From: dale@dale.CAM.ORG (Dale Wharton)
Newsgroups: soc.culture.african.american
Subject: NAFTA analysis--labor
Date: 22 Dec 92 02:14:21 GMT
Organization: private


         NAFTA analysis--labor
Date:    15 Dec 92 14:51 PST
Source:  Kai Mander <kmander@igc.apc.org>
         Institute for Agriculture and Trade Policy

U.S. CITIZENS' ANALYSIS OF THE NORTH AMERICAN FREE TRADE AGREEMENT

L A B O R

Author:             Affiliation (addresses at end of text):

Thea Lee (contact)  Economic Policy Institute
Mark Anderson       AFL-CIO
Lance Compa         National Lawyers Guild Free Trade Task Force
Mehrene Larudee     University of Massachusetts-Amherst
John Howley         Service Employees International Union
Dave Ranney         University of Illinois-Chicago

CRITIQUE

1.      POTENTIAL JOB LOSS

        NAFTA dramatically alters the incentives and rules facing
investors, enhancing corporate mobility within the North American
continent.  For this reason, it would significantly increase the shift
of productive investment from the United States to Mexico if ratified
in its current form.  Furthermore, NAFTA would encourage new
investment to go to Mexico, rather than to the United States. The
Conference Board, a New York-based business-oriented research firm,
found that Mexico accounted for "nearly all of the net growth in
business spending throughout North America in 1992," and that
growth in business spending in Mexico will be three times faster
than that in the United States from 1993 to 1995.(1)
        Studies show that up to half a million high-wage U.S. jobs
could be lost over the next ten years if such investment shifts
occur.(2)  General Motors alone has already announced 75,000 layoffs
from its U.S. facilities, while it expands production in Mexico.  A
higher unemployment level will intensify pressure on already
overburdened local, state, and federal government budgets as it
increases demands for unemployment compensation, welfare, and
social services.
        While Mexico will likely gain some manufacturing jobs due to
such a shift, it will also experience significant labor-market
disruption due to large-scale displacement of small basic grain
farmers and agricultural workers.(3)  In addition, over one hundred
thousand Mexican workers have already been displaced due to the
restructuring of newly privatized industries.(4)  Though it is not
fully clear how these opposing effects will balance out, it is clear
that many existing studies fail to take into account the channels
through which NAFTA will have negative effects on employment.
        Most mainstream economic studies of NAFTA are not capable of
predicting its impact on overall employment because they assume
(rather than concluding on the basis of research) that all those who
are able and willing to work will find jobs, and they therefore
assume there will be no change in overall employment.  (This fact is
often obscured, since the models do predict shifts in employment
from one sector to another, while overall employment levels remain
unchanged.)  Studies that predict that U.S. employment will rise as a
result of huge increases in U.S. exports to Mexico are equally
deceptive. These studies take no account of increasing imports; to the
extent that imports increase, they will cancel out the employment-
creating effects of increases in exports.

2.      IMPACT ON WAGES

        Liberalizing trade and facilitating the shift of investment
between the United States, Canada, and Mexico as NAFTA proposes
will put downward pressure on U.S. and Canadian wages without
necessarily pulling Mexican wages up.  The threat of runaway shops
--even when it is not carried out--contributes to keeping an
increasing percentage of full-time wage earners below the poverty
line.  Employers have used the threat of moving to Mexico, for
example, to scare workers out of voting for unionization.(5)
Professor Edward Leamer of the University of California Los Angeles
has predicted that NAFTA will further polarize the U.S. income
distribution, reducing the wages of "low-skilled" workers by about
$1000 a year.(6)
        During the last ten years, as trade between Mexico and the
United States has accelerated and investment by U.S. corporations in
Mexico has increased, real wages in Mexico have fallen by about 40
percent.  During this same period, productivity in Mexican
manufacturing production has increased dramatically.  This suggests
that growth, investment, and productivity improvements are not
sufficient to raise wages if other conditions are not conducive to a
free and independent labor movement.
        Since 1979, the real median wage for all U.S. workers has
fallen by 7.3 percent. For those workers without a high school degree,
the decline was almost three times as great--20.5 percent.(7)  This
suggests that workers at the bottom of the wage distribution have
borne the brunt of the "globalization" of the U.S. economy, but that
all workers have felt its impact. Recent immigrants, women, and people
of color are disproportionally concentrated in some of the labor-
intensive industries that may be most vulnerable to wage erosion
and job loss due to NAFTA.
        If ratified in its current form, NAFTA could cost U.S. workers
up to $320 billion over the next decade in lost jobs and lower
wages.(8)

3.      EROSION OF LABOR STANDARDS

        Any trade agreement among the nations of North America
should integrate basic labor rights and protections to prevent "social
dumping"--violating worker rights to gain an advantage in the
international marketplace. Several U.S. trade statutes already set
forth such standards as a condition in various beneficial trade
programs, including the Generalized System of Preferences (GSP), the
Overseas Private Investment Corporation (OPIC), the Caribbean Basin
Initiative, and Section 301 of the Trade Act.  The basic worker rights
specified in those statutes are:

        --      the right of association
        --      the right to organize and bargain collectively
        --      prohibitions on forced labor
        --      restrictions on the use of child labor
        --      minimum acceptable conditions regarding minimum wages,
                hours of work, and workplace health and safety.

        A NAFTA that does not contain an equivalent formulation of
basic worker rights in trade would actually be a giant step backward
for worker rights.  NAFTA would displace other trade statutes, so
worker rights now protected under U.S. law would be left unguarded
under NAFTA, at least as far as Mexico and Canada are concerned.  A
later "Enterprise for the Americas" trade pact modeled on NAFTA would
exempt all of Latin American and the Caribbean from labor rights
conditions in trade with the U.S.
        In addition to their incorporation in U.S. law, these
standards reflect human rights declarations of the United Nations, the
Organization of American States and other international bodies.  They
are also contained in conventions of the International Labor
Organization either ratified by the U.S., Mexico, and Canada, or
protected under the domestic legislation of each country. Thus, there
is sufficient consensus on this minimum set of worker rights to insist
that they be included in NAFTA.
        One other standard missing from labor rights clauses in U.S.
trade statutes should be added to a NAFTA labor rights provision: non-
discrimination in the workplace.  This is critical in light of the
race, gender, and national origin-based division of labor in the
transnational economy of the North American continent.  While an
antidiscrimination clause is lacking in the labor rights provisions of
U.S. trade privilege programs, it is a cornerstone of domestic
employment law.  Congress went as far last year as to extend the
Equal Employment Opportunity Act to protect citizens working for
U.S. corporations in foreign countries.  An antidiscrimination clause
also reflects human rights instruments and ILO Conventions and
Recommendations.
        In addition to its Conventions and their careful definitions
of these labor standards, the International Labor Organization has
developed an extensive body of case law in many of these areas.  Each
signatory to NAFTA also has its own national experience under
constitutional, statutory, and judicial enforcement of worker rights.
All together, a consensus is already in place to establish at least
this minimum, six-point labor rights standard covering:

   1) free association
   2) organizing and bargaining
   3) forced labor
   4) child labor
   5) acceptable conditions
   6) nondiscrimination.

4.      SAFEGUARDS

        NAFTA effectively weakens existing U.S. law (Section 201 of
the Trade Act, which is compatible with GATT rules) to protect
domestic workers and industries from injurious import surges.
Currently, workers and trade unions have the right to file escape-
clause petitions when they believe imports have caused substantial
injury to the domestic industry. These petitions allow the injured
country to restrict trade temporarily.
        While NAFTA ostensibly allows for safeguard petitions in the
event that imports surge into a country after the signing of the
agreement, it severely limits the circumstances under which such cases
could be brought. For example, safeguard actions can be brought only
once during the transition period (while tariffs are being phased
out).  After the transition period is over (from five to fifteen
years, depending on the product), actions may be brought only with the
consent of the other party.  As the Labor Advisory Committee pointed
out in its report to Congress, this means that, "as a practical
matter, even the theoretical safeguard protection will end at the
conclusion of the transition period."(9)

5.      IMMIGRATION AND TEMPORARY ENTRY

        NAFTA proponents have argued that NAFTA will stem the
migration of Mexicans to the United States by creating jobs. In
reality, NAFTA, in conjunction with President Salinas's other
economic reforms, will slash agricultural subsidies and speed
industrialization along the border. The resulting large-scale
dislocation will likely mean greater migration to the United States
from Mexico--at least in the short term.
        Immigration rights for most groups of Mexican, U.S., and
Canadian citizens are left unchanged by NAFTA.  Maria Jimenez,
director of the American Friends Service Committee's Immigration Law
Enforcement Monitoring Project, writes that, "A free trade pact that
does not expand to include a flexible immigration framework, such as
that adopted by the European Economic Community, effectively freezes
wages within national boundaries and guarantees continuing large
wage differentials between the two countries."(10)  By continuing to
restrict labor mobility while increasing corporate mobility, NAFTA
will maintain "the availability of an undocumented labor force that is
highly exploitable and [will] insur[e] that runaway shops in Mexico
continue to diminish the integrity of the work forces in the United
States and Canada," Ms. Jimenez argues.
        The only labor mobility addressed in NAFTA is in the
temporary-entry provisions, which significantly alter the conditions
under which professionals and businesspeople can enter and do
business in the other North American countries. This provision
undermines U.S. immigration law without enhancing the rights of these
nonimmigrant workers.  Current U.S. law does not permit employers to
hire temporary entrants without showing that they are unable to
recruit resident workers.(11)  NAFTA specifically precludes this type
of labor certification.
        NAFTA's temporary-entry provisions create a disenfranchised
group of workers, whose right to remain in the country depends on
the whim of a single employer.(12)  NAFTA will significantly expand
this class of entrants, as the Canada-U.S. FTA did in 1989.  The
"business-people" and "professionals" covered by NAFTA include
nurses, medical technicians, tour bus operators, and truck drivers, as
well as many other categories such as architects, engineers, doctors,
and lawyers.
        These workers will be eligible for temporary entry, so long as
the individuals can show that they have been offered a job in the
country of their destination. Their permission to remain in the
country depends entirely on that employer; they may not seek
another job if they lose the original job.  Temporary entrants under
NAFTA will not be subject to labor certification requirements or
quotas applicable to other nonimmigrant workers. Their status may
be renewed indefinitely, unlike the H visas currently available.
        NAFTA should not provide for expanded temporary entry of
professionals or other "guestworker" programs disguised as free
trade in services.  At the same time, the rights of temporary entrants
working in the United States must be better protected.
        Border entry and immigration policies must be administered in
an orderly, consistent, and humane fashion.  The legitimate need of
every country to regulate its borders can never justify the violation
of human rights or the exclusion of persons seeking refuge.

ALTERNATIVES

        Our goal is to enact a trade and development agreement that
truly benefits the majority of people in all three nations.
The present NAFTA, on the contrary, facilitates the ability of major
corporations to move their operations around the continent while
forcing working people to bear the costs of those moves. Our proposed
alternatives facilitate trade that does not depend on driving down
wages, working conditions, and health, safety, and environmental
standards in order to gain a short-lived competitive advantage.

1.      LABOR RIGHTS

        Mechanisms to enforce labor rights and standards in a
renegotiated trade agreement can also be crafted to address the
specific concerns of workers.  Negotiators created a detailed, tough
enforcement structure for intellectual property rights. Nothing less
should be accepted for the protection of worker rights.
        Elements of an enforcement regime specific to worker rights in
the North American Free Trade Agreement should include the following
features:

Standing

        Any worker or group of workers engaged in commerce among the
three countries of North America, or any trade union representing
such workers, or any nongovernmental organization whose charter
contemplates worker rights advocacy in North America, should have
standing to bring any complaint of worker rights violations under
NAFTA or to intervene as a bona fide interested party in any dispute
settlement proceeding under NAFTA.

Corporate Responsibility

        Notwithstanding separate or artificial forms of incorporation
in the three countries, a parent corporation should be held
accountable for the labor practices of its subsidiaries. If a parent
corporation is not headquartered in one of the three countries of
North America, its principal operation center in any of the three
countries should be subject to liability for labor rights violations
of a related enterprise.

Choice of Forum

        Regardless of nationality, workers or unions complaining of
labor rights violations by a multinational corporation, or by a
government, should be allowed to bring an action in a court of
competent authority or before an appropriate administrative agency of
either the country where the violation occurred, or the country of the
complaining party, or the country where the headquarters of the
offending employer is located, if it is different.  Alternatively, a
complaining party should be permitted to press its claim under
NAFTA dispute resolution mechanisms.  Where labor law and
precedent is more favorable to workers than a NAFTA labor rights
standard, the more favorable rule should apply.

Country-specific, Sector-specific, and Company-specific Sanctions

        Complaints of labor rights violations should be permissible
against a country that is signatory to NAFTA, against an industrial
sector or association of enterprises engaged in commerce with another
NAFTA signatory, or against a single company engaged in commerce with
another NAFTA signatory.  Upon determination of a violation of
worker rights under NAFTA, the offending entity should be stripped
of benefits under the treaty until such violation or violations have
been cured by adequate remedial measures (for example,
reinstatement and back pay for workers fired in violation of the
right of association; back pay to workers paid below the applicable
minimum wage, a halt to the use of child labor or forced labor, and
compensation for its victims; an end to race or sex discrimination,
with compensation to its victims, and so on).

A Broad Range of Available Sanctions

        As in the case of intellectual property, an array of sanctions
against worker rights violators should be available to tailor the
punishment to the crime.  Applicable sanctions can include:

        --duties or fees on goods or services from a labor rights
violator entering another NAFTA signatory country;
        --application of a quota limiting the entry of goods or
provision of services from a labor rights violator;
        --an outright ban on goods or services from a labor rights
violator;
        --compensatory and punitive damage awards to workers or
unions whose rights are violated (where injury, disability, or disease
results from health and safety violations, the limitations of workers
compensation laws can be lifted to permit compensatory and punitive
damages);
        --criminal prosecutions in case of willful violations of
worker rights;
        --denial of government contracts from any or all NAFTA
signatories to firms that violate worker rights;
        --award of lawyers' fees to workers, unions, or human rights
groups whose action vindicates worker rights.

Injunctive Relief

        In cases where continued violation of workers rights under
NAFTA threatens to cause irreparable harm either to the workers whose
rights are being violated, or to workers affected by the beneficial
treatment of goods or services entering North American commerce
produced under conditions of labor rights violations, injured parties
or their advocates (including unions and human rights groups), or
administrative agencies, or NAFTA dispute settlement panels, should
be authorized to seek immediate injunctive relief from a court of
competent authority to halt such violations.  Failure to comply should
subject violators to contempt of court sanctions.

Composition and Proceedings of Arbitral Panels

        There is nothing inherently wrong with consultative or
arbitral panels set up under NAFTA as long as they are not an
exclusive forum.  Such panels ought to be open to claims of labor
rights violations, too.  But NAFTA should be amended to provide that:

        1) Lists of potential panelists include persons with
experience and expertise in labor, environmental, and human rights
matters;
        2) Panelists be prohibited from representing any NAFTA
disputant in other forums or different NAFTA proceedings;
        3) NAFTA panels must consult a range of outside experts and
scientific advisors, including those with expertise in labor and human
rights matters (or scientists with such expertise, in cases, for
example, of occupational health disputes);
        4) Proceedings before NAFTA panels must be open to the public
and briefs and decisions must be published, with only genuine trade
secrets or proprietary information subject to a protective order;

Translation Costs

        The costs of translating documents, depositions, and testimony
in legal proceedings asserting worker rights under NAFTA shall be
borne by the budget of the NAFTA Free Trade Commission, so that
workers, unions, and human rights groups are not prevented by
language barriers from seeking to enforce their rights under NAFTA.
        As a condition for negotiating liberalized trade, each of the
three governments should commit to comply with internationally
recognized standards for the rights of free association, collective
bargaining, the right to strike, and nondiscriminatory wages and
conditions of employment.  Failure to respect these basic rights
should be considered an unfair trade practice, punishable by trade
sanctions or other financial remedies.  Only then will workers be able
to negotiate for a fair share of their production and a safer working
and living environment.
        Other labor-related issues that should be addressed by a
continental trade and development agreement are the following:

2.      INVESTMENT IN EDUCATION, TRAINING, SOCIAL INFRASTRUCTURE

        In order to raise living standards in all three countries, the
three governments must invest substantially in the education and
skills of their workforces.  In addition, companies that invest in
other countries should be compelled to contribute their fair share to
support the social infrastructure in the communities in which they
operate, including medical care, community development, and
education. This could be achieved by a tax on investment.

3.      LIVING WAGE PROVISION

        The agreement should explicitly recognize the goal of creating
jobs which pay a "living wage" in all three countries.  As a start, it
should mandate a higher minimum wage in Mexico, to be implemented
immediately in export industries and expanded as rapidly as possible
throughout the rest of the Mexican economy.

4.      PROTECTION OF IMMIGRANTS' RIGHTS

        The labor rights of immigrant workers, both documented and
undocumented, both permanent and temporary, should be protected
and improved.  Ultimately, we should work toward harmonizing
wages and working conditions up to the highest level prevailing in
any of the countries. As progress is made on this front, legal
barriers to labor mobility could be eased.(13)

5.      SHIFT TRANSITIONAL COSTS TO TRANSNATIONAL CORPORATIONS,
NOT WORKERS

        Corporations in all three countries should be compelled to
compensate workers and communities for losses suffered as a result
of the movement of production facilities.  Compensation should
include the following:

   --   120-day advance notification of plant closing;
   --   severance pay;
   --   continuation of medical benefits for one year after the
closing, or until comparable work has been found;
   --   retraining and job search assistance.

        By forcing corporations to absorb some of the costs their
location decisions impose on the community, this provision would
change the incentives facing firms.
__
NOTES
1  Daily Labor Report, Bureau of National Affairs, August 27, 1992, p.
A-4.
2  See Jeff Faux and William Spriggs, U.S. Jobs and the Mexico Trade
Proposal (Washington, D.C.: Economic Policy Institute, 1991); and
Timothy Koechlin and Mehrene Larudee, "The High Cost of NAFTA,"
Challenge, September/October, 1992.
3  See the agriculture chapter by Karen Lehman.  For research
suggesting that, without mitigating income support from the Mexican
government and a lengthy transition period, NAFTA will cause a
large exodus of workers from the Mexican countryside to the U.S. and
urban Mexican areas, see also Sherman Robinson, Mary E. Burfisher,
Raul Hinojosa-Ojeda, and Karen E. Thierfelder, "Agricultural Policies
and Migration in a U.S.-Mexico Free Trade Area: A Computable
General Equilibrium Analysis," Working Paper No. 617, California
Agricultural Experiment Station, Giannini Foundation of Agricultural
Economics, December 1991.
4  See Kim Moody and Mary McGinn, Unions and Free Trade: Solidarity
vs. Competition. Jan.92, p. 30.
5  See, for example, Wall Street Journal, July 30, 1992, p. A-1.
6  Edward E. Leamer, Wage Effects of a U.S.-Mexican Free Trade
Agreement, NBER Working Paper No. 3991 (Cambridge, Mass.:
National Bureau of Economic Research, February 1992).
7  Lawrence Mishel and Jared Bernstein, Declining Wages for High
School and College Graduates. (Washington, D.C.: Economic Policy
Institute, 1992).
8  Koechlin and Larudee, Challenge, Sept/Oct 1992
9  Labor Advisory Committee on the NAFTA, "Preliminary Report,"
September 16, 1992, p. 11.
10  Maria Jimenez, "Labor Mobility and the North American Free
Trade Agreement," Immigration Newsletter, vol. 19, no. 4, p. 3.
11  Labor Advisory Committee Report, p. 15.
12  From "Comments of the Service Employees International Union
(SEIU) Before the U.S. International Trade Commission on the
Probable Effects of Free Trade Agreement Between the U.S. and
Mexico," April 16, 1991, Docket # 91-3421.
13  There are very different perspectives on this issue.  Some
analysts advocate completely open borders; others think we should not
call for any easing of barriers.  Please send any ideas on reaching a
consensus position to Thea Lee.
__
Mark Anderson
AFL-CIO
815 16th Street NW
Washington, DC 20006
phone: (202) 637-5178

Lance Compa
National Lawyers Guild Task Force on Free Trade
1511 K Street NW, #900
Washington, DC 20005
phone: (202) 393-0808

Pharis Harvey
International Labor Rights Education and Research Fund
100 Maryland Avenue NE
Box 74
Washington, DC 20002
phone: (202) 544-7198

John Howley
Service Employees International Union
1313 L Street NW
Washington, DC 20005
phone: (202) 898-3343

Mehrene Larudee
University of Massachusetts
Department of Economics
Thompson Hall
Amherst, MA 01003
phone: (413) 549-0116

Thea Lee (coordinator)
Economic Policy Institute
1730 Rhode Island Avenue NW, Suite 200
Washington, DC 20036
phone: (202) 775-8810

Dave Ranney
University of Illinois
P.O. Box 4348 (M/C 348)
Chicago, IL 60680
phone: (312) 996-2126