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Libertarian Labor Review #13
Summer 1992, pages 18-19
North American Free Trade?
As the U.S.-Canada-Mexico Free Trade Agreement talks continue
on the fast-track, the labor movement--and in particular its left
wing--is mobilizing its efforts in a last-ditch effort to block an
agreement they say will devastate the U.S. and Canadian economies.
The Canadian Labor Congress estimates that 260,000 jobs have
already been lost as a result of the U.S.-Canada Free Trade
Agreement (though they clearly didn't find their way down to the
States, as is evidenced by the continuing recession), and the AFL-
CIO expects that two and a half million jobs would go to Mexico if
the Free Trade Agreement goes through.
The government has been relatively open about the rationale
for a Free Trade Agreement: "By lowering overall costs of U.S.
manufacturing firms, a free trade agreement would make U.S. firms
more competitive..." (1991 Economic Report of the President) This
competitiveness might be realized by moving production to Mexico or
by driving U.S. wages closer to Mexican levels. Either approach
makes U.S. firms "more competitive" entirely at the expense of
their workers.
Mexican workers are clearly cheaper than their North American
counterparts, and getting cheaper all the time. High inflation and
a rapidly devaluing Peso have resulted in average Mexican labor
costs (wages and benefits) dropping from $3.71 in 1981 to $1.57 in
1987, and the Mexican economy is in free-fall. The Mexican
government tightly controls the major labor federation, and
forcefully intervenes against militant unions and unionists.
The result has been a cheap, relatively disciplined (though
not always docile) workforce conveniently located to manufacture
products for North American markets. Many firms have moved their
manufacturing operations to Mexico, in particular to low-wage
"maquiladora" districts near the U.S. border. U.S.-based companies
have long had extensive investments in Mexico, dominating its auto,
rubber, mining and chemical industries even before the maquiladora
program began in 1965. The maquiladoras manufacture products almost
entirely for U.S. and other foreign markets, and are largely
exempted from U.S. import duties. Last year, about 500,000 workers
were employed in 2007 maquiladoras, almost all of them owned by
U.S. companies.
U.S.-based companies have proven eager to expand operations in
Mexico (just as in other low-wage economies). Two years ago, Levi-
Strauss shut down a San Antonio plant, throwing more than 1,000
workers out of their jobs. Last year, Pillsbury-Green Giant laid
off nearly 400 workers from its frozen food plant in Watsonville,
California, to shift their unionized jobs to a non-union plant in
Mexico which pays workers only $4 per day. Louisiana-Pacific has
closed a California plant and built a state-of-the-art sawmill in
Suarez, where it has already successfully broken the longshore
union by shutting down production for several days and threatening
to close the plant altogether. And Procter-Silex (a manufacturer of
irons, coffee makers, and similar items) recently closed two
profitable North Carolina plants to shift production to Juarez.
Already, corporations are blackmailing workers and governments
in towns, states and entire countries--using their mobility (made
possible by improved communication and transportation networks, and
by the increasingly global economy) to pit us against our fellow
workers around the world. Each concession we make to save our jobs
is then used as leverage to force concessions somewhere else, and
the cycle soon returns to slash our wages and/or working conditions
again. The record clearly demonstrates that companies do not use
their savings from concessions or tax breaks to modernize, they
take the money and run. As a result, what happens to our $1-a-day
Vietnamese fellow workers affects us as directly as what happens to
our fellow workers in Alabama.
(Environmentalists, too, oppose the Free Trade Agreement,
arguing that it will result in environmental safeguards being
abandoned as impediments to "competitiveness" or as illegal
restraints on trade. However, the U.S. has long attacked
environmental standards on such grounds, as in the recent decision
to resume clear-cutting in public forests in Oregon even though
this will likely result in the extinction of the spotted owl.)
As we noted in LLR 2 ("What's To Protect?"), however,
maintaining existing trade barriers or building new ones is not an
effective response. The American economy died long ago, and had
been replaced by a global economy in which most products long ago
ceased to have any meaningful country of origin. The 1992 Ford
Crown Victoria, for example, is assembled in Canada using parts
from Britain, Germany, Japan, Mexico, Spain and the U.S., while
Toyota Corollas are assembled by a jointly owned GM-Toyota plant in
California. Harvard economist Robert Reich notes that "almost any
product weighing more than 10 pounds and costing more than $10 is
a global composite, combining parts or services from many different
nations."
As long as our present economic system continues, the bosses
will shift manufacturing--and, increasingly, even service
industries--around the world to wherever they make the most money.
Governments that obstruct this process will quickly be brought to
heel through the enormous economic pressures transnational capital
can bring to bear.
We can't hope to gain anything by supporting "our" bosses
against the other guys, whether across the border or across the
sea. Free trade or no free trade, the bosses will always go where
the money's best, where unions are weak, where they can maim
workers and pollute the environment to their heart's content. They
won't be stopped by legislation (the Free Trade Agreement isn't
even drafted yet, but employers have been setting up shop in Mexico
for decades) or by patriotic sentiment.
But that doesn't mean that they can't be stopped. The flow of
low-paid jobs to South Korea is slowing and employers are fleeing
their increasingly militant Korean workers in search of new low-
wage production sites. Rather than trying to make common cause
with our exploiters against our fellow workers abroad, we would do
far better to assist our fellow workers in their struggles to build
militant, independent unions and to win better working and living
conditions. As long as workers anywhere are repressed and poverty-
stricken, the bosses will find a way to exploit their misery--and
to spread that misery, as best they can, to the rest of us. But if
we are organized internationally to fight for our own interests, we
can put the bosses on the run.