No More Trickle-Down Trade Deals

Leo W. Gerard

Leo W. Gerard USW President Emeriti

Free trade be damned.

People don’t need any more free trade. They need jobs. And not just any jobs. They need good jobs with living wages and decent benefits.

That’s what negotiators from the United States, Canada and Mexico must prioritize as they begin talks this week to rewrite the reviled and failed North American Free Trade Agreement (NAFTA). Negotiators must focus on improving the lives of people, not boosting the profits of corporations.

NAFTA betrayed the citizens of the United States, Canada and Mexico because it was based on the same servility to the rich that trickle-down economics was. Under trickle-down, the wealthy and corporations got the biggest, fattest tax cuts. Everyone else supposedly was to benefit somehow someday.  A microscopic pinch of the immense monetary gift granted to the high and mighty was supposed to magically appear in everyone else’s pockets. It never did. 

And that’s the problem with NAFTA. Its negotiators placed corporations on a pedestal, awarding them rights and privileges that no human, no labor organization, no environmental group got. Again, the wrong-headed idea was that if corporations made big bucks, some of the benefits would trickle down to workers. That never happened.

NAFTA was great for corporations. It provided incentives for them to move to the lowest-wage, lowest-environmental regulation location – that being Mexico. Profits, dividends and CEO pay all rose as corporations like United Technologies uprooted profitable American factories – like its Carrier plant in Indiana – and moved them to Mexico. There, dirt-poor wages and lack of environmental regulation provide even higher profits, dividends and CEO pay.

Workers in none of the three NAFTA signatory countries saw any benefits. Wages in the United States and Canada stagnated.  In Mexico, wages are actually lower than before NAFTA. The poverty rate in Mexico is almost exactly the same as it was in the mid-1990s, before NAFTA took effect.

NAFTA ensured there was no wall between the United States and Mexico for corporations to scale. Humans get stopped at the border, but not corporations. United Technologies faced no barriers this year when shipped manufacturing from Indiana to Mexico. It was the same for Rexnord, which closed its ball bearing plant in Indianapolis this year and sent it across the border to Mexico, no problem.

As the United States’ trade deficit with both Canada and Mexico skyrocketed in the 20 years after NAFTA took effect in 1994, the United States lost 881,700 jobs. That figure is three years old, so it does not include United Technologies and Rexnord moving 1,600 Indiana jobs to Mexico. Since NAFTA, more than 60,000 factories closed in the United States.

Clearly part of the lure is wages. While a manufacturer may pay $20 an hour in the United States, it’ll only pay $20 a day in Mexico, where the average manufacturing wage is $2.49 an  hour. Labor organizations there are almost always completely controlled by corporate employers, rather than by the workers. So securing raises is nearly impossible.

And while many formerly American manufacturers moved just across the border to special industrial areas, overall job growth in Mexico was not significant. That is because subsidized corn exported from the United States bankrupted huge numbers of small Mexican farmers and many corporations have moved their factories again, this time from Mexico to even lower-wage China and other south Asian countries.

That’s just great for rich investors and fat cat CEOs. It’s been horrible for workers in Mexico, Canada and the United States. What has trickled down has been toxic – lost jobs, stagnant wages and worry.

The difference in the way NAFTA treats corporations and workers is stark. Corporations get special perks in the main NAFTA document. The rights of workers are dealt with in an addendum. They’re an afterthought.  

NAFTA gives corporations an extraordinary privilege. They can sue governments for what they contend are “lost profits” if they don’t like regulations or legislation. They don’t have to present their cases to real judges in open court, either. They get to go before a tribunal of corporate lawyers whose decision cannot be appealed by the governments ordered to pay unlimited billions of tax dollars to the corporations. Corporations can force governments to pay if lawmakers protect citizens by, for example, banning a neurotoxin or limiting sale of dangerous products.

There’s no counterpart for workers. NAFTA provides no way for the Carrier workers laid off in Indianapolis by United Technologies to sue. The workers can’t ask three hand-picked worker-jurists in a secret court for income lost because the corporation moved to Mexico to make even bigger profits on the backs of underpaid workers there. There’s no way for Mexican workers to sue when a corporation endangers worker health with pollution or when a company-controlled labor organization pushes down wages.

In fact, NAFTA’s labor addendum bows to corporations before even mentioning workers. The addendum’s preamble says the NAFTA signatories resolved to expand markets for goods and services and to enhance corporate competitiveness globally. Then, after that, the preamble says a goal is to create new jobs, improve working conditions and living standards, and protect “basic” workers’ rights.  

Leo W. Gerard also is a member of the AFL-CIO Executive Committee and chairs the labor federation’s Public Policy Committee. President Barack Obama appointed him to the President’s Advisory Committee on Trade Policy and Negotiation and the President's Advanced Manufacturing Partnership Steering Committee 2.0. He serves as co-chairman of the BlueGreen Alliance and on the boards of Campaign for America’s Future and the Economic Policy Institute.  He is a member of the executive committee for IndustriALL Global Labor federation and was instrumental in creating Workers Uniting, the first global union. Follow @USWBlogger

Posted In: From the USW International President

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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