NAFTA:
The Unions in a Dubious Combat

Nov 20, 1993

The North American Free Trade Agreement (NAFTA) passed the House of Representatives and then the Senate. NAFTA extends to Mexico the free trade agreement between the U.S. and Canada that was passed in the late 1980s. If implemented, NAFTA is supposed to do away with most trade and investment barriers between the 3 countries over 15 years.

NAFTA had all the markings of Republican legislation. It was negotiated under the Bush administration. And most Republicans in the House of Representatives voted for it. NAFTA was supported by most of the bourgeoisie, including almost all of the Fortune 500 companies, the largest banks and insurance companies, along with the U.S. Chamber of Commerce and the National Association of Manufacturers.

The opposition to NAFTA came from the Democratic Party, which not only controls the presidency, but has a large majority in Congress. And this is why, for months, NAFTA seemed in trouble. President Clinton had been hemming and hawing about the treaty. Only in the final stages did he come down strongly in support of it. A majority of Democrats still voted against the treaty. But Clinton brought enough Democrats over in support of it so that it passed the House with a comfortable majority of 34 votes.

The passage of the treaty seems to be a defeat for such right-wingers as Ross Perot and Patrick Buchanan and the liberal wing of the Democratic Party. They opposed the treaty in order to score points among the increasingly impoverished working and middle classes, who feel threatened by the accord with Mexico, more than anything else. For these politicians, how they do in the next elections will say whether their opposition to NAFTA really was a defeat... or success.

But the real defeat was sustained by the AFL-CIO, which has been the main center of opposition to NAFTA. For at least two years the union federation has made the defeat of NAFTA one of its most important political objectives. The unions had fought the accord, repeating again and again that it is a real disaster for the working class, so that today a significant part of the working class is convinced that NAFTA is the problem.

NAFTA and U.S. Jobs

The crux of the union officials’ opposition to NAFTA is founded on a legitimate suspicion of the corporations. When, as in this case, most corporations say they want something so badly, of course, the working class has every reason to be suspicious. Obviously, when the capitalists insist that NAFTA will mean increased trade and investment, and everyone on both sides of the border shall benefit, it is just the sugar-coated version for popular consumption.

The unions, on the other hand, charged that as the trade and investment barriers come down under NAFTA, it will cost U.S. workers hundreds of thousands of jobs. They say the corporations will take advantage of wages in Mexico that are about one-seventh the level of U.S. wages, and turn Mexico into a low wage manufacturing platform that will produce for the U.S. market. As proof, they point to what has already happened on the border, which the Mexican government had turned into a free trade zone. Factories import parts duty-free from the U.S., assemble them in Mexico and then export the products back into the U.S. The only tax paid is on the labor added in Mexico. Many of the largest U.S. companies set up thousands of low wage "maquiladoras" to take advantage of the low wages paid in Mexico.

It is true that in the process, Northern Mexico has been turned into a real industrial zone, containing Mexico’s fastest growing cities. Some of these new plants have either been runaways, that is, plants from the U.S. that relocated in Mexico, including those of such companies as Zenith, GTE, Smith Corona, Green Giant. Almost all furniture manufacture in Southern California relocated in northern Mexico. Other plants were set up as many of the largest companies poured investment for manufacturing into Mexico. These included the Big 3 auto companies, GM, Ford and Chrysler, which built some modern assembly and parts plants that are producing not just for Mexico and the rest of the Latin American market, but for the U.S. market as well. The UAW claims that 75,000 auto jobs have already been lost to Mexico. The Machinists say their number lost is 100,000. Says Mark Anderson, director of the AFL-CIO task force on trade, "We think these jobs, in large measure, would have stayed home if the Mexican Government had not made it so easy to move them across the border. And the free trade agreement locks in this arrangement."

But what the union officials fail to mention is that at the same time that U.S. production has moved down to Mexico, U.S. exports to Mexico have steadily increased, quadrupling in the last 4 years, reversing the U.S. trade deficit with Mexico. Last year, the U.S. trade surplus with Mexico was 6 billion dollars. Logically, increased production for export should mean more jobs in the U.S. And this should compensate for at least a large proportion of jobs that disappeared when the corporations moved their factories across the border. (In fact, jobs did not increase to keep pace with increased exports, but that is because of reasons other than what is happening in Mexico.)

It would appear that with NAFTA, U.S. exports into Mexico will continue to grow. Because Mexico has much higher tariffs and trade barriers than does the U.S., the elimination of trade barriers in both countries could very well have more of an impact on the exports from the U.S. to Mexico than those from Mexico to the U.S.

History bears this out. Mexico has already begun bringing down its trade barriers. Over the last 10 years, under the pressure of the economic crisis, Mexico’s hundred billion dollar foreign debt, and the collapse of the price of oil, Mexico’s main export, the Mexican government brought its trade and investment barriers down over and over. As these barriers and tariffs come down, U.S. exports to Mexico have grown, outpacing the exports from Mexico to the U.S., changing a deficit to a surplus. This is despite the existence of the free trade zone along Mexico’s northern border that has existed since the late 1960s, and despite the fact that U.S. tariffs are much lower than Mexico’s (currently averaging 4% in the U.S. versus 10% in Mexico).

It is highly unlikely that there will be a sudden stampede of U.S. manufacturing into Mexico, the way the AFL-CIO pictures. First of all, U.S. companies are already in Mexico. It is why the AFL-CIO can discuss what these companies are already doing. And these companies have dominated much of the Mexican economy for over a century. So they did not need NAFTA to do all that. But if these companies support NAFTA, it is because it brings down some of their expenses, and it makes trade policies more predictable, by locking the U.S., Mexican and Canadian governments into procedures and schedules for the next decades. But these companies don’t need NAFTA to transfer their production across the border.

Perhaps NAFTA will mean some changes inside various sectors of production. Since the Mexican auto market will no longer be protected by trade barriers, U.S. auto companies in Mexico will no longer manufacture several models in one factory just for sale in Mexico. Instead, they will produce one or two models for Mexico and the U.S. And U.S. factories will produce other models for Mexico. Or else, manufacturing facilities that had located in northern Mexico to take advantage of the free trade zone will move to some other part of the country, since the whole country will become duty-free. But overall, NAFTA will not bring big changes between the U.S. and Mexico. It simply continues a process that has been well underway. NAFTA gradually phases out trade barriers that were already being brought down. With or without NAFTA, this process is going to continue.

So, NAFTA does not spell a big change in U.S. corporate trade and investment. The way the AFL-CIO characterizes NAFTA is, at least, very questionable, if not misleading. If there is a big loss of U.S. jobs over the next years, it will not be because of this accord.

The Source of Job Cuts

Obviously jobs are disappearing in the U.S., and at a growing pace. But the famous "sucking sound" that Ross Perot referred to is not coming from Mexico.

What is behind the huge loss in jobs? According to the AFL-CIO, the explanation can be summed up in two words: foreign competition. The AFL-CIO’s campaign against NAFTA revolved around this idea. In its pamphlet written in 1991 called "Exploiting Both Sides: U.S.-Mexico Free Trade", the AFL-CIO states, "The international economy has had a profound and negative effect on U.S. workers during the last 10 years. The unprecedented shift in trade patterns has cost the economy hundreds of thousands of jobs, contributed to declining real income and made the United States the largest debtor nation in the world. There is no end in sight to these crippling deficits, and in 1990, the United States recorded its seventh consecutive year of merchandise trade deficits of more than $100 billion."

Behind this argument is the assumption that U.S. workers are losing jobs because the U.S. economy is becoming less competitive on the world scale. The increasing imports from Mexico and from the rest of the world are supposed to be a sign of this.

The facts show otherwise.

Certainly, imports into the U.S. have increased substantially, from Mexico and from many other countries, including of course, Japan. But just as U.S. exports to Mexico have increased, so have all U.S. exports. Over the past years U.S. exports have increased both in absolute terms and in relationship to the Gross National Product (GNP). Since the 1970s, U.S. exports have doubled as a percentage of U.S. output, rising from 4.4 per cent to 8.4 per cent. The U.S. is the largest exporter in the world, with about 12 per cent of the international market. And 40 per cent of what the U.S. exports is machinery and tools, which are products of advanced and modern technology. This also is an indication of technological strength, relative to the rest of the world economy.

The famous economic deficit that the AFL-CIO always points to is actually less significant than they say. First, the trade deficit has been cut by about one-third, since the mid-1980s. Over the last 3 years, it has held steady. Even if it is assumed that the loss of U.S. industrial jobs is caused by the trade deficit, this job loss should have stopped many years ago. Yet, this is not the case...

In fact, there should never have been a loss of manufacturing jobs in the first place. For just as exports produced in the U.S. are increasing, so is manufacturing. According to the U.S. government, production in the U.S. has more than doubled since 1970.

The United States is not becoming "deindustrialized". But not only has job growth not kept pace with the increase in production, the number of manufacturing jobs has actually shrunk. While production has doubled, the number of manufacturing jobs was reduced from 20 million to only 18 million. The U.S. capitalists have been driving the workers harder and harder in order to eliminate more and more jobs. U.S. jobs are not being lost to workers in Mexico, Japan, Europe or anywhere else. The "giant sucking sound" is that of U.S. capitalists flushing millions of U.S. workers jobs down the toilet of speed-up. A very profitable venture indeed.

Fighting or Begging?

The campaign that the AFL-CIO carried out against NAFTA ended in defeat. NAFTA was passed. But did the AFL-CIO really try to defeat NAFTA? Did it commit all its forces in this fight, as it logically should have, if NAFTA was the real problem for the working class?

What the AFL-CIO said about NAFTA was indicative of what they actually did about it. For they told the workers one thing and Congress another. The story the AFL-CIO told the workers was that NAFTA would lead to enormous changes, cost a lot of jobs, become a real disaster. But in front of Congress the AFL-CIO said they were not really against a free trade treaty with Mexico. They just wanted the present one modified. This is the reasoning behind that not very memorable slogan "Not This NAFTA" (that is, "Yes to Another NAFTA").

The main fight the AFL-CIO led was to pressure the politicians. The best example of what kind of pressure the AFL-CIO was talking about was how they handled Bill Clinton. Even as a candidate last year, Clinton was never really against NAFTA. The most that could be said was that he avoided taking a clear cut position. The AFL-CIO let Clinton get away with straddling the fence without demanding that he take a strong position against NAFTA. They still supported Clinton with money and votes anyway. This was proof that the AFL-CIO was not ready to make a real fight against something that they were telling the workers was a disaster.

Predictably, once elected, Clinton began to work for NAFTA’s passage. He pretended that he had modified the treaty that had been negotiated under Bush, by adding some side agreements that essentially changed nothing. Then he began to push Democrats, many of whom had depended on AFL-CIO support for money and votes to vote for NAFTA, against the wishes of the AFL-CIO. All the AFL-CIO could say was that the politicians would hear from them in the next elections. But why didn’t it act before the last election, by refusing votes and money to any politician whose stance on this issue was in the least ambiguous?

What did the AFL-CIO organize so that workers could bring pressure on the politicians? Labor Day became a "Not This NAFTA" Day. There were a few small demonstrations in a few cities. The rest of what was done, resembled begging more than fighting. There were letter writing campaigns and petitions to Congress. Delegations of workers went to Washington to talk to their Congressmen. Some bus loads of trade unionists went over the border, took a tour of the maquiladoras, and reported on the conditions they found. It was all very polite and respectful.

But there was no mobilization of the workers. There were not even any big demonstrations organized as a warning to the politicians of what might happen if NAFTA passed, much less widespread work disruptions or strikes. The AFL-CIO did not organize anything approaching a real fight, the only thing that the politicians and the bourgeoisie fear.

In fact, from beginning to end, the AFL-CIO’s campaign against NAFTA was a sham. The NAFTA issue was a false issue. It not only had nothing to do with jobs, but the fight the AFL-CIO claimed it was carrying out against NAFTA was not a fight at all. The whole operation was engineered as a diversion, a means to avoid confronting the real source of the problems facing workers, that is, the policies of the corporations here in this country. It was a means to avoid... a fight.

The AFL-CIO and U.S. Imperialism

It is no surprise that the AFL-CIO does not really fight, even on an issue they claim is so important, like NAFTA. U.S. imperialism wanted the accord for its own interests, in order to bolster its domination in this part of the world. And for over 50 years, this is exactly the kind of thing that the AFL-CIO has supported.

The AFL-CIO has always supported the wars and military alliances the U.S. government has engaged to impose U.S. domination all over the world. In the period after World War II, for example, the AFL and CIO (the two federations would unite in 1955 to form the AFL-CIO) accepted the Marshall Plan, the North Atlantic Treaty Organization, the Alliance for Progress and the Korean and Viet Nam wars.

This did not end in the 1980s under Reagan and Bush, despite the AFL-CIO’s supposed opposition to those administrations. The labor federation supported the U.S. invasions of Grenada and Panama, the bombing of Libya, the sending of U.S. "advisers" to El Salvador; and it backed anticommunist guerrilla movements in Nicaragua, Angola, Afghanistan and Southeast Asia. It supported the Persian Gulf War.

This military and political domination by the American state makes it easier for U.S. corporations to exploit workers and peasants all over the world, and it thus serves U.S. corporations in their efforts to expand investments overseas. Today, the AFL-CIO may complain that some of those investments are going against the interests of the U.S. working class. But it was the AFL-CIO which gladly helped to open the way for them. Nowhere did the AFL-CIO do this more than in Mexico and the rest of Latin America.

Today the AFL-CIO complains that the over-exploited workers in Mexico are taking U.S. jobs. But throughout the post-World War II period, the AFL-CIO worked with the CIA, the U.S. government and U.S. business to help tame the explosive Mexican, as well as Latin American, labor movement. After World War II, the Mexican government carried out its own McCarthy period, an anti-Communist purge of the unions. Communist leadership was replaced by such people as the anti-Communist, corrupt and wealthy boss (who in his 90s still runs the main Mexican labor federation, the CTM) Fidel Velazquez. Under Velazquez, the CTM joined the notoriously anticommunist Inter-American Regional Organization of Workers (ORIT), whose "dirty tricks" to help imperialism topple governments in Latin America has since become legend. Once ORIT became discredited, the AFL-CIO, together with transnational corporate executives and the U.S. government, helped found (in Mexico in 1962) the American Institute for Free Labor and Development (AIFLD). The AIFLD is funded largely by the U.S. government’s Agency for International Development (AID) but also by U.S. corporations and AFL-CIO membership dues.

In its recent propaganda against NAFTA, the AFL-CIO often cited the Caribbean Basin Initiative (CBI), a U.S.-sponsored regional development program that permits qualified countries to export products to the United States without paying the usual duties, as a forerunner to NAFTA. They claimed that CBI only led to greater impoverishment of the workforce in the Caribbean and the loss of jobs in the U.S.

But, what they didn’t mention was their role in helping the U.S. to implement CBI. In Haiti, in 1984 under the Duvalier dictatorship, the AFL-CIO helped set up the conservative Federation of Trade Union Workers (FOS) in order to qualify Haiti to participate in the CBI. FOS was the only recognized union grouping under Duvalier, a cosmetic formality that allowed Haiti—and U.S. assembly plants—duty-free access to the U.S. market under CBI. FOS continues to be a major recipient of U.S. funding for labor in Haiti.

Another example, among many, of the more recent functioning of the AFL-CIO in Latin America is that of El Salvador. In El Salvador, working through the AIFLD, the AFL-CIO helped the U.S. government and corporations to split militant labor organizations, peel away more cooperative members, create U.S.-controlled alternatives, and then promote them as the spokespersons for Salvadoran workers. This campaign was carried out with assassinations, torture and other official harassment of non-AIFLD unionists. As reported in the Nation in 1987, in 1986 the AIFLD had a budget of $3.5 million in order to lure unions away from coalitions sympathetic to the guerrillas. Said one campesino leader, Adrian Esquino, "AIFLD is a disaster for workers. AIFLD says if you do what we want, we’ll give you money. The institute buys union leaders."

The AFL-CIO helped organize the very super-exploitation of workers in Mexico and the rest of Latin America that today they claim to denounce. But denunciations are just a show if a fight is not organized against those who are mainly responsible for this super-exploitation, the U.S. capitalists and the U.S. corporations.

The Interests of the Working Class

If the union officials were interested in a real fight for jobs, obviously they would target those who were taking them, the U.S. corporations. They would organize to guarantee the jobs of all workers in the runaway shops that move from state to state, or country to country. And they would organize to defend the jobs in the more numerous plants which remain in place, but nonetheless cut their workforce. They would fight for better working conditions. They would fight for a shorter work week. They would not accept to let the bosses be the sole beneficiaries of all the productivity increases. They would fight to spread the work around, so that one part of the working class is not overworked, while the other part is chronically unemployed.

This kind of fight would give the workers their own class goal, a program in the interests of the working class for its struggle against the capitalist class. In so doing, it would put pressure on the most powerful imperialism, precisely where it is most vulnerable, at its base, from the inside. By carrying out these fights, the workers in the U.S. would even restrict imperialism’s abilities to carry on exploitation elsewhere; they would open up new possibilities of struggle by workers everywhere, including first of all, in the Third World and Mexico. They would reinforce the international solidarity of the working class, so necessary to fight imperialism, which exploits the whole world.

In this sense, targeting NAFTA is not only a diversion, it is a trap for the working class. Because willingly or not, it tends to pit U.S. against Mexican workers, instead of uniting them against the same bourgeoisie that exploits them both. And in so doing, far from breaking with its past pro-imperialist policy, the AFL-CIO continues to serve the interests of the U.S. capitalists ... even when it claims to oppose them.