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Broad Bipartisan Congressional Votes on Revised NAFTA Cement New Floor for Trade Pacts: Pharma Giveaways, Extreme Investor Rights in Past Pacts Are Out, Better Labor and Environmental Terms In After Democrats Forced Trump to Redo His 2018 NAFTA 2.0 Deal

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

Note: The U.S. Senate today passed the revised North American Free Trade Agreement (NAFTA) by a margin of 89 to 10. This follows passage in the U.S. House of Representatives by a margin of 385 to 41 in December 2019.

The unusually large, bipartisan votes in the Senate and House on the revised NAFTA set a new standard that to be politically viable, U.S. trade pacts no longer can include extreme corporate investor privileges or broad monopoly protections for Big Pharma and must have enforceable labor and environmental standards, in contrast to the 2016 Trans-Pacific Partnership, which never got close to congressional majority support.

Renegotiating the existing NAFTA to try to reduce its ongoing damage is not the same as creating a good trade agreement that creates jobs, raises wages and protects the environment and public health. That would additionally require climate provisions, stronger labor and environmental terms, and truly enforceable currency disciplines, and not limit consumer protections for food and product safety and labeling, the service sector, online platforms and more.

The NAFTA 2.0 deal that President Donald Trump initially signed in 2018 betrayed his campaign promise to fix NAFTA: It included new Big Pharma giveaways that lock in high drug prices, making it worse than the original, and its labor and environmental terms were too weak to counteract NAFTA’s outsourcing of jobs and pollution.

However, after congressional Democrats, unions and consumer groups forced Trump to remove Big Pharma giveaways and improve labor and environmental terms, the final revised deal is better than the original and might reduce some of NAFTA’s ongoing damage to workers and the environment. Although the new deal still includes problematic terms, the alternative is status quo NAFTA, not a more improved deal.

But this new NAFTA won’t bring back hundreds of thousands of manufacturing jobs, as Trump nonsensically claims. Nothing makes that clearer than U.S. auto manufacturers’ recent announcements that they plan to increase production in Mexico – from Ford’s decision to make its new Mustang electric SUV in Mexico to GM closing U.S. auto plants while expanding production in Mexico.

One clear and important win for consumers, workers and the environment is the gutting of NAFTA’s Investor-State Dispute Settlement (ISDS) regime. ISDS empowers multinational corporations to go before panels of three corporate lawyers to demand unlimited compensation from taxpayers over claims that domestic laws, regulations and court rulings violate special investor privileges. The lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits. To date, corporations have extracted almost $400 million from North American taxpayers after attacks on energy, water, timber and toxics policies. Largely eliminating ISDS will foreclose numerous corporate attacks on environmental, health and other public interest policies and send a signal worldwide to the many countries also eager to exit the illegitimate ISDS regime. 

The new NAFTA is not a template for future agreements; rather, it sets the floor from which we will fight for good trade policies that put working people and the planet first.

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Dem Debate: The Data on Iowa’s Ongoing Trade Job Loss, Decline in Ag Exports

With U.S. agricultural exports down, the White House touting a signing ceremony on a preliminary China trade text and the new North American Free Trade Agreement (NAFTA) up for a vote soon in the U.S. Senate, the Democratic candidates are likely to talk trade during Tuesday’s debate in Iowa. Below are key trade data points relating to Iowa.

On the China front, it remains to be seen if what the White House is selling as a “phase 1” China trade agreement will translate into changes in trade flows or China policies. The agreement does not cover the mass subsidies or other “China 2025” policies that the White House has spotlighted as a threat to U.S. manufacturing and geopolitical interests. Indeed, policy changes China has made that are reflected in the agreement, including more access for foreign investors and protections for their intellectual property, may promote more outsourcing of U.S. investment and jobs. Meanwhile, the promise of one-time increased Chinese purchases of U.S. goods, including agricultural exports, that the administration is touting may provide elusive. Chinese purchasing agency commodity orders last week did not reflect a shift to U.S. purchases while Chinese officials have said they will not increase ag import quotas.

  • U.S. Department of Agriculture data show that Iowa’s agricultural exports to the world have decreased 23% this year relative to last year –from $4.3 billion in the first 11 months of 2018 to $3.4 billion in the first 11 months of 2019.

  • Iowa agricultural exports to the world are down 8% in the 11 months of 2019 for which there is U.S. government data relative to the same 11 months of 2016, Obama’s last year in office. 

With respect to NAFTA, Donald Trump’s campaign promise to quickly replace the pact was stalled by his year-long refusal to remove new Big Pharma giveaways that would lock in high drug prices from the NAFTA 2.0 deal he signed in 2018. NAFTA 2.0 labor and environment terms also were too weak to counteract NAFTA’s outsourcing of jobs. Even after congressional Democrats and unions forced Trump to rewrite the 2018 deal, the new NAFTA won’t bring back hundreds of thousands of manufacturing jobs, as Trump claims. The recent announcements by U.S. automakers of increased production in Mexico make that clear.

  • During the Trump administration, the NAFTA trade deficit has grown 30% relative to the year before Trump took office.

  • Meanwhile, the manufacturing sector has hit a wall in 2019: Manufacturing job creation nearly stopped while an important indicator of manufacturing sector health – the Purchasing Managers Index – registered its lowest reading since June 2009 financial crisis days.

  • Tens of thousands more U.S. jobs have been government-certified as lost to NAFTA during the Trump era.  Nationwide, the United States has had a net loss of 4.5 million manufacturing jobs – about 27% – since NAFTA and the WTO went into effect.

  • The government has certified tens of thousands of Iowa workers as trade job-loss victims under just one narrow program called Trade Adjustment Assistance (TAA). This government program represents a significant undercount: Workers must know to apply and meet the TAA’s narrow criteria, which exclude many types of jobs lost to trade. The top five firms that TAA certified for China job loss in Iowa are Ocwen Loan Servicing, TMK-IPSCO, Lands’ End, Maytag and IMI Cornelius. The top five firms certified for NAFTA job loss in Iowa are Eaton Corporation, John Deere, GFSI, Intier Automotive Seating of America and International Automotive Components.

  • Iowa metro areas Department of Labor-certified trade jobs loss:
    Waterloo-Cedar Falls (3,342)                   Cedar Rapids (2,466)
    Newton (2,195)                                         Des Moines (1,878)
    Dubuque (1,162)     
                                  
  • According to the U.S. Department of Labor, manufacturing workers who lose jobs and find reemployment are typically forced to take pay cuts. Two of every five rehired in 2018 were paid less in their new jobs. One in six lost greater than 20% of their income. That means a $8,955 pay cut for the median-wage worker earning $44,800.

  • During NAFTA’s 25 years in force, the U.S. goods trade deficit with Canada of $33.2 billion and the $2.9 billion surplus with Mexico in 1993 (the year before NAFTA) turned into a combined NAFTA goods trade deficit of $220 billion in 2018. Before NAFTA, the U.S. had a good trade surplus with Mexico and Canada in the top 10 products that Iowa exports to the NAFTA nations. We now have a massive $90 billion deficit in trade of those good with NAFTA nations.

  • The $2.5 billion U.S. agriculture trade surplus with Canada and Mexico before NAFTA reversed to a $9 billion deficit in 2018. Nearly 250,000 small- to medium-scale farmers have been driven out of agriculture since the original NAFTA went into effect. Nationwide, $15 billion has been lost in U.S. agriculture exports just to China in the past year. Trump’s new NAFTA cannot fix this or stop future erratic and unpredictable Trump trade actions. Months after the deal was signed and boosters claimed it would lock in a new era of certainty in North American trade, Trump threatened to impose new tariffs on all Mexican imports for immigration-related reasons. Because the new NAFTA would simply continue NAFTA’s existing duty-free treatment with very modest increased access for U.S. dairy, poultry, eggs and wine to the Canadian market (around $400 million), it wouldn’t make a dent.

  • Growing NAFTA trade deficit under Trump: The nearly 10% growth in the NAFTA goods deficit over the past 11-month period compared to that same period in 2018 continues a Trump-era trend: The 2018 annual U.S. NAFTA goods deficit was up 11% relative to 2017, an increase from $197 billion to $218 billion, and up 19% ($34 billion) in 2018 relative to the U.S. annual NAFTA goods deficit in 2016.

Data Notes: Deficit figures are adjusted for inflation to the base month of November 2019. Thus, the figures represent changes in trade balances expressed in constant dollars. So, for months prior to November 2019, the numbers are different than the data unadjusted for inflation that is provided by the U.S. Census Bureau. The U.S. Department of Labor certifies trade-impacted workplaces under its TAA program. This program provides a list of trade-related job losses and job retraining and extended unemployment benefits to workers who lose jobs to trade. TAA is a narrow program, covering only a subset of workers who lose jobs to trade. It does not provide a comprehensive list of facilities or jobs that have been offshored or lost to import competition. Although the TAA data represent a significant undercount of trade-related job losses, TAA is the only government program that provides information about job losses officially certified by the U.S. government to be trade-related. Public Citizen provides an easily searchable version of the TAA database. Please review our guide on how to interpret the data here and the technical documentation here.

For more information visit State-by-State Outcomes of NAFTA.

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Trump Visits Milwaukee: The Data on Wisconsin’s Ongoing Trade Job Loss, Decline in Ag Exports to China

With U.S. agricultural exports down, the White House touting a signing ceremony on a preliminary China trade text and the new North American Free Trade Agreement (NAFTA) up for a vote soon in the U.S. Senate, Trump is likely to talk trade during his Tuesday rally in Milwaukee. Below are key trade data points relating to Wisconsin.

On the China front, it remains to be seen if what the White House is selling as a “phase 1” China trade agreement will translate into changes in trade flows or China policies. The agreement does not cover the mass subsidies or other “China 2025” policies that the White House has spotlighted as a threat to U.S. manufacturing and geopolitical interests. Indeed, policy changes China has made that are reflected in the agreement, including more access for foreign investors and protections for their intellectual property, may promote more outsourcing of U.S. investment and jobs. Meanwhile, the promise of one-time increased Chinese purchases of U.S. goods, including agricultural exports, that the administration is touting may provide elusive. Chinese purchasing agency commodity orders last week did not reflect a shift to U.S. purchases while Chinese officials have said they will not increase ag import quotas.

  • U.S. Department of Agriculture data show that Wisconsin’s agricultural exports to China have decreased 22% this year relative to last year –from $106 million in the first 11 months of 2018 to $82.7 million in the first 11 months of 2019.

  • Wisconsin agricultural exports to China are down 27% in the 11 months of 2019 for which there is U.S. government data relative to the same 11 months of 2016, Obama’s last year in office. 

With respect to NAFTA, Donald Trump’s campaign promise to quickly replace the pact was stalled by his year-long refusal to remove new Big Pharma giveaways that would lock in high drug prices from the NAFTA 2.0 deal he signed in 2018. NAFTA 2.0 labor and environment terms also were too weak to counteract NAFTA’s outsourcing of jobs. Even after congressional Democrats and unions forced Trump to rewrite the 2018 deal, the new NAFTA won’t bring back hundreds of thousands of manufacturing jobs, as Trump claims. The recent announcements by U.S. automakers of increased production in Mexico make that clear.

  • The government has certified 83,047 Wisconsin workers as trade job-loss victims under just one narrow program called Trade Adjustment Assistance (TAA). This government program represents a significant undercount: Workers must know to apply and meet the TAA’s narrow criteria, which exclude many types of jobs lost to trade. The top five firms that TAA certified for trade-related job loss in Wisconsin are Briggs & Stratton, Honeywell, Master Lock, NewPage Corporation and Humana Insurance Company.

  • Some Wisconsin metro areas’ Department of Labor-certified trade jobs loss numbers:
    Milwaukee-Waukesha (22,856)                      Appleton (8,172)
    Green Bay (4,235)                                          Oshkosh-Neenah (3,722)
    Manitowoc (3,676)
  • During the Trump administration, the NAFTA trade deficit has grown 30% relative to the year before Trump took office.

  • Meanwhile, the manufacturing sector has hit a wall in 2019: Manufacturing job creation nearly stopped while an important indicator of manufacturing sector health – the Purchasing Managers Index – registered its lowest reading since June 2009 financial crisis days.

  • Tens of thousands more U.S. jobs have been government-certified as lost to NAFTA during the Trump era. Nationwide, the United States has had a net loss of 4.5 million manufacturing jobs – about 27% – since NAFTA and the WTO went into effect.

  • According to the U.S. Department of Labor, manufacturing workers who lose jobs and find reemployment are typically forced to take pay cuts. Two of every five rehired in 2018 were paid less in their new jobs. One in six lost greater than 20% of their income. That means a $8,955 pay cut for the median-wage worker earning $44,800.

  • During NAFTA’s 25 years in force, the U.S. goods trade deficit with Canada of $33.2 billion and the $2.9 billion surplus with Mexico in 1993 (the year before NAFTA) turned into a combined NAFTA goods trade deficit of $220 billion in 2018. Before NAFTA, the U.S. had a goods trade surplus with Mexico and Canada in the top 10 products that Wisconsin exports to the NAFTA nations. We now have a $146 billion deficit in trade of those goods to NAFTA nations.

  • The $2.5 billion U.S. agriculture trade surplus with Canada and Mexico before NAFTA reversed to a $9 billion deficit in 2018. Nearly 250,000 small- to medium-scale farmers have been driven out of agriculture since the original NAFTA went into effect. Nationwide, $15 billion has been lost in U.S. agriculture exports just to China in the past year. Trump’s new NAFTA cannot fix this or stop future erratic and unpredictable Trump trade actions. Months after the deal was signed, and boosters claimed it would lock in a new era of certainty in North American trade, Trump threatened to impose new tariffs on all Mexican imports for immigration-related reasons. Because the new NAFTA would simply continue NAFTA’s existing duty-free treatment with very modest increased access for U.S. dairy, poultry, eggs and wine to the Canadian market (around $400 million), it wouldn’t make a dent.

  • Growing NAFTA trade deficit under Trump: The nearly 10% growth in the NAFTA goods deficit over the past 11-month period compared to that same period in 2018 continues a Trump-era trend: The 2018 annual U.S. NAFTA goods deficit was up 11% relative to 2017, an increase from $197 billion to $218 billion, and up 19% ($34 billion) in 2018 relative to the U.S. annual NAFTA goods deficit in 2016.

Data Notes: Deficit figures are adjusted for inflation to the base month of November 2019. Thus, the figures represent changes in trade balances expressed in constant dollars. So, for months prior to November 2019, the numbers are different than the data unadjusted for inflation that is provided by the U.S. Census Bureau. The U.S. Department of Labor certifies trade-impacted workplaces under its TAA program. This program provides a list of trade-related job losses and job retraining and extended unemployment benefits to workers who lose jobs to trade. TAA is a narrow program, covering only a subset of workers who lose jobs to trade. It does not provide a comprehensive list of facilities or jobs that have been offshored or lost to import competition. Although the TAA data represent a significant undercount of trade-related job losses, TAA is the only government program that provides information about job losses officially certified by the U.S. government to be trade-related. Public Citizen provides an easily searchable version of the TAA database. Please review our guide on how to interpret the data here and the technical documentation here.

For more information visit State-by-State Outcomes of NAFTA.

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