FTAA trade negotiators should heed lessons from NAFTA

November 18, 2003

OTTAWA-Trade ministers from Canada and 40 other countries in North, Central and South America are meeting in Miami this week to try to reach agreement on establishing a Free Trade Area of the Americas (FTAA) before December 31, 2005.

The FTAA would extend the terms of the North American Free Trade Agreement (NAFTA) to the entire Western Hemisphere (except Cuba). But to convince counterparts in Latin America of the benefits of the proposed FTAA, NAFTA-countries' trade negotiators would have to prove that NAFTA has been a boon for most people in their own countries.

However, according to Lessons from NAFTA: The High Cost of "Free Trade," the latest assessment of ten years of NAFTA, that case simply can't be credibly established.

The study, published by the CCPA and prepared by researchers in Canada, the U.S. and Mexico, finds the effects of NAFTA to have been overwhelmingly negative for the workers and consumers in all three countries.

In all three countries, NAFTA has depressed wages, worsened poverty and inequality, destroyed more jobs than it has created, eroded social programs, undermined democracy, and enfeebled governments while greatly increasing the rights, power and wealth of corporations and big investors.

Of NAFTA's effects on Canada, the report finds that:

  • 334,000 Canadian manufacturing jobs were eliminated between 1988 and 1994, and, although 2.7 million jobs were created under NAFTA up to 2003, less than half were secure, well-paid, full-time jobs;
  • 96.6% of the increased foreign investment in Canada in the free trade years was for the takeover of Canadian firms by foreign (mostly U.S.) corporations, many of whom financed their takeovers with loans from Canadian banks;
  • Canada has become a markedly more unequal society under free trade, with the poorest 40% of Canadians having their meagre 1.8% share of the nation's total wealth prior to NAFTA reduced even lower to just 1.1%.

Despite higher rates of productivity, workers and low-income groups in the U.S. and Mexico have fared no better under free trade. In the U.S., between 1990 and 2000, manufacturing industries shed 1.5 million jobs. Surveys indicate that, if these displaced workers found new service sector jobs, they did so for wages that averaged 13% below their previous pay. Exports from Mexico increased by over 300% under NAFTA, but these foreign sales have not translated into growth in the Mexican economy. The average annual rate of per capita growth of GDP under NAFTA has been less than 1%.