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    Public Citizen | Publications - NAFTA's Broken Promises: Failure to Create US Jobs




     

    NAFTA's Broken Promises: Failure to Create US Jobs

       
     

    Read the Full Text

    INTRODUCTION:
    In November of 1993, the National Association of Manufacturers (NAM) released NAFTA We Need It, a collection of anecdotes from more than 250 companies describing how they would create U.S. jobs and face improved business prospects if Congress passed the North American Free Trade Agreement (NAFTA).

    As NAM President Jerry Jasinowski proclaimed in the report's forward: "U.S. companies are publicly sharing information on their market prospects in Mexico -- information normally considered 'company proprietary' and jealously guarded from the competition...They are doing so to convince Congress to approve the pact. These anecdotes...clearly illustrate how important the Mexican and other foreign markets are to U.S. companies and U.S. jobs."

    Three years after NAFTA went into effect, Public Citizen's Global Trade Watch examined the specific promises contained in the NAM's report and other pro-NAFTA business and government reports and congressional testimony to determine whether NAFTA has actually created the U.S. jobs that its proponents promised. By tracking the performance outcomes of specific job creation and export expansion promises of businesses and industry organizations, this report documents a broad sample of NAFTAs real life results.

    As leading promoters of NAFTA, the firms surveyed for this report were the most likely to embody the promised benefits of NAFTA. This report reveals how the real life experiences of these pro-NAFTA companies three years into NAFTA now embody a very different story -- one which shows that NAFTA is not working. New U.S. jobs are not being created by NAFTA and NAFTA is causing major U.S. job loss.

    Despite NAFTA's three year record, many of NAFTA's original industry and political boosters are now urging an immediate expansion of NAFTA to additional countries in the Americas. Any prudent consideration of NAFTA's future must be based on the real life evidence of NAFTA's actual performance.

    With this study, Public Citizen demands: "Show Us the New NAFTA Jobs!" Recently, NAFTA's proponents have made weak attempts to use new statistical models to demonstrate NAFTA job creation. However, repeated inquiries to the Department of Commerce and our own studies have failed to uncover more than a few hundred actual new jobs attributable to NAFTA. These jobs stand in stark contrast to the NAFTA job loss reported by the NAFTA TAA program, which itself is a fraction of the actual NAFTA job loss. This study attempts to get past the phantom jobs NAFTA's defenders claim (using their economic models) and to look for the specific jobs created by NAFTA.

    In three years, NAFTA has already cost more than 600,000 U.S. jobs. The evidence of NAFTA's job losses is described in detail below. Among the total NAFTA job loss are over 109,000 specific jobs certified by the U.S. Department of Labor under one narrow NAFTA job loss assistance and retraining program called NAFTA Trade Adjustment Assistance (NAFTA TAA.)

    In order to examine NAFTA's impact on job creation, Public Citizen attempted to contact every company for which we were able to locate a specific NAFTA jobs or exports promise. We conducted an extensive investigation of the following sources to locate specific promises: the state-by-state NAFTA reports of USA*NAFTA and the National Association of Manufacturers (NAFTAs biggest industry promoters); the U.S. Department of Commerces state-by-state reports; and reams of congressional testimony on NAFTA over several years.

    From November 1996 to February 1997, we conducted interviews with representatives from the identified companies in conjunction with The Multinational Monitor, an international news magazine published by Essential Information, Inc.

    These interviews document that the vast majority of specific company promises to create U.S. jobs under NAFTA have not come close to fulfillment and are not heading in a direction to do so in the future. Interviewers found that company after company conceded that they are no where close to realizing their job creation assurances.

    Public Citizen's Global Trade Watch first issued a report on NAFTA job creation in September 1995, twenty months into NAFTA. The findings in the 1995 report, which used a similar methodology, were staggering: 59 of 66 company-specific promises made by NAFTA advocates had been broken -- the promises did not even come close to being fulfilled. That is, 89 percent of the companies contacted in 1995 had not made any significant steps towards fulfilling their promises of U.S. job creation or export expansion. Despite an arduous search, we were unable to find more than a handful of specific new U.S. jobs created that companies attributed to NAFTA. At that time, the Department of Labor had already certified over 60,000 workers for special assistance under NAFTA Trade Adjustment Assistance.

    Critics of our 1995 study charged that it was too soon to judge whether or not NAFTA was working. They also claimed that Mexico's December 1994 peso devaluation was responsible for the fact that companies were not performing as promised. "It's time to stop playing the 'blame NAFTA' game every time there is a shock felt in the international financial markets," said the late Commerce Secretary Ronald H. Brown. Of course, the United States had already begun a new monthly trade deficit with Mexico under NAFTA in the fall of 1994, four months before the December peso crash.

    Therefore, we decided to let time pass and revisit the NAFTA job situation three years into the Agreement. The results of our recent survey of U.S. companies' promises to increase U.S. jobs and exports because of NAFTA reveal that NAFTA job creation performance in 1997 is statistically almost identical to the unfortunate findings of our earlier survey in 1995. However, what has changed is the scope of NAFTA-related job loss. Since 1995, NAFTA job losses have increased dramatically


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