Please explain NAFTA to me, and why it is so horrible.

[MurikanDemocrat]

It’s a serious question. I'm not familiar with the particulars. I know it is considered a pariah but I don’t understand how it works or its consequences.

[Dookus]

1. It has good points and bad points

but nobody here will admit that. It's pure evil with no redeeming value, according to folk here.

[LincolnMcGrath]

5. Its good for the ruling class.

Not good for American workers or Foreign workers.

[Dookus]

7. thank you for proving my point

[PVnRT]

9. Well, then, Dookus, what are the good points?

Enlighten us ignorant, seething masses who know only hate and are too stupid to see the truth.

[LincolnMcGrath]

12. Fast track to lost jobs

The dismal U.S track record in negotiating trade agreements since the mid-1990s, as indicated by the nation's growing trade deficit and the attendant economic problems, suggests that a fast track is exactly what the nation does not need:

While gross U.S. exports rose 61.5% between 1994 and 2000, imports rose much more, by 80.5%.


Job losses associated with the trade deficit increased six times more rapidly between 1994 and 2000 than they did between 1989 and 1994.


Every state and the District of Columbia suffered significant job losses due to growing trade deficits between 1994 and 2000. Ten states, led by California, lost over 100,000 net jobs.


The manufacturing sector, where the trade deficit rose 158.5% between 1994 and 2000, shouldered 65% of the surge in job losses during that period.


U.S. trade deficits with NAFTA partners Canada and Mexico increased nearly four-fold between 1993 and 2000, driven primarily by direct U.S. investment in Mexican and Canadian factories that export to the United States. The sustained appreciation of the U.S. dollar also encouraged investors around the world to build new and expanded production capacity at home to export more goods to the U.S. As a result, U.S. markets have been flooded with imports from Asia, Europe, Central and South America, and Africa since 1994.

[LincolnMcGrath]

28. hit and run?

[Dookus]

29. Not at all

and no reason to be insulting about it. I don't live my life here. And keep in mind I don't claim that there's no bad side. I'm simply saying there are some benefits.

Some benefits:

US agricultural exports to Canada and Mexico have increased by 4 billion dollars, according to the USDA.

Many American jobs rely on US trade exports to Mexico, and Mexico's trade imports from the US have increased a lot since NAFTA. In 1996, according to the US Trade Representatives office, 2.3 million American jobs relied on Mexican trade.

Philosophically, the benefit is to have Canada and Mexico be real free-trade partners. I worked for a company for years that manufactured in Mexico, creating decent manufacturing jobs for people that otherwise would not have had the opportunity.

Again, I'm not saying NAFTA is uniformly positive. It has a lot of problems, and I'll be the first to say they should be addressed. But the idea itself of free trade with our neighbors is not inherently bad. I've always maintained we need a real international labor and environmental movement. But protectionism and trade barriers will neither help our neighbors nor ourselves.

[Darranar]

11. Which good points?

[Gunit_Sangh]

2. re: nafta

I'm not an expert on it either, but my understanding of it is that it lifted all restrictions and import duties for goods flowing into and out of all North America. It's kinda like making something in Indiana and shipping it to Illinois to be sold.

This meant that corporations could shut down factories the U.S. and build new factories in Mexico. Down there, people will work for a few dollars a day, not demand stupid things like health insurance, AND the environmental laws typically are far more lax than in the U.S. Good for a corp's bottom line, but bad for U.S. workers.

For awhile, that "giant sucking sound" of jobs going to Mexico wasn't all that bad. The economic policies of the Clinton administration (passed without one single repugilican vote) created an environment where job creation was white hot (an average of 236,000 new jobs a month for his entire administration).

When the economy slowed in 2000, job creation slowed and we all know what happened when * and his greedy thugs took over. Now with jobs going to Mexico, China and India ... Perot's "giant sucking sound" has become a friggin black hole.

[LincolnMcGrath]

3. The Clinton Economy covered the job loss

Some 6 million since NAFTA was passed. The sucking sound was there. We were able to cover the losses with many new jobs, mostly at less pay and benefits.

[anti-NAFTA]

4. The blame rests on ourselves also.

I won't stand for this counterproductive "Bush MADE nafta suck" argument. NAFTA was going to start taking its toll sooner or later.

NAFTA is a trage agreement that eliminated all tariffs on Canadian and Mexican goods. So Canadian agriculture, which costs much less, is destroying our agriculture; and Mexican labor, which is cheaper than American labor, has destroyed our manufacturing sector. But NAFTA is only the peel of the orange. There's also trade with China, also destroying our manufacturing base, and India, which has proven that service jobs are also at risk. Bush has plans to get CAFTA (central american version of NAFTA) and FTAA (free trade association of the Americas) through before his second term is up.

[Darranar]

6. This is the problem...

NAFTA lifted most restrictions on trade between Canada, Mexico, and the United States. That wouldn't be so bad, if there was regulation in place to replace it. There was none then and there is none now.

The free market needs to be regulated, whether global or local. NAFTA and other forms of free trade fail to do so, and the result is harm to all countries involved.

That's the problem in a nutshell.

[Tinoire]

36. And a very clear nutshell that was!

:thumbsup: for your clear post.

[carpetbagger]

8. The mixed bag of NAFTA...

From an American point of view, the NAFTA agreements have some good which, imo, may or may not offset the bad.

While low-tech manufacturing is going south, we still compete rather well in many, if not a majority, of sectors. While short-term loss of jobs will happen, it may be in our net interest to have two things happen over time that would mitigate the job loss. The first is that it's certainly in our interest to have a stable border and an industrialized Mexico. Over time, our exports will increase. I agree that environmental and labor issues need to be tweaked. Perhaps just as important, a solid Mexican industrial sector will help North America compete with Asian, specifically Chinese, industry. I can't imagine that our rolling over in Sino-American trade is doing wonders for our stability and that of our allies 10, 20, or 50 years from now.

I liked NAFTA, but that might be because I've spent significant amounts of time, as I do now, living along or south of I-10, and my father was involved in Latin American trade. But I thought that the WTO was much too radical a step.

[LincolnMcGrath]

10. A solid mexican industrial sector?

[revcarol]

15. Some of the goals, like those you mention were lofty.

They have now been negated by opening free trade with China.Many of the maquiladoras that used to exist in Mexico and pay the workers $4.00 a day for semi-slavery have now gone to China.Mexico is reeling under Nafta because our mechanized agri-business produces most crops so much cheaper that their agriculture base of family farms is being devastated.Many of the auto parts that went to Mexico for cheap labor have now gone to China.

Why do you think that Bush proposed all that yucky guest-worker crud, (besides political gain?) Because the pressure is on him from his good friend Presidente Fox to DO SOMETHING about the economy of Mexico because NAFTA has virtually gone defunct in helping Mexico.!!If those workers can send 1/2 their wages home and fill the jobs Americans would work for half the wages, what's not to like, thinks Bush.

Someone please fill in about Chapter 11, the most devastating part. I've got to lie down.

[LincolnMcGrath]

16. The failure of NAFTA to deliver on its promise

NAFTA's critics did not doubt that it would stimulate more trade; that was, after all, its function. Rather, they predicted that any benefits would go largely to the rich while the middle class and the poor would pay the costs, and that the promised growth would not materialize. They were right. NAFTA is not the cause of all Mexico's economic troubles, but it has clearly made them worse. Since NAFTA's inception in 1994 -- indeed, for the 20 years of neoliberal "reform" -- the Mexican middle class has shrunk and the number of poor has expanded. Economic growth has been below the old corporatist economy's performance and substantially less than what is needed to generate jobs for Mexico's growing labor force. During his 2000 campaign, Mexican President Vicente Fox promised that under his six-year term the country would grow 7 percent per year. Two and a half years after his inauguration, growth has averaged less than 1 percent.

So the northward migration continues. Between the U.S. censuses of 1990 and 2000, the number of Mexican-born residents in the United States increased by more than 80 percent. Border-crossings diminished temporarily after September 11, but they are now as great as ever. Some half-million Mexicans come to the United States every year; roughly 60 percent of them are undocumented. The massive investments in both border guards and detection equipment have not diminished the migrant flow; they have just made it more dangerous. In the past five years, more than 1,600 Mexican migrants have died on the journey to the north, including 19 people who were found asphyxiated in a truck near Houston in May. Still, as a neighbor of one of the 19 who left told The Washington Post, "If you're going to improve your life, you have to go to the United States."

[snoochie]

13. It's an investor protection agreement

It allows multinational corporations to sue governments for taxpayer money if they are restricted for health, safety, or environmental reasons.

It has resulted in lower wages for manufacturing jobs in Mexico.

It has resulted in much greater pollution.

Click here for more information every voter needs to know about this particular free trade agreement and others, and why, in their current state, they are bad for everyone but the investors / owners.

When NAFTA was negotiated, there were hundreds of manufacturers and industry representatives present to ensure their needs were met. There were only seven representatives for labor. It's not hard to see how we ended up in this mess.

Free trade in and of itself is not a bad thing. But when it's done as it has been so far -- with only big businesses needs in mind, it is a bad thing.

[LincolnMcGrath]

18. Great post snoochie

[El Supremo]

14. Globalisation

It is not just NAFTA that is causing major changes it is Globalisation. See:
http://news.bbc.co.uk/1/hi/special_report/1999/02/99/e-cyclopedia/711906.stm

The bottom line is that the NeoCons have seen that we can loose this competition and have decided that we must use our military superiority to offset our economic deficiencies.

Sounds like Kaiser Willhelm and Hitler all over again.

[Tinoire]

17. 1 lesser known point but very important one is water, electricity & other

1 lesser known point but very important one is utility privatization. NAFTA had language cemented in it to privatize water, electricity & other utilities in the same poor countries where we are exploiting their labor and breaking up their unions. When you read what Bechtel did to the peasants of Bolivia it is a down-right crime! And to the elctrical unions in Mexico. All for a few pennies for stock-holders.

Anti-NAFTA had a great thread on this: http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=315065

If you need more after that let me know. If you need examples, let me know.

Thank you for asking.

[LincolnMcGrath]

19. Thank you Tinoire

[Tinoire]

31. My pleasure... Always a pleasure to get the information out there

I firmly believe that the differences between sincere progressives, people of good will is just a the amount of information they've been exposed to and have processed. Someone at Free Republic made a very good point last week and that was that only the extreme Progressives and extreme Conservatives bother with details anymore. If they would give the old DU one month at FR, we could convert half of them past the point of no return!

Peace

[Darranar]

20. Another problem...

As I stated above, free trade is fine with regulation.

At the current time, there is little, and what we have is lacking.

[anti-NAFTA]

23. Do you have an AOL or AOL instant messenger screen name?

Because I would really like to speak with you.

If you don't want to give it on the board you can IM me at Cantinflas1789, if you have AOL that is.

[absyntheNsugar]

21. It could be made good if changed to provide safety nets

like the EU...The EU was suupposed to be the model for NAFTA, and many who voted for it thought thats what they were getting.

Unfortunately it has all of the tariff lifting and none of the safeguards.

[charlie]

22. Chapter 11 provisions

allow foreign corporations to challenge public policy set by state legislatures with claims of damage to their interests. While the state taxpayers are usually the ones held liable for compensation in these cases, arbitration is held in closed tribunals and the only allowed representation is from federal officials -- not even the state Attorney General can attend.

Then there's the troubling matter of state sovereignty being ceded to foreign commercial interests.

NAFTA’s investor-to-state tribunals
provide a way for foreign litigants to seek government compensation for damages ordered by U.S.
courts. In one NAFTA case, a huge Canadian funeral conglomerate called the Loewen Group is using
NAFTA’s investor protections to, in effect, “reverse” a Mississippi jury’s ruling in favor of a small
funeral home operator who sued the conglomerate for breech of contract. After the conglomerate
refused to engage in pre-trial settlement discussions, the jury found that Loewen had engaged in a variety
of fraudulent actions and applied $500 million in punitive and compensatory damages. Loewen claims
that it was then “forced” to settle the case for $150 million, because the Mississippi Supreme Court
would not waive the normal rules of civil procedure for the company. These rules require that a
defendant post a bond when filing an appeal so that it cannot liquidate its assets in case the appeal is
unsuccessful and the underlying damages must still be paid. Loewen is suing the U.S. taxpayers for $725
million under NAFTA to compensate the company for this “expropriation,” almost five times the amount
of the settlement. The U.S. defense in this case was that a jury ruling in a civil contract case was not a
“government action” against which foreign investors were granted special NAFTA protections.
Remarkably, the NAFTA tribunal in the Loewen case has ruled that not only is a Mississippi jury award
in a contract case a legitimate target of a corporate suit under NAFTA, but to date the panel has placed
no limits on what types of court decisions could be open to challenge. If Loewen prevails in its NAFTA
case, the corporation will be able to push the “bill” for its illegal behavior onto the U.S. taxpayers,
another “privilege” not allowed U.S. corporations. Moreover, this case shows how NAFTA provides
an incentive for foreign investors to resist reasonable settlement discussions with the prospect that any
final unfavorable court orders or damages could be evaded using NAFTA.

Potential Cost to the Taxpayers in the Billions:

In the end, it is the taxpayers of the
challenged country who must pay the compensation to a corporation if it succeeds in its NAFTA suit. In
the first seven years of NAFTA, with only a small number of cases filed, an astonishing $13 billion has
been claimed by corporations in their initial filings: $1.8 billion from U.S. taxpayers, $294 million from
Mexican taxpayers and a whopping $11 billion from Canadian taxpayers. In the California case, the
corporation is seeking nearly $1 billion or 1.2% of the state budget in compensation for the
environmental measure phasing out the gasoline additive. A number of awards of that size could 6
significantly impact the treasuries of national governments, and put pressure upon governments to
squeeze states and localities for funds.

State and Local Governments are Not Safe from NAFTA Tribunals’ Reach:

Not only have federal laws, such as a U.S. “Buy America” procurement law, been challenged under
NAFTA’s Chapter 11, but a variety of measures taken by state, provincial and municipal governments
have been challenged as well. In the toxic waste case, involving the U.S. Metalclad corporation, the
decision of a Mexican municipality to demand a construction permit before a U.S. company could begin
building a toxic waste facility was successfully challenged as NAFTA-illegal. In the same case, a later
decision by the Governor of the state to create an ecological reserve was deemed a NAFTA violation
challenged and the Mexican government has been ordered to pay $15.6 million in damages. In another
NAFTA case, British Columbia’s decision to ban the bulk export of lake and river water to prevent it
from being sucked up and shipped to California in supertankers was challenged by a California
corporation called Sun Belt. The Mondev corporation of Canada has attacked the actions of the Boston
Redevelopment Authority, the City of Boston and the Massachusetts Supreme Court in a NAFTA
tribunal over a real estate deal arguing that NAFTA overcomes the U.S. common law right of sovereign
immunity. While it is true that under NAFTA, a panel cannot directly rescind a law, and it is the federal
government that is technically liable for any damages, federal governments currently have a variety of
avenues under domestic law to bend state and local governments to their will. For example, federal
governments can hold funds for state and local projects ‘hostage’ until the offending measure is
rescinded or until the locality agrees to contribute to the damage award. State and local governments
must begin to take a hard look at these NAFTA cases to understand the implications for state
sovereignty and governance under NAFTA as well as the FTAA.

Governments Subject to Endless Second-Guessing by NAFTA Tribunals:

A tribunal in another NAFTA case found that Canada’s temporary ban of PCB exports because of
environmental concerns (during a brief period when the U.S. lifted its PCB import ban) were
reasonable. However the tribunal also ruled that Canada’s actions were NAFTA-illegal because the
tribunal decided that the manner in which Canada sought to implement its environmental goal was not the
least trade restrictive manner possible. The panel, with no apparent expertise in environmental policy,
put forward a variety of suggestions on other alternatives Canada might have pursued to achieve similar
ends. In the California case, the Canadian corporation Methanex is arguing that the state of California
should not phase out the gasoline additive called MTBE (a suspected carcinogen, which is highly soluble
in water posing a greater risk to drinking wells than similar additives), but rather should deal with the
problem of MTBE-contamination of drinking water by cleaning up all potentially leaky fuel tanks – an
extraordinarily costly endeavor that still would not remove all causes of MTBE water contamination. In a
number of cases, corporations argue that the very process by which a law was achieved constitutes a
violation of their new NAFTA investor rights. In the California case, the MTBE phase-out was
achieved after a multi-year public process during which the state took deliberative actions, first
commissioning numerous studies, followed by public hearing and debate. In the coming months, a
NAFTA panel will be empowered to inform us if these common practices of democratic governance will
soon be considered violations of NAFTA’s new investor rights.

http://www.citizen.org/documents/ACF186.PDF

[kiahzero]

24. My brother, who is far more schooled in economics than I, explained:

NAFTA isn't particularly horrible. It was really more of a political gift to Mexico than anything about free trade. Our tariff and non-tariff barriers with Mexico were next to nothing when it was signed. It was more symbolic than anything; the US, Mexico, and Canada all came together to increase economic integration.

It doesn't actually suck jobs to Mexico like Ross Perot Claimed.

Trade doesn't affect aggregate number of jobs. It may affect the TYPES of jobs, which is why Edwards is raising it as an issue. North Carolina is big on manufacturing, which are the jobs that are shifting overseas.

Because the United States has an advantage in service sectors, we produce them cheaper than other countries, while other countries can manufacture cheaper than we can. Hence, we trade. It allows us to consume more than we would be able to otherwise. If we weren't gaining from trade, with a higher standard of living, we wouldn't engage in it.

The problem is that anytime you make a comment, like the Council of Economic Advisors did - that outsourcing of jobs is good for the economy - it irritates the people affected.

[LincolnMcGrath]

27. "Trade doesn't affect aggregate number of jobs."

false

"It doesn't actually suck jobs to Mexico like Ross Perot Claimed."
false

"US, Mexico, and Canada all came together to increase economic integration."
HAHAHAHAHA

[kiahzero]

30. Any actual rebuttal, or just laughs?

Also interesting that you separated the third quote from context.

[AP]

33. NAFTA is implemented in way that's intended to minimize the costs of the

inputs into making a product, which the major cheapend input being labor.

In some respects this is good. Price competition is always good. But it many respects it's bad. In particular, it's bad for the following two reasons.

1) Labor should never be exploited, and that's what's happening. Labor is being exploited abroad, and at home, wages are being driven down so that American business can have cheap inputs for whatever we do in the US (primarily, service jobs).

2) The lower costs created by NAFTA aren't being passed on to consumers. They're creating a huge profit. And that profit also isn't being passed on to employees. It's being churned through the top of the corporation and out to insiders in incredibly low-taxed channels of wealth transfer (dividends and sale of stocks).

NAFTA isn't this great free trade thing which is improving the conditions of people throughout the world by spreading wealth among the poor, and creating needed price competition where there's already wealth.

It's a wealth transfer and concentration mechanism that is contributing to the creation of an oligopoly of 500 millionaires who control government and use that control to give them even greater wealth and power.

[MurikanDemocrat]

25. I have no idea this would get so much response!

Some very informative posts and links in here. Thank you for everyone that contributed! I have a much better picture now.

[hedgetrimmer]

34. and... What is that picture? How do you perceive it? The +'s & -'s?

[MurikanDemocrat]

35. More negatives than positves, to sum it up briefly

[Darranar]

26. Here's an article you may find interesting...

http://www.epinet.org/content.cfm/briefingpapers_nafta01_index

[DrFunkenstein]

32. Progressives: See Kerry On The Chapter 11 Provisions

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=108&topic_id=34553

I think you will be very, very impressed.

[corporatewhore]

37. Go ask a maquiladora worker in cuidad juarez a indigenous bolivian

or a laid off factory worker in the us