As a candidate, President Trump promised to stop American job outsourcing and bring jobs back with a fast renegotiation of the North American Free Trade Agreement and day-one action to reverse our huge China trade deficit. A year later, Trump has done little to follow up.
Hopefully, this latest round of tough talk will translate into comprehensive action.
Meanwhile, the outsourcing continues with hundreds of the Carrier workers he pledged to protect just seeing their jobs shipped to Mexico, the NAFTA and China trade deficits up, and the recent Trump tax bill incentivizing corporations to outsource even more U.S. jobs.
Two issues now at the top of the national agenda could make the situation considerably worse.
First, the Republican tax legislation creates new incentives for job outsourcing while failing to close the loophole that lets companies deduct the expenses of relocating to another country. Large multinational corporations should not be rewarded with tax cuts for abandoning their American workers and raking in extra profits by exploiting dollar-an-hour wages in poor countries.
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Second, the administration’s renegotiation of NAFTA, which is to be done by March, must eliminate NAFTA’s incentives to outsource American jobs and level the playing field by adding strong labor and environmental provisions with swift enforcement to raise wages for all workers. Otherwise, companies will continue to move U.S. jobs to Mexico to pay workers poverty wages and dump toxins and then import those products back for sale here.
At NAFTA’s heart are special corporate protections that make it less risky and costly to outsource jobs and empower firms to attack domestic policies by going before tribunals of three corporate lawyers who can order unlimited compensation be paid to the firms by taxpayers.
The stakes are high for working families in Arizona. Our state has lost 12,000 of its manufacturing jobs since NAFTA and other similar trade deals went into effect.
More than 30,500 Arizona jobs have been certified under just one narrow government program as lost to outsourcing or imports under NAFTA.
These numbers represent a significant undercount of the actual jobs lost, given the program only covers certain types of jobs.
According to the Department of Labor, manufacturing workers who lose jobs to trade and find re-employment are typically forced to take pay cuts. Two of every five rehired in 2016 were paid less in their new jobs. One-in-four lost greater than 20 percent of their income. That means a $7,700 pay cut for the median wage manufacturing worker earning $38,000.
This is the opposite of what boosters promised 23 years ago when the deal was debated by Congress.
They promised that NAFTA would improve the U.S. trade balance with Mexico and Canada, and create 200,000 new jobs in each of NAFTA’s first five years. Instead, we’ve lost almost 1 million jobs as a small surplus with Mexico and small deficit with Canada became a massive $176 billion NAFTA goods trade deficit in 2016.
Meanwhile, corporations have collected more than $392 million in taxpayer money using NAFTA’s “investor-state” tribunals where corporations can sue governments before panels of three private lawyers to demand unlimited sums of taxpayer funds over environmental and health laws that they claim violate the corporations’ NAFTA rights.
Arizona can benefit from trade with Mexico and Canada, but a tweak to NAFTA won’t cut it.
We want a NAFTA replacement we can support, meaning one that raises wages and creates good jobs for people in Arizona and the nation.
Phil Lopes
Phil Lopes is a former state legislator from Tucson.