the assembly of all but the very biggest of these machines down to Mexico.”

The IUE, Williams said, represented workers at 21 facilities in Minnesota before NAFTA; that number is down to 16 today. “They’ve all been impacted by the trade issue,” he said.

Even when employers didn’t pick up and move, they were sure to let workers know it was an option – especially during contract negotiations.

“It has been very difficult to get anywhere near a raise that might get anywhere close to keeping up with the cost of living, and it’s because of this constant threat that if we ask for too much or get too much, they’re going to shut ‘er down and go to wherever – name your country,” Ryan said. “That has put a real hard pressure on wages for our bargaining units.

“I hear it from the members when you talk to them. They want more money, but they’re afraid – the unspoken threat is always there. It’s always in their mind.”

When unions are constantly negotiating concessions – or negotiating severance packages for workers who’ve lost their jobs to trade – it also makes organizing a tough sell, Ryan added

“’Well those union guys, they couldn’t stop the company from moving.’ That’s the kind of thing you hear,” Ryan said. “And when you try to organize, workers say, ‘If we organize they’ll shut it down, they’ll move production.’ And they’re told that by management.”

By weakening the power of unions and incentivizing low wages, NAFTA has contributed to growing income inequality in all three partner countries – despite consistent gains in worker productivity, the AFL-CIO report finds.

web.nafta-streetsCorporate power grab

While workers saw their rights attacked and wages stagnate under NAFTA, corporations saw their powers expand and their profits soar – thanks to the free-trade model established 20 years ago.

Beyond reducing tariffs, NAFTA created new privileges and protections for corporations that allow them to challenge local laws, government regulations or other “barriers to trade” that could interfere with their actual or potential profits. NAFTA established unelected international panels – “unaccountable to the public,” the AFL-CIO report points out – to hear these complaints and award monetary compensation.

It’s called investor-to-state dispute settlement, or ISDS, and according to the AFL-CIO report, it may be NAFTA’s most enduring and troubling legacy, as the practice has been included – and expanded upon – in subsequent free-trade agreements.

“NAFTA set a precedent for how corporations could gain control over writing trade laws,” Wise said. “They realized they could achieve a whole host of deregulation and other legislative victories through trade negotiations that they couldn’t achieve through Congress, and it’s really accelerated the global race to the bottom.”

ISDS empowers foreign investors – mostly multinational corporations – to challenge “buy-local” laws, living-wage provisions and regulations designed to protect consumers, patent holders and the environment.

Exxon Mobil won $60 million from the Canadian government two years ago, arguing that local regulations requiring oil companies to fund research and development in Canada’s poorest provinces constituted a barrier to trade. Mexico had to pay Cargill for laws regulating high-fructose corn syrup.

And who’s on the hook for these monetary damages? The taxpayers. In all, NAFTA governments have paid at least $340 million to “investors” since the agreement took effect.

Of course, similar protections for workers – say, the right to sue a country for establishing barriers to union organizing – are not part of the NAFTA model.

“Unlike the procedures that protect investor rights, the complaint procedures for violations of labor or environmental standards are exceedingly slow and cumbersome, and provide no reasonable possibility of sanctions being imposed for noncompliance,” the AFL-CIO report reads.

Fight for fair trade continues

Frighteningly, the ISDS language written into NAFTA seems tame in comparison to what’s in the Obama administration’s top trade priority, the Trans-Pacific Partnership. It expands ISDS protections from traditional goods and services to intellectual property and financial services.

But fair-trade activists celebrated a big victory when Congress refused to grant Obama “fast-track” authority for the TPP and other trade deals – a sign, they hope, that increased public awareness about ISDS and the damaging effects of the NAFTA model are yielding increased public outrage.

Twenty years after taking to the streets to fight NAFTA, labor unions are continuing to partner in the struggle for fair trade.

“When folks are made aware of what’s going on, they seem to be universally opposed to the idea of the TPP,” Williams said. “Labor’s challenge is to recognize it’s going to take more than labor; it requires community partners. We all need to work together to produce a framework for trade that members of the public can see themselves included in.”

web.nafta-penny

Gloves come off as orchestra musicians mark one year locked out of their jobs

web.orchestra-lockout3Since Day 1 the Minnesota Orchestra lockout has been taking a personal toll on musicians. Now, one year into the work stoppage, things are getting personal for the orchestra’s Board of Directors too.

Union musicians, members of the American Federation of Musicians Local 30-73, marked the one-year anniversary of the start of their work stoppage today, rallying outside Orchestra Hall downtown Minneapolis with patrons, community supporters and the president of their international union, who wasn’t shy about naming names.

In a fiery speech before a crowd of more than 200 people, AFM President Ray Hair called out 11 members of the board, and he identified most by their corporate employers, including Cargill, General Mills, U.S. Bank, Wells Fargo, United Health, 3M, Xcel Energy, Land o’ Lakes and the Star Tribune.

“Does that sound like a board that doesn’t have any money?” Hair asked. “Or does that sound like a bunch of bullies?

“I say no more groveling to these union-busters. These people and their companies are not worthy of our business.”

[Click here for Save Our Symphony Minnesota’s guide to calling or e-mailing members of the Board of Directors!]

Musicians voted unanimously last weekend to reject the orchestra’s latest contract proposal, which would have slashed salaries by about 25 percent over three years.

Signing bonuses of $20,000 sweetened the offer, but musicians did not budge from their stance that significant compensation cuts will damage the orchestra’s long-term artistic viability, limiting its ability to attract qualified musicians – and prompting current musicians to seek jobs elsewhere.

Musicians have presented management with counteroffers, including some that would cut their pay by as much as 8 percent. The also say they are open to a “play-and-talk” arrangement that would allow concerts to resume while contract negotiations play out.

Still, management has shown little interest in compromise, Tony Ross, a cellist and member of the musicians’ bargaining team, told the crowd. Ross said he’s lost count of how many different offers the union has presented to management.

“They come back and make the same offer over and over again,” he said.

The lockout, of course, is a deliberate strategy to inflict economic hardship on workers in the hopes of exacting concessions at the bargaining table. The Board of Directors, Hair said, appears committed to the strategy, regardless of its effect on the orchestra’s reputation. Management announced yesterday it had backed out of concerts scheduled next month at Carnegie Hall, and today Osmo Vanska, the orchestra’s renowned conductor for the last 10 years, resigned.

“I call it economic terrorism by the rich big shots in this town,” Hair said. “It’s management without music, that’s what it is. And it’s coming from managers who wouldn’t know the difference between a banjo and a bass drum.”

The unanimous contract vote indicates musicians, too, remain resolved as ever, although many musicians with the orchestra a year ago have taken positions elsewhere. The musicians maintain a list of “ghosts lost to the lockout” on its website.

Still, they are forging ahead with plans to stage a series of concerts in various venues this fall, beginning with performances Friday and Saturday at Ted Mann Concert Hall. Emanuel Ax, a Grammy-winning pianist, will be featured in a program slated to include Stravinsky’s “Suite from The Firebird” – a piece, Ross noted, about “rising from the ashes.”

“We want to serve our community because it is the community that owns this orchestra, it is not the management,” Ross said. “So if we have to play every other hall but (Orchestra Hall), we will until we can get back where we belong.”

Patrons and musicians gather for a demonstration outside Orchestra Hall organized by Save Our Symphony Minnesota last month.

Patrons and musicians gather for a demonstration outside Orchestra Hall organized by Save Our Symphony Minnesota last month.

Franken takes the lead in Senate effort to sway Trans-Pacific trade negotiations

U.S. Sen. Al Franken, shown here at a union rally in St. Paul, co-authored a letter to President Obama urging enforceable protections for workers' rights in the TPP.

U.S. Sen. Al Franken, shown here at a union rally in St. Paul, co-authored a letter to President Obama urging enforceable protections for workers’ rights in the TPP.

As negotiations on the latest U.S.-backed free-trade agreement resumed in Australia this week, U.S. Sen. Al Franken of Minnesota led a bipartisan appeal to President Obama, urging his administration to craft an deal that protects American jobs and workers’ rights worldwide.

Franken, a DFLer, joined Republican Sen. Olympia Snowe of Maine in authoring a letter to Obama on the Trans-Pacific Partnership, a proposed free-trade agreement currently encompassing 11 countries and reaching all corners of the Pacific Ocean.

The senators want Obama to ensure the new free-trade agreement is “crafted to maximize good job creation and market expansion while minimizing the incentives for further off-shoring of middle class jobs,” according to the letter (click to download as pdf).

Twenty-two other senators, including Minnesota DFLer Amy Klobuchar, signed onto the letter.

The senators voice specific concern in the letter about including enforceable protections for labor rights in the TPP – a provision that has been lacking in previous free-trade agreements entered into by the U.S.

“A country that denies these rights to workers is providing a hidden subsidy that keeps wages artificially lower than they otherwise would be if workers were free to organize and bargain – a subsidy that makes U.S.-based producers less cost-competitive,” the letter says. “The free exercise of fundamental labor rights is key to improving the standards of living and expanding export markets while labor suppression merely ensures that middle classes – and export markets – will be smaller than they otherwise would be.”

Congress has been mostly shut out of TPP negotiations, now in their 15th round. As a result, letters like Franken’s are as close as federal lawmakers can come to influencing the talks before the TPP lands in Congress for a ratification vote.

Josh Wise, director of the Minnesota Fair Trade Coalition, which is closely monitoring TPP negotiations, equated the senators’ letter to the committee hearing that takes place before a bill reaches the Senate floor.

Members of the Minnesota Fair Trade Coalition protested outside Cargill's offices in Hopkins last July, targeting the company for its involvement in secretive TPP negotiations.

Members of the Minnesota Fair Trade Coalition protested outside Cargill’s offices in Hopkins last July, targeting the company for its involvement in secretive TPP negotiations.

Wise praised Minnesota’s senators for taking a “strong stand for the rights of workers in Minnesota and around the globe.”

Countries currently engaged in TPP talks with the U.S. are Australia, Peru, Vietnam, Chile, Malaysia, New Zealand, Singapore, Vietnam and Brunei.

Although members of Congress – and the media – have been shut out of negotiations, a handful of multinational corporations like Cargill have been included in the talks – a big reason why it is critical for lawmakers like Franken and Klobuchar to speak out, Wise added.

“With countries such as Vietnam, which has been referred to as the ‘low cost labor alternative to China,’ being party to the Trans-Pacific Partnership, it is vitally important that our elected officials do everything in their power to ensure that this massive free-trade deal does not repeat the results of NAFTA and create a race to the bottom for wages and working conditions,” Wise said.

Fair trade activists to Cargill: What’s the big secret?

Members of the Minnesota Fair Trade Coalition protest outside Cargill’s offices in Hopkins.

If free-trade agreements like the forthcoming Trans-Pacific Partnership are in the public interest, then why are they negotiated in private?

That’s the question supporters of the Minnesota Fair Trade Coalition asked during a July 9 rally in Hopkins. The coalition of labor, environmental and agricultural organizations is mounting a public campaign to pressure the Obama administration into opening Trans-Pacific Partnership negotiations to public scrutiny.

“The Trans-Pacific Partnership is an 11-country free-trade deal that could eventually encompass half of the world,” coalition director Josh Wise told a crowd of about 50 demonstrators. “It’s huge. It’s big. And the public is being entirely shut out.”

So, too, are journalists and members of Congress. The agreement could create legally binding policies regarding agriculture, workers’ rights and intellectual-property rights – without any input from U.S. lawmakers during negotiations.

Not surprisingly, 132 members of Congress have signed a complaint, addressed to the Obama administration’s chief trade negotiator, that Trans-Pacific Partnership negotiations have not been sufficiently open to public or congressional scrutiny. Protesters in Hopkins echoed those concerns.

Protesters line the sidewalk outside Cargill, protesting the company’s influence on Trans-Pacific Partnership negotiations, which are closed to the public.

“We could say that transparency is synonymous with truth,” Colombian fair-trade activist Gerardo Cajamarca told the crowd via a translator. “When we’re demanding transparency, we’re also demanding truth and justice.”

Cajamarca and other demonstrators gathered outside offices of Cargill, the multinational food- and agriculture-based corporation headquartered in the Twin Cities. Cargill is one of a handful of companies granted access to – and influence on – Trans-Pacific Partnership negotiations.

That multinational corporations have been granted access to the trade talks worries fair-trade activists, who suspect the Trans-Pacific Partnership will be written to benefit companies like Cargill at the expense of workers, small farmers and the environment.

“It is lies that companies like Cargill use to impose free-trade agreements,” Cajamarca said. “They have told the world that free-trade agreements are going to bring prosperity and progress and development to the rest of the world. This is false.”

Indeed, the track record of existing free-trade agreements – NAFTA, CAFTA and the Korea Free Trade Agreement, among others – has not been good, particularly for manufacturing workers in the U.S.

Bob Ryan, a representative with the United Steelworkers union, said companies already are flooding the American market with cheap products, made by low-wage workers overseas. Free-trade agreements only make that process easier, and that’s bad news for American workers.

Ryan offered this example: The Korea Free Trade Agreement, he said, enables automakers like Nissan to build cars with cheaply made auto parts and export them to the U.S., where they compete with cars built in the U.S. by Ford and General Motors.

“Ninety-five percent of every car that’s made in the United States, the Steelworkers represent the workers who make those parts,” Ryan explained. “Every car that comes into the United States (from Korea) is one less job for us.

“Companies like Cargill, they’re just out for their pockets – nobody else’s. They don’t care about the environment. They don’t care what they do to workers. That’s why we’re here today; we’ve got to stop these rotten trade agreements.

“We should keep these jobs in America.”

For more information on the Trans-Pacific Partnership, or to get involved in the struggle for fair trade, visit the Minnesota Fair Trade Coalition’s website.

Fair Trade Coalition plans rally against corporate control of trade pact

Negotiations are underway on what experts say will become the largest free-trade agreement in the world, the Trans-Pacific Partnership (TPP). But as important as this deal will be for workers worldwide, it has been negotiated behind closed doors, away from public scrutiny.

On July 9 the Minnesota Fair Trade Coalition will stage a rally to protest these secret negotiations. The coalition of labor, environmental and agricultural organizations will take its message to one of the multinational corporations granted access to TPP negotiations: Cargill.

The rally will begin at 10 a.m. outside Cargill’s offices at 9380 Excelsior Boulevard in Hopkins. Activists will call on U.S. trade negotiators to release their proposals and let the public see what its own government is doing.

“The only people who have access to these negotiations are ‘cleared advisors,’” the Fair Trade Coalition says in a flier promoting the rally. “These people are corporate lobbyists, including from Cargill, that have used their financial clout to get in the room. That’s right, corporate lobbyists have more access to laws than our own members of Congress!”

Click here to read Minnesota Fair Trade Coalition Director Josh Wise’s column about TPP negotiations, published in the April 2012 Union Advocate.

TPP negotiations are scheduled to resume next week in San Diego. Nations included in the talks are Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the U.S.

The agreement could create legally binding policies regarding agriculture, workers’ rights and intellectual-property rights – without any input from U.S. lawmakers during negotiations.

Not surprisingly, 132 members of Congress have signed a complaint, addressed to the Obama administration’s chief trade negotiator, that TPP negotiations have not been sufficiently open to public or congressional scrutiny.

Drafts of the agreement leaked to the public suggest it will grant corporations broad new powers, including the right to skirt domestic laws and regulations by filing suit before international “trade tribunals” – something Obama promised he would not support during the 2008 campaign.

Free-trade pacts have been notoriously bad news for American workers. The North American Free Trade Agreement, passed in 1994, cost the U.S. nearly 700,000 jobs, most of them in manufacturing, according to a 2011 study by the Economic Policy Institute.

For more information on the July 9 rally, contact Josh Wise at 952-818-5474 or josh [at] citizenstrade [dot] org.