Documents menu

Globalization of trade: Reflections on NAFTA & GATT

By Anibel Comelo, AIWA News, 27 February 1995.

Congressional approval of the General Agreement on Trade and Tariffs (GATT) in December 1994 means a widespread impact on the local economy, such as the garment and electronics industries located in the Bay Area. The most recent international GATT negotiations were launched in Punta del Este, Uruguay in 1986 and led to the national deliberations and subsequent U.S. signing last month. The explicit aims of GATT are to remove barriers to trade and investment between countries and open up markets favorable to particular national exports. But what do these international trade agreements mean to the garment and electronics workers in the U.S., specifically in Northern California? In order to grasp the probable effects of GATT and NAFTA, it is useful to examine the claims of those in favor of free trade and the effects to date under the year-old NAFTA.

Eyes on the dangling carrot

Both NAFTA and GATT are designed to lower production costs, increase productivity and create new job opportunities. Proponents of free trade predict a rise in the American standard of living as a result of a reduction in tariffs and big tax cuts on U.S. imports. According to a full page newspaper advertisement run by the American International Group, Inc., "the U.S. Department of Treasury estimates that the lower tariffs will increase U.S. exports by $150 billion, create 500,000 new jobs, and increase all our incomes," if GATT is passed. Similar claims were made to the general public during the negotiations over NAFTA a little over a year ago. However, these claims have proven to be thoroughly deceitful.

Carrying the burden

According to a recent study by the Institute for Policy Studies, which documents the effects of NAFTA after its first year in operation, the promise that NAFTA would create 100,000 jobs is found to be entirely unsubstantiated. On the contrary, evidence gathered for the study links NAFTA policies to the loss of at least 12,000 U.S. jobs and the creation of only 535 new jobs. As GATT forces the California garment and electronics industries to face stiffer competition by phasing out import limits, the corporate elite will look for ways to reduce their production costs and finding cheap labor is often the message they use. Since products can be assembled in countries such as China, India or the Philippines at a fraction of U.S. wages, the transfer of technology, plants, equipment and overall manufacturing across borders or even continents will continue at a faster pace. These very products will then be shipped back duty-free into the U.S. markets to be sold at slightly lower rates to U.S. consumers who are generally unaware of the unjust conditions under which these products were manufactured, either abroad or right here in the U.S. While middle-class U.S. consumers will probably benefit given greater choice and price range for "luxury" items, the ones made most vulnerable are the skilled and semi-skilled workers across borders in industries susceptible to foreign competition. The power of GATT and NAFTA to abolish labor rights is of paramount concern. Job loss due to the easy, low-cost transfer of production across borders is a constant threat to workers already paid paltry wages. Consolidation of power into the hands of the corporate elite is a direct corollary of such an imminent threat and has a chilling effect on organizing among workers. U.S. workers will be forced to compete with their Asian and Latin American counterparts who work for between 2 and 20 percent of the wages paid here in the U.S. As jobs leave and foreign-made goods pour in, the standard of living of U.S. skilled and semi-skilled workers will continue to decline. Their negotiating power will diminish leaving them with no other choice than to accept labor conditions set by those who control their jobs. The reality of "run-away" shops, or the flight from corporate social and environmental responsibility, is gradually sinking into the labor psyche. For example, in October 1994, U.S. Labor Secretary, Robert Reich refused to pursue complaints that Mexico had failed to enforce union organizing rights at two plants owned by U.S. corporations - Honeywell, Inc. and General Electric, Co. The Mexican government had apparently turned a blind eye toward grievances filed against these corporations which had dismissed dozens of workers and used other illegal tactics to foil efforts of organizers.

Conclusion

The most serious question facing northern Californian semi-skilled workers is that of job security, low wages and exploitative labor practices. It is important to note that issues raised here deal with only a fraction of the possible impact of GATT and NAFTA on the lives of low-income workers in the two industries and consequently, on the Bay Area in general. Extreme caution needs to be exercised in projections of success, whether economic or social. The fundamental questions one needs to pose to assess the value of free trade to the local community are: by whom are these international trade agreements supported? For whose benefit? At whose expense? And at what costs? The answers to these questions will be indicative of the need to take back control of the right to basic livelihood.