The following article reflects a discussion of the Communist Party Labor Commission. Send your comments or questions to laborcommission@cpusa.org. You can also request notifications of future discussions.
DETROIT – What do NAFTA 2 and Donald Trump’s new tax law have in common? A little-noticed section of the new tax code encourages multinational corporations to invest in Mexico by granting them a 0% tax rate for such investments, compared to a 10% rate for U.S investments. Both NAFTA 2 and the new tax code continue down the path of sacrificing jobs of U.S. workers to generate super profits for billionaires.
The North American Free Trade Agreement – NAFTA – was signed by President George H. Bush in 1992 and pushed through Congress by President Bill Clinton in 1993. Its advocates – big corporations, Republicans, and neoliberal Democrats – claimed that by eliminating tariffs and any restraints on the flow of capital, the U.S. trade balance would improve. They claimed that NAFTA would reduce immigration from Mexico by improving environmental conditions and raising the wages there.
Clinton promised that NAFTA would result in the creation of one million new jobs in the U.S. In fact, the opposite occurred: nearly one million manufacturing jobs were LOST within ten years of NAFTA being signed, according to the Economic Policy Institute. Environmental conditions got even worse as the Mexican government was unable or unwilling to enforce environmental regulations. The U.S. trade deficit with Mexico soared. Lack of labor protection allowed transnational corporations to lock in low wages with company-controlled unions, keeping the extremely productive Mexican manufacturing workers living in poverty.
In 2000, China entered the World Trade Organization and Congress granted China Permanent Normal Trade Relations status. Both actions made it easier for U.S. corporations to invest there. Congress made no corresponding regulations on the movement of capital to protect the jobs of U.S. workers. Giant corporations again jumped at the opportunity to increase profits by transforming good union jobs into low paying jobs.
To this day, U.S auto companies continue to relocate plants to Mexico as evidenced by the recent closing of the GM plant in Lordstown Ohio and four other GM facilities.
In the 2016 elections, Donald Trump promised to either fix the NAFTA agreement or toss it out completely. He has done neither. Instead, Trump has negotiated a “new” NAFTA, called United States Mexico Canada Agreement or NAFTA 2.
The AFL-CIO and all the major unions call for is rejection.
Jobs, the environment and big pharma are among the reasons that labor is joined by economic justice, consumer and environmental groups in opposing NAFTA 2.0
First, NAFTA 2.0 includes no provisions to stop the outsourcing of jobs to Mexico and the unrelenting downward pressure on wages.
Second, there are no improvements in environmental regulations in spite of the horrific environmental damage spawned by NAFTA.
Third, the new agreement grants special monopoly protections that allow big pharmaceutical companies to continue to price gouge: for example, their patent licenses are being extended to 10 years, meaning generic drugs will not be available for that entire decade.
Speaker of the House Nancy Pelosi has promised to not bring NAFTA 2.0 to a vote, keeping it stalled in Congress. But continued pressure is still needed. The AFL-CIO is asking its members and supporters to keep calling on their Congresspeople to vote no on NAFTA 2.0 with these fatal flaws.
But NAFTA and NAFTA 2.0 are part of a bigger problem. Even before NAFTA, U.S. corporations had begun moving factories and jobs to Mexico. NAFTA just made it easier.
U.S. tax policies, which gave an incentive to corporations to move to Mexico, combined with changes in banking and bankruptcy laws greased the wheels for shutting down healthy U.S. factories and shifting production to Mexico. According to Donald Bartlett and James B. Steele, Philadelphia Enquirer reporters who wrote America: What Went Wrong?, an estimated 2,000 new factories employing 800,00 workers were built in Mexico from 1965 to 1995, mainly by U.S. corporations. Within the first 10 years of NAFTA, over 1 million jobs shifted to Mexico. Replacenafta.org cites a Bureau of Labor Statistics figure that estimates that 4.5 million manufacturing jobs have been lost to Mexico and China since NAFTA was enacted.
Rejecting NAFTA 2.0 is an important step to stop the outsourcing of jobs to Mexico. But in and of itself rejecting NAFTA 2 won’t restore manufacturing jobs in the U.S.
What is needed is an industrial policy that puts the needs of workers ahead of the profits of the few. We need to look at a just transition for workers in a shifting economy. We need to see the Green New Deal as an economic as well as an environmental necessity. And we need to invest trillions in rebuilding our nation’s infrastructure that will put tens of thousands to work in repairing roads, bridges, water systems and many possible alternative sources of energy at good-paying union jobs.
We need to see that communities that have been hardest hit by this de-industrialization, Black, Latino and Native American, are uplifted. And we need to increase labor’s power by enacting legislation to allow workers to join unions without company interference. In short, we need to put people before profits.
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