Six Problems With NAFTA 1. U.S. Jobs We
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Posted On: 12/28/2019 9:04:19 PM
Six Problems With NAFTA
1. U.S. Jobs Were Lost
Since labor is cheaper in Mexico, many manufacturing industries withdrew part of their production from the high-cost United States. Between 1994 and 2010, the U.S. trade deficits with Mexico totaled $97.2 billion. In the same period, 682,900 U.S. jobs went to Mexico. But 116,400 of those jobs were displaced after 2007. The 2008 financial crisis could have caused them instead of NAFTA.
Almost 80 percent of the losses were in manufacturing. The hardest-hit states were California, New York, Michigan, and Texas. They had high concentrations of the industries that moved plants to Mexico. These industries included motor vehicles, textiles, computers, and electrical appliances.
2. U.S. Wages Were Suppressed
Not all companies in these industries moved to Mexico. But some used the threat of moving as leverage against union organizing drives. When workers had to choose between joining the union and losing the factory, workers chose the plant. Without union support, the workers had little bargaining power. That suppressed wage growth. According to Kate Bronfenbrenner of Cornell University, many companies in industries that were moving to Mexico used the threat of closing the factory. Between 1993 and 1999, 64 percent of U.S. manufacturing firms in those industries used that threat. By 1999, the rate had grown to 71 percent.
3. Mexico's Farmers Were Put Out of Business
Thanks to NAFTA, Mexico lost nearly 1.3 million farm jobs. The 2002 Farm Bill subsidized U.S. agribusiness by as much as 40 percent of net farm income. When NAFTA removed trade tariffs, companies exported corn and other grains to Mexico below cost. Rural Mexican farmers could not compete. At the same time, Mexico reduced its subsidies to farmers from 33.2 percent of total farm income in 1990 to 13.2 percent in 2001. Most of those subsidies went to Mexico's large farms. These changes meant many small Mexican farmers were put out of business by highly subsidized American farmers.
https://www.thebalance.com/disadvantages-of-nafta-3306273
1. U.S. Jobs Were Lost
Since labor is cheaper in Mexico, many manufacturing industries withdrew part of their production from the high-cost United States. Between 1994 and 2010, the U.S. trade deficits with Mexico totaled $97.2 billion. In the same period, 682,900 U.S. jobs went to Mexico. But 116,400 of those jobs were displaced after 2007. The 2008 financial crisis could have caused them instead of NAFTA.
Almost 80 percent of the losses were in manufacturing. The hardest-hit states were California, New York, Michigan, and Texas. They had high concentrations of the industries that moved plants to Mexico. These industries included motor vehicles, textiles, computers, and electrical appliances.
2. U.S. Wages Were Suppressed
Not all companies in these industries moved to Mexico. But some used the threat of moving as leverage against union organizing drives. When workers had to choose between joining the union and losing the factory, workers chose the plant. Without union support, the workers had little bargaining power. That suppressed wage growth. According to Kate Bronfenbrenner of Cornell University, many companies in industries that were moving to Mexico used the threat of closing the factory. Between 1993 and 1999, 64 percent of U.S. manufacturing firms in those industries used that threat. By 1999, the rate had grown to 71 percent.
3. Mexico's Farmers Were Put Out of Business
Thanks to NAFTA, Mexico lost nearly 1.3 million farm jobs. The 2002 Farm Bill subsidized U.S. agribusiness by as much as 40 percent of net farm income. When NAFTA removed trade tariffs, companies exported corn and other grains to Mexico below cost. Rural Mexican farmers could not compete. At the same time, Mexico reduced its subsidies to farmers from 33.2 percent of total farm income in 1990 to 13.2 percent in 2001. Most of those subsidies went to Mexico's large farms. These changes meant many small Mexican farmers were put out of business by highly subsidized American farmers.
https://www.thebalance.com/disadvantages-of-nafta-3306273
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