The Effects of The North American Agreement on Labor Cooperation
by Zachary Chin
The North American Agreement on Labor Cooperation, a supplement to the 1994 North American Free Trade Agreement (better known as NAFTA), has been the catalyst for many grievances surrounding labor and employment. The goal of the agreement was to allow for massive deregulation, such as tariff reduction or elimination, which, in turn, would increase trade among Canada, Mexico & the U.S. The new agreement has had only modest impact on the relationship between Canada and the U.S., but the effect on U.S. and Mexico has been immense.
by Zachary Chin
The North American Agreement on Labor Cooperation, a supplement to the 1994 North American Free Trade Agreement (better known as NAFTA), has been the catalyst for many grievances surrounding labor and employment. The goal of the agreement was to allow for massive deregulation, such as tariff reduction or elimination, which, in turn, would increase trade among Canada, Mexico & the U.S. The new agreement has had only modest impact on the relationship between Canada and the U.S., but the effect on U.S. and Mexico has been immense.
The explosive growth of low wage factories in Mexico, as a result of the new opportunities for American businesses to outsource, has dramatically reduced the number of American jobs, as well as impairing the health and well-being of many employed Mexicans in the “maquiladoras” (factories that manufacture a foreign client’s goods) that do not adequately protect their workforce. Deregulation has been bitterly criticized by Americans who have lost their jobs or have had their wages suppressed, as well as those who have witnessed or felt the harm to Mexican laborers and the damage to the environment in Mexico.
Between 1994 and 2002, the Economic Policy Institute reported that NAFTA had resulted in a net loss of 879,000 jobs in the United States, 80% of which were in manufacturing. Those companies who did not move to Mexico used outsourcing as a threat to gain leverage over workers and labor unions. Because the American workers wanted to keep their jobs, the owners of these companies were able to hold down wages.
South of the border, thousands of manufacturing plants have been operating to serve American companies and have delivered dramatic increases in the profit margins. There are those who believe that, while the laborers in the United States were harmed by the Labor Agreement, the unprecedented outsourcing of American businesses has helped employment along the border. Yet, the competition for work among Mexican laborers at these maquiladoras has kept wages very low – about $2.30 per hour in U.S.-equivalence according to Ellwyn Stoddard, a professor at University of Texas El Paso and an expert on Mexican borderlands culture.
The labor conditions of these maquiladoras pose another deep concern. Without adequate health and safety regulations, such as those provided by OSHA in the U.S., the American Medical Association labels these Mexican factories "a virtual cesspool and breeding ground for infectious disease.” The workers in the maquiladoras have been subject to numerous respiratory diseases due to the air pollution in the factories. While Mexico’s Gross Domestic Product has grown healthily as a result of NAFTA, the welfare and long-term livelihood of the Mexican laborers are still much in doubt.
In the end, does NAFTA’s labor supplement boil down to the U.S. trading away jobs for healthier corporate sales and profits? Does the global competitiveness of American firms always require such a horrifying Faustian bargain, where Americans face unemployment, while their jobs, along with labor and environmental abuse, are shipped to our neighbor? The United States must consider a more holistic concept of trade, beyond the exchange of goods and services, beyond global competition and trade surpluses and deficits. Jobs are, in and of themselves, precious assets too, not just the revenue or earnings growth they produce for corporate America. Moreover, turning a blind eye to labor and environmental neglect in Mexico will have downstream consequences to both trading partners.
