Fast Track to Disaster
"Fool me once, shame on you; fool me twice, shame on me." Never one to underestimate his own salesmanship, President Clinton is now shamelessly asking Congress to grant him "fast track" authority for another round of NAFTA style trade negotiations with Chile and other nations.Fast track has always amounted to a repudiation of fundamental democratic principles. Under its provisions, the President is free to negotiate trade treaties that can only be voted up or down without amendments. These trade arrangements also require that all domestic laws contrary to treaty principles be superseded by the new agreements. Thus, major revisions of labor, public health, and environmental policy are negotiated in secret and can only be approved or vetoed as a total package by Congress. In light of the recent history of trade negotiations, failure to stem this erosion of the public voice would surely be one more symptom of the withering of our democracy.This Administration, like its Republican predecessors, has always defended "trade liberalization" as a win-win proposition that allows each nation to specialize in what it does best and thereby contributes to worldwide economic growth. Yet its version of free trade is very different from that first developed by its classic defender, David Ricardo. Ricardo pictured a world in which products moved but factories stayed put. He also assumed an economy where full employment was the norm and no business enjoyed inordinate market power.Clinton's labor supporters pointed out during the 1992 campaign that the Bush negotiated trade treaty with Canada and Mexico was a very different affair. It lowered tariffs in standard Ricardian fashion, but it also gave multinational corporations whole new freedoms. The right to repatriate profits from foreign operations was guaranteed, protection against expropriation strengthened, and intellectual property rights expanded. These protections amounted to a virtual invitation to move operations in search of the cheapest and most exploited labor.In response to labor criticism, Clinton assured the public that any trade treaty he submitted to Congress would include adequate protection for labor and environmental concerns. In office, Clinton settled for side agreements on these topics so tepid as to be meaningless. Even the Clinton Administration's staunchest NAFTA's defenders now admit it has created far fewer jobs than they initially promised. A recent study by Public Citizen's Global Trade Watch has concluded that ninety percent of the U. S firms that promised to add domestic jobs once NAFTA was enacted have failed to deliver on their promises. During the NAFTA era a small trade surplus with Mexico has turned into an enormous trade deficit, costing the U. S. hundreds of thousands of jobs. To prevent further hemorrhaging of the trade deficit, the U. S. has committed 50 billion of taxpayer dollars to a currency stabilization package for Mexico.After assuring us in 1993 that Mexico would be a strong trading partner, the Administration now argues that the unpredicted trade deficit with Mexico is a temporary result of currency problems unrelated to NAFTA. Yet, as University of Maine economist Mel Burke has demonstrated, that currency crisis itself grew out of long standing, NAFTA- style, initiatives imposed on Mexico, including forced privatization, labor repression, and financial deregulation. For more than two decades, the U. S. and the international financial community have imposed wage austerity, gutted the public sector, and tolerated rampant speculation in non productive mergers and acquisitions in Mexico. NAFTA strengthens and formally codifies these practices. It thereby only facilitates further attacks on the Mexican working class. To claim that currency crisis is unrelated to NAFTA is disingenuous in the extreme.U. S. trade statistics continue to obfuscate the issue. Burke reports that "when a Senora automobile plant in Mexico imports parts from the U. S. and then reexports the assembled cars back to the U. S., these transactions are registered as net increases in trade with no accounting taken of the decrease in domestic auto trade between Michigan and the other forty-nine states." These "increases" in trade are often used to imply that real economic capacity and new jobs are being created.A proper accounting of NAFTA can shed some light on another confusing topic, the stagnation in worker wages. Despite some gains in employment during this upswing in the business cycle, working class wages have failed to match recent gains in productivity. Part of the explanation of this wage sluggishness lies in the inequities built into the NAFTA accords. These provide iron clad guarantees regarding "intellectual property" and profit repatriation but make only token mention of labor. The U. S. worker now finds that he or she is part of an international labor force. Demands for wage equity here can be met by the stated or implied threat to move production to anti labor havens across the border. Nor are the jobs exported only low skilled or low tech ones. State of the art auto plants in Mexico now have worker productivity equal to the best Detroit or even Japan can offer, and only pay about ten percent of U. S. wages.These criticisms are met by some tired rejoinders. Insisting on labor's rights will only alienate foreign governments and encourage protectionism. If the President doesn't have fast track authority, foreign governments won't negotiate with him. These arguments are patently fallacious. The President has negotiated other important international economic agreements without the carte blanche of fast track. The U. S. market remains the most valued in the world and foreign nations will not readily forsake it.The U. S. government has shown no compunctions about imposing corporate protections as a condition for admission to our markets. No one calls this "protectionism." It is time to stand up for labor and the environment in trade treaties. Trade treaties with enforceable guarantees of labor's right to organize and wage standards pegged to each nation's level of productivity would allow trade to expand in ways that met Ricordo's test. Trade and business location decisions would be based on access to the relevant skills and resources rather than cheap labor. Growing wages and consumer demand would speed world economic growth.Popular pressure to protect labor is growing in Mexico, and in much of the rest of the world there is growing restiveness regarding sweatshops. Now is perhaps the best time in recent memory to broaden the terms of trade negotiations. A first step in this process is to demand that our representatives in Congress to vote no on Clinton's fast track.Beyond this immediate defensive step, advocates of social justice should encourage their representatives to cosponsor the NAFTA Accountability Act. The bill, which already has 100 co-sponsors in the House, requires that the President document that NAFTA has not made conditions worse than before NAFTA. The areas to be examined include trade between the U.S. and Mexico and Canada, related jobs and wages, and environmental conditions. If NAFTA can not pass such a test, then the President must conduct renegotiations to fix specific problems. If the problems are not fixed, the bill provides for termination of Congressional authorization of NAFTA. Unless NAFTA were reauthorized by Congress, this would trigger U.S. withdrawal from NAFTA. Absent such bold initiatives, we may expect further attacks on labor not only here but worldwide.John Buell lives in Souhwest Harbor, Maine and writes regularly on labor and environmental issues. His most recent book, co-authored with Tom DeLuca, is Sustainable Democracy: Individuality and the Politics of the Environment (Sage).