NAFTA Numbers Don't Add Up

Article excerpt

On November 17, 1993, the U.S. Congress passed the North American Free Trade Agreement, which became the law of the land in Canada, Mexico, and the United States on January 1, 1994. Despite the passage of over a year, there has been precious little discussion of the economic results of the "free trade" agreement. In fact, until the recent de valuation of the Mexican peso, proponents of NAFTA had claimed that the matter was settled and not worthy of further discussion or investigation. It was a fait accompli, they said; time to move on to other, more pressing social and political issues. The irony of this thinly disguised attempt to stifle public inquiry is that only now--one year after the passage of NAFTA--can its impact be tested in the field and reality substituted for rhetoric.

This being the case, how has NAFTA performed thus far? Not very well. Proponents of NAFTA promised that the free trade agreement would create 170,000 new jobs in the United States by 1995; even now the Department of Commerce claims that 100, 000 jobs have been generated. Yet the official numbers offered by Commerce actually reveal a loss of more than 20,000 American jobs during the first six months of the agreement. We will discuss this finding in more detail shortly--but first, a few words on the problem with "official numbers"

It should be obvious that studies and reports--however objective and empirical--which document the failures of NAFTA are not going to be welcomed by the powerful multinational corporations, conservative politicians, and orthodox economists who were responsible for the agreement in the first place and who are among the few who stand to benefit from it (though at the expense of others). We can rest assured that any post NAFTA increases in pollution, unemployment, or poverty will be ignored, denied, obscured, or attributed to causes other than the agreement. Strategies which NAFTA defenders are already using and will continue to use to protect the agreement include: altering the semantics of economics; lying with stasis tics; and, when all else fails, evoking the infamous "long run" solution.

As regards to semantics, here are some tricks to watch out for. When the integrated North American economy performs poorly but one of the three nations performs well, it is that country's success which makes the news. When all three nations suffer from increased un employment, increased poverty, or negative economic growth, external "shocks" will be blamed. These shocks include interest rate increases, currency devaluations, and rebellions--all of which are already happening in Mexico, Canada, and the United States.

The skillful manipulation of statistics is yet another tactic employed to disguise the negative impacts of NAFTA. Gross--not net--changes in trade, investment, in come, and employment are the figures that are officially recorded and made available to the public. Likewise, only export generated employment is counted, while import generated unemployment is ignored. All decreases in investment and employment are viewed as structural "down sizing" necessary for international competition and unrelated to NAFTA. Most of the displaced workers who subsequently leave the labor force and either become self employed, take part time jobs, or disappear into the "informal labor sector" are not included in the official unemployment statistics.

In the unlikely event that these tactics prove insufficient to justify NAFTA--or when poor economic results can no longer be obscured or explained away with "shocks"--the guardians of free trade will employ their ultimate rationalization: arguing from deep paradigm conviction, neoclassical economists and conservative politicians will claim that NAFTA's benefits will be realized in the "long run,' which, for them, is simply the period of time needed for the promised theoretical results to be realized--no more, no less, and certainly not today. In the New World Order being crafted by multinational corporations, free trade agreements cannot be held responsible for poor economic performance or any of the "shocks" experienced by the working citizens of the signatory nations. …