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Report on 25 Years of NAFTA’s Damaging Outcomes Underscores the High Stakes for Next Year’s Battle Royale Over NAFTA 2.0

Dec. 19, 2018

New Report on 25 Years of NAFTA’s Damaging Outcomes Underscores the High Stakes for Next Year’s Battle Royale Over NAFTA 2.0

On NAFTA’s Quarter-Century Mark, Data Reveal a Wide Gap Between 1993 Rosy Promises and 2019 Realities

WASHINGTON, D.C. – As the North American Free Trade Agreement (NAFTA) marks a quarter century in effect (Jan. 1, 2019) and the congressional battle over a renegotiated deal heats up, Public Citizen today released a user-friendly analysis that documents the chasm between the reality of NAFTA’s negative outcomes and the rosy promises made by its proponents. Those promises included major U.S. jobs gains, higher wages in Mexico and thus less U.S. migration, an improved U.S. trade balance with Canada and Mexico, and environmental improvements.

“NAFTA proved so damaging that its fallout ended decades of U.S. bipartisan congressional consensus in favor of trade agreements,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The NAFTA 2.0 text signed on Nov. 30 would not stop NAFTA’s ongoing job outsourcing, downward pressure on our wages and attacks on environmental safeguards, but there is a clear path to improving it so a final NAFTA package could win wide support next year.

“The status quo of NAFTA helping corporations outsource more U.S. jobs to Mexico every week after nearly one million have been government-certified as lost to NAFTA is not acceptable, nor are the ongoing Investor-State Dispute Settlement (ISDS) attacks against environmental and health safeguards or corporations’ exploitation of Mexican workers, who today face $1.50 per hour manufacturing wages that are lower in real terms than before NAFTA,” said Wallach. “Neither withdrawing from NAFTA nor maintaining NAFTA 1.0 will raise wages in Mexico, which is necessary to stop NAFTA offshoring that transforms middle-class jobs into sweatshop jobs.”

Key highlights of the data-packed analysis, which provides data tables, graphics and links to original sources, include:

  • Almost one million American jobs have been government-certified as lost to NAFTA, contrary to promises that one million American jobs would be gained in NAFTA’s first five years.
  • Real wages in Mexico have decreased since NAFTA, which generated growing incentives to outsource U.S. jobs. Mexican gross domestic product per capita has barely risen. Labor conditions in Mexico did not improve, nor have Mexican standards of living come closer to those in the U.S. as promised.
  • Instead of increasing U.S. wages as promised, NAFTA’s elimination of high-wage manufacturing jobs has put downward pressure on the wages of the two-thirds (66 percent) of American workers without college degrees. And wages in growing non-offshorable service sectors also have been held down as displaced manufacturing workers sought new employment.
  • Contrary to promises that NAFTA would not threaten consumer and environmental safeguards, U.S. truck safety and meat labeling policies were rolled back, hundreds of millions have been paid to corporations that have successfully attacked environmental and health laws, and imports of meat that do not meet U.S. safety rules soared while border inspection declined.
  • A large NAFTA trade deficit composed mainly of manufactured goods emerged, contrary to proponents’ promises that the U.S. trade balance with Canada and Mexico would improve.
  • Instead of environmental conditions improving in Mexico, they have deteriorated. And not one of the 91 enforcement actions brought under NAFTA’s environmental rules led to action.
  • The U.S. agricultural trade surplus before NAFTA became a deficit, as U.S. agricultural exports have lagged and agricultural imports have surged, with small farms hardest hit – contrary to promises that NAFTA would be a boon to U.S. farmers.
  • Mexico turned into an export platform for China and other Asian companies seeking duty-free access into the U.S. market, and the share of Chinese imports into Mexico grew, displacing U.S. market share, despite promises to the contrary.

• NAFTA destroyed Mexican livelihoods and displaced millions of people in rural Mexico, creating a powerful push factor for migration, contrary to claims that NAFTA would reduce unauthorized immigration from Mexico.

The new analysis is available here.