September 19, 2018
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Tweaking NAFTA won’t cut it. It needs a major rewrite.

Kaylie Reese | BDN
Kaylie Reese | BDN
By Cynthia Phinney, Special to the BDN
Updated:

Many Americans are rightly anxious about the outsourcing of jobs from their communities and the widening gap between their earnings and expenses.

Two issues at the top of the national agenda could make the situation considerably worse.

Congress just passed tax legislation that failed to eliminate a tax break that lets companies deduct the expenses of relocating to another country.

The administration’s renegotiation of the North American Free Trade Agreement must eliminate its incentives to outsource U.S. jobs and level the playing field by adding strong labor and environmental provisions with swift and certain enforcement to raise wages for all workers. Otherwise, companies will continue to move U.S. jobs to Mexico to pay workers poverty wages and dump toxins while importing those products back for sale here.

NAFTA was negotiated behind closed doors with 500 corporate advisers calling the shots, and the public and Congress shut out. At its heart are special “investor-state” corporate protections that make it less risky to outsource jobs and that empower firms to attack domestic policies.

[Opinion: Canada’s NAFTA negotiators may find an unusual ally in LePage]

Washington, D.C., is swarming with lobbyists who want to preserve these corporate protections and use NAFTA renegotiations to add new limits on food safety and labeling and new monopoly rights for pharmaceutical firms that would raise medicine prices.

The stakes are high for working families in Maine.

Maine has lost more than 32,000 of its manufacturing jobs — more than a third since NAFTA and other similar trade deals went into effect. Twenty-five thousand of them have been specifically certified as lost to international trade competition. Overall, more than 930,000 American jobs already have been certified by the U.S. government as lost due to NAFTA. Every week NAFTA helps corporations outsource more good-paying jobs to Canada and Mexico, including recently at General Electric, Carrier and Nabisco.

The effect of this manufacturing job loss hits us all in the form of lower wages across the economy.

According to the U.S. Department of Labor, manufacturing workers who lose jobs to trade and find re-employment are typically forced to take pay cuts. Two of every five rehired in 2016 were paid less in their new jobs.

Workers in the United States are not the only ones getting a pay cut from NAFTA. According to the Organization of Economic Cooperation and Development, average annual wages in Mexico declined in real terms from 1993 to 2016, and its average manufacturing hourly wage is now lower than China’s.

This is opposite of what NAFTA boosters promised 23 years ago, when the deal was debated by Congress. They promised that NAFTA would improve the U.S. trade balance with Mexico and Canada and create 200,000 jobs a year for five years. Instead, we’ve lost almost 1 million jobs as a small surplus with Mexico and small deficit with Canada became a massive $176 billion NAFTA goods trade deficit in 2016.

Meanwhile, corporations have collected more than $392 million in taxpayer money from NAFTA nations using the “investor-state” provisions.

[Opinion: Our opportunity to bring NAFTA into the 21st century is slipping away]

As a candidate, Donald Trump pledged that he would make NAFTA “a lot better” for working people. To accomplish that, NAFTA needs a major rewrite.

To start with, the American people must be able to see what’s being negotiated in their names. Yet, so far, the negotiations are happening under the same secretive, corporate-influenced process that hatched the original NAFTA.

This secrecy will make it difficult to get the right changes.

That includes eliminating NAFTA’s investor outsourcing protections and NAFTA’s limits on “buy American” policies.

Tough and strongly enforced labor, wage and environmental standards must be added, and the loopholes that allow goods with significant Chinese value to get NAFTA’s benefits need to be closed.

A good NAFTA replacement must ensure imported food, goods and services meet U.S. consumer and environmental standards and eliminate NAFTA’s existing terms that drive up the price of lifesaving medicines by giving pharmaceutical companies extended monopolies.

With this new approach to trade agreements, we can harness the benefits of expanded trade while halting job outsourcing, lowering of wages, and attacks on environmental and health safeguards.

Maine can clearly benefit from trade with NAFTA countries. But a tweak to NAFTA won’t cut it. We want a NAFTA replacement we can support, one that raises wages and creates good jobs for people in Maine and across the nation.

Cynthia Phinney is the president of Maine Fair Trade Campaign.

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