The Multinational Monitor

May 1997 · VOLUME 18 · NUMBER 5

T R A D E     W A T C H

NAFTA's Broken Promises

NAFTA WILL CREATE JOBS and have "a very positive effect on more than 2,000 [Mattel] U.S. employees."

That was Mattel Vice President Fermin Cuza testifying before the U.S. House of Representatives Ways and Means Subcommittee on Trade in 1993 about expected benefits of passage of the North American Free Trade Agreement.

"Little, if any, of our products are exported to Mexico."

That is what Mattel spokesperson Glenn Bozarth now says. And the U.S. Labor Department's NAFTA Trade Adjustment Assistance (TAA) program has certified that Mattel laid off 520 workers at its Fisher Price facility in Medina, New York due to "increased company imports from Mexico."

The Mattel example is not isolated. In 1993, a General Electric representative told the House of Representatives Foreign Affairs Committee that sales to Mexico "could support 10,000 jobs for General Electric and its suppliers. We fervently believe that these jobs depend on the success of this agreement." Today, a GE spokesperson is unable to cite a single job created due to trade with Mexico -- and the NAFTA TAA has certified that GE has laid off 2,318 workers due to NAFTA.

The story is the same with smaller companies. IBP Equipment, a maker of industrial equipment in Wabasha, Minnesota, reported in a 1993 National Association of Manufacturers publication that "with the implementation of NAFTA, IBP expects to double or triple its exports to Mexico, increasing employment by 25 percent." In 1997, company spokesperson Todd Smith says NAFTA "hasn't made a difference at all" in IBP's exports to Mexico. Smith says the firm actually sold more to Mexico prior to NAFTA. "I don't think we sold anything [to Mexico] last year," he says.

The Mattel, GE and IBPcases are typical. A study conducted by Multinational Monitor in conjunction with Public Citizen's Global Trade Watch found that U.S. corporations broke 89 percent of the specific job-creation and export-gain promises made during the business drive to win passage of NAFTA.

Surveying state-by-state reports of the pro-NAFTA coalition USA*NAFTA and the National Association of Manufacturers, the U.S. Department of Commerce's state-by-state reports and congressional testimony, the study identified 83 specific promises by individual companies to increase jobs or exports if NAFTA was approved. Of the 83, seven companies kept those promises; 60 corporations broke their promises; and 16 were unwilling or unable to provide current data.

U.S. corporations failed to keep 90 percent of their promises to increase jobs (46 of 51), and broke 87 percent of their promises to increase exports (14 of 16).

Allied Signal, General Electric, Johnson & Johnson, Scott Paper (since acquired by Kimberly-Clark), Lucent Technologies (a spin-off of AT&T), Mattel, Proctor and Gamble, Siemens, Whirlpool, Xerox and Zenith all made specific promises to create or maintain jobs prior to NAFTA's approval. In the years since, each has actually laid off workers because of NAFTA, as certified by NAFTA TAA.

Zenith was one of the five companies to keep promises to create new NAFTA-related jobs in the United States. While the company did create some new jobs at one plant, its relocations to Mexico of other plants under NAFTA resulted in Zenith having a net NAFTA job loss of more than 290 jobs. The other four companies showed only small net job creation.

Springs Industries, a textile manufacturer based in Fort Mill, South Carolina, was one of the two companies which kept its promise to increase exports to Mexico -- yet it has been certified as having laid off 200 workers at a California plant due to a "shift in production to Mexico."

Overall, the U.S. Department of Labor had certified more than 125,000 workers as having lost their jobs due to NAFTA as of May 1997. This figure vastly understates the number of U.S. jobs lost due to NAFTA because the Labor Department's TAA program is so narrow. For example, only workers involved in the production of an actual product -- such as assembling a car -- damaged by NAFTA trade can qualify. Workers producing auto parts used by that NAFTA TAA-certifiable assembly plant would not qualify. NAFTATAA is also more complicated and less well known than other trade unemployment assistance programs under which NAFTA-displaced workers may have filed.

The Washington, D.C.-based Economic Policy Institute has computed that NAFTA has eliminated more than 425,000 net jobs in its first three years.

Trade data betrays another of the major claims made by NAFTA backers. According to unpublished Census Bureau Data, only 11.7 percent of U.S. goods exported to Mexico in the first 11 months of 1996 were consumer goods. Most of the U.S. exports to Mexico involve machinery or components necessary for manufacturing or assembling goods that will be exported back to the United States.

Even more severe than the job loss in the United States may be NAFTA's effect on U.S. worker wages and job insecurity. In battling against union organizing campaigns, for example, employers regularly refer to NAFTA and threaten to move South if workers vote union; and the plant-closing rate in the wake of successful organizing drives has increased three times since NAFTA's passage [see "We'll Close!" Multinational Monitor, March 1997].

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