NAFTA

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ILRF has been at the forefront of thought regarding the North American Free Trade Agreement (NAFTA) since its inception. Our position is that that unless more enforceable labor rights provisions are established in the agreement, there will be benefits of free trade but these benefits will not go to poor workers. While the North American Agreement on Labor Cooperation (NAALC) was put in place under NAFTA to promote the protection of basic worker rights, the agreement lacks adequate enforcement mechanisms. As a result, corporate profit takes priority in the market place over the rights of laborers.

More on the NAALC

The ILRF believes that due to the NAALC’s ineffectiveness, NAFTA has been detrimental to workers throughout North America. It has resulted in harmful downward pressures in labor markets—benefiting corporations at the expense of workers in the US, Canada, and Mexico.

The ILRF has found that in the case of both the US and Canada, NAFTA not only failed in its promise to create high productivity export jobs with better wages, but contributed to pushing more than one million workers out of higher wage jobs and into lower wage positions in non-trade related industries. In the U.S., poor women in apparel industries were particularly hurt, who held two-thirds of jobs that were lost.

NAFTA has brought about systematic changes in the Mexican economy and labor market. Through the 1994 agreement Mexico was opened to US subsidized agricultural goods; this has damaged Mexican markets, businesses, and farm workers which cannot compete with the artificially cheap prices. The Mexican corn industry for instance, a longstanding integral part of Mexico’s economy, has suffered severely from heavy US corn subsidies. Since NAFTA’s inception cheap US corn (kept artificially cheap at the expense of US taxpayers) has flooded into Mexico, driving down the real prices for corn received by Mexican farmers: from 1994 to 2003, prices dropped by some 70%. This is unsurprising considering the fact that in the year 2000, US subsidies equaled ten times Mexico’s entire agricultural budget. Since Mexico became vulnerable to US subsidies, the real minimum wage has declined by 20 percent; half of Mexico’s population now lives in poverty.

While the agreement has generated the decline of Mexico’s corn industry, causing rural poverty, it has also opened new corporate-driven jobs to Mexican workers. It has thus caused an overall shift in the nature of Mexican employment. On the positive side, access to employment has provided new economic opportunities. Unfortunately, it has come hand in hand with systematic violations in the workplace. A significant number of the jobs created have been in the unregulated informal sector, where labor enforcement is virtually non-existent. Many workers have also turned to employment in the maquiladoras, corporate-driven sweatshops. Social benefits in maquiladoras are virtually non-existent and occupational health and safety regulations are substandard. Wages are almost 40% lower than those paid in heavy non-maquila manufacturing industries, and because of forced mandatory overtime, workers are subject to long and grueling working hours. This is particularly difficult for women workers who often are faced with the double burden of continued traditional home-work and childcare.

In 2005 ILRF contracted research on the plight of women maquila workers, who comprise the bulk of the workforce. The report found that women suffer under a variety of forms of sexual discrimination. Mandatory overtime increases a woman’s susceptibility to forced sexual relations with employers and/or to sexual harassment both within and beyond the workplace. Moreover, in maquiladoras pregnancy and urine tests are commonly used as preconditions for continued employment.

ILRF contracted report on sexual discrimination in the maquiladoras

More resources:
ILRF on NAFTA in the context of World Bank Conditionality
NAFTA’s affect on the Global Food Crisis