International

The United States, Mexico and Canada have twenty years’ experience of a free trade agreement like the one which the European Union now wants to conclude with the US. The North American Free Trade Agreement (NAFTA) has had primarily negative consequences, despite all of the fine promises made during negotiations. US citizens would like to see it got rid of as quickly as possible. Once bitten, twice shy, but Obama can’t be stopped. He wants to see NAFTA-style accords not only with Europe, but also with Japan, Australia and others. For whom, actually?

The fourth round of talks was held last week on the so-called Transatlantic Trade and Investment Partnership (TTIP), the trade and investment agreement between the EU and the US. It will, according to European Commissioner for trade Karel de Gucht, who conducted the negotiations, lead to a great deal of growth, and create jobs. We’re going to get rich from it! This sort of talk always annoys me, sounding as it does like sales prattle, most of which is false.

So it’s good to take a look at how a comparable agreement between the US, Canada and Mexico has worked. There too what was said was that the US would get a boost, growth would increase, as would employment. Twenty years on things look very different. US imports have increased as a result of American firms moving south to Mexico where wages are much lower. American grain exports to Mexico are indeed thriving, but with the result that a million Mexican farmers have been deprived of work. Their small operations can’t cope with the competition. Some of these farmers go to work for starvation wages in US-owned and other farms in northern Mexico. Others go to the US, entering illegally. Downward pressure on wages and working conditions is huge, not only in Mexico but north of the border, where manufacturing industry has dwindled and service sector companies have taken its place. Full time jobs in factories have been replaced by ‘flexible’ contracts in service industries, once again bringing lower wages. The wages of the 65% of American workers with a low level of education have fallen in twenty years by more than 12%.

In that case, has no-one profited from NAFTA? Yes indeed. For the multinationals it has become easier to lodge legal claims in connection with legislation which ‘interferes with investment.’ The total value of such cases has amounted to US$340 million. Legislation relating to food safety and the environment has been undermined or bypassed. Along with lower labour costs, these corporations have gained a great deal of advantage from NAFTA.

The American population has had it with NAFTA: only 15% want it to continue. Ordinary people have been driven into unemployment or had to take work that pays lower than the job they had before. Looked at in this way, it’s incomprehensible that the US federal government is simply going through with negotiations on similar agreements with other countries. Or could it be perhaps that the US is attempting by means of this treaty with the EU to undo some of the damage done by NAFTA? Wages are on average lower in America than they are in Europe, and that creates space for European forms to move to the States. EU exports to the US would in that case not increase, but on the contrary, they’d decline. Unemployment in Europe would grow still greater and employers demand for ‘flexible’ work contracts along with it, with the result that in Europe less and less truly rewarding work would remain.

Anyone hesitating over the TTIP should study NAFTA’s effects. This will make it clear why social organisations and small firms are no supporters of this treaty. There’s only one group which has indeed benefited and that’s the big, international corporations behind the lobby for a quick, positive conclusion of the negotiations between the EU and the US. In the SP’s view, an end should be put to these negotiations as quickly as possible. The least that can be said is that the treaty would represent a leap in the dark which can only turn out badly, especially for ordinary people.