North American Free Trade Agreement
NAFTA ... is a framework for corporations to sue governments in closed trade tribunals ... how many of your MPs or representatives know that NAFTA, and the proposed Free Trade Area of the Americas, will declare your zoning laws illegal trade barriers? In other words, that your government could have to pay corporations for the right not to site toxic waste dumps next to your schools? How many of your MPs know that there are over 2,000 multilateral agreements in the world designed to safeguard workers and the environment - a huge body of public interest laws that put people first, from UNICEF codes, International Labour Organization laws ... and that all of these are subjugated to NAFTA, the IMF and the WTO? -- Lori Wallach
January 1, 2002 was the eighth anniversary of the implementation of North American Free Trade Agreement: NAFTA now has an extensive real life record. NAFTA's proponents promised the pact would create new benefits and gains in each of these areas. The promised benefits - of 200,000 new US jobs from NAFTA per year, higher wages in Mexico and a growing US trade surplus with Mexico, environmental clean-up and improved health along the border - have failed to materialize. However, after eight years, NAFTA fails to pass the most conservative test of all: a simple do-no-harm test. Under NAFTA, conditions not only have not improved, they have deteriorated in many areas
- It’s estimated that over a million US manufacturing jobs have been lost since NAFTA as companies relocated to Mexico to take advantage of $5 per day wages for Mexican workers. Without enforceable labor rights, Mexican workers cannot organize to increase their wages. The laid-off US workers usually find jobs with less security and wages that are about 77% of what they originally had.
- The trade surplus the US enjoyed with Mexico before NAFTA has become an $24.2 billion per year
deficit as of 2000.
- Despite promises of increased economic development throughout Mexico, only the border region has
seen intensified industrial activity. In border maquiladora factories, over one million more Mexicans work for less than the minimum wage of $5 per day today than before NAFTA. Meanwhile, NAFTA’s
agricultural terms have devastated small farmers, with one million peasant farm families estimated to have been forced out of farming. The displaced campesinos are forced either into immigrating to the US or into Mexico’s overcrowded cities where unemployment runs rampant. During the NAFTA period, eight
million Mexicans have fallen from the middle class into poverty.
- In addition, the increase of border industry has created worsening environmental and public health threats in the area. Along the border, the occurrence of some environmental diseases, including hepatitis, is two or three times the national average, due to lack of sewage treatment and safe drinking water.
- In preparation for NAFTA, Mexico repealed Article 27 of the Constitution, which gave people rights to communal land ownership.
- Dumping of maize in Mexico has displaced at least 500,000 farmers and is steadily eroding the genetic diversity of thousands varieties of native maize varieties.
- Health, safety and environmental laws in the three NAFTA countries have been attacked in NAFTA
tribunals, where corporations demand financial compensation for public interest laws that cut into
Human rights, social and environmental justice, all suffer under NAFTA.
- The Canadian funeral home chain Loewen Group used NAFTA investor protections to sue the US
government for $750 million in cash damages after a Mississippi court found Loewen guilty of malicious
and fraudulent practices that unfairly targeted a local small business. (NAFTA permits companies to sue
governments over rulings or regulations that may potentially limit their profits.) Loewen argues that the very existence of the state court system violates its NAFTA rights.
- The US-based Ethyl Corporation forced Canada to pay $13 million in damages and drop its ban on the
dangerous gasoline additive MMT, a known neurotoxin that attacks the human nervous system. Other
regulations protecting public health and the environment remain open to attack under NAFTA and
- In a similar case, US-based Metalclad Corp. sued a Mexican state to allow a toxic waste disposal site, claiming that the environmental zoning law forbidding the dump constituted an effective seizure of the company’s property – a seizure that, under the property rights extended by NAFTA (and to be
perpetuated in FTAA), requires that the offending government compensate the company. The NAFTA
tribunal ruled in favor of Metalclad and the Mexican government was forced to pay the company $16.7
- Similarly, an American PCB waste disposal company, S.D. Meyers, used NAFTA’s Chapter 11 rules to compel the Canadian government to reverse its ban on PCB exports - a ban undertaken in compliance with the Basel Convention’s restrictions on the transborder movement of hazardous waste - successfully suing the Canadian government for more than. $8 million in damages for lost business while the short-lived ban was in place.
- United Parcel Service (UPS) to sue Canada Post under Chapter 11 of NAFTA. In this case, UPS is charging that the NAFTA rules on public monopolies are being violated with regard to parcel and courier services.
- In 1991 the Canadian province of British Columbia passed a law banning the export of water. A California corporation, Sun Belt Water Inc., has challenged the law using NAFTA's Chapter 11 lawsuit, claiming that the law represents trade barrier. Sun Belt is seeking $220 million in compensation in lost profits from the Canadian government.
- A Quebec law banning specific pesticides reveals how Chapter 11 clauses - which are set to be included in the FTAA - undermine environmental protection. Quebec laws ban the herbicide 2,4-D, a known human carcinogen, and shown to adversely affect the immune system and reproductive functions in humans, among other impacts. But now a corporate lobbying group representing some of the makers of the pesticide are now threatening to challenge the law by suing the Canadian government under NAFTA's Chapter 11. The provincial government of Quebec and Canadian taxpayers has been given a harsh choice: face paying the corporations millions of dollars, or repeal the law.
Since NAFTA came into effect in 1994, it is estimated that eight million Mexicans have fallen from
middle class into poverty. Mexicans are suffering a dramatic rise in ill health as their traditional diet is replaced by Yanqui junk food. Mexican farmers go out of business as agribusiness dumps basic agricultural commodities. Mexican farmers are driven off their land to be replaced by agribusiness supplying luxury foods to the US market. Californian farmers are driven out of business by imports of cheap avocados and other luxury fruit and vegetables.
NAFTA's vicious cycle
- INCREASED US CORN EXPORTS: During NAFTA's first six years, US
corn exports to Mexico increased an astounding 1,397%, from $35 million
worth in 1993 to $527 million in 1999. On the surface, this sounds like good
news for US farmers and for Mexicans looking for lower prices on their staple
food. The reality is more complicated.
- FARMERS UPROOTED: Thousands of Mexican
peasants, stripped of subsidies and unable to compete with US
producers, have been driven from their land. Once able to feed their
own families, they must now obtain cash to buy food, despite limited
- POVERTY INCREASE: The World Bank reports that 82%
of rural Mexicans were living in poverty in 1998, up from 79% in
- IMMIGRATION: uprooted Mexican farmers have contributed
to increased immigration flows to the United States.
According to the Institute for Agriculture and Trade Policy, 'In
one of free trade's brutal ironies, many of these Mexican trade
policy refugees are joining the swelling flow of immigrants who
are harvesting and processing US food in often dangerous and
- BORDER PATROL: US spending on immigration controls
has skyrocketed from $967 million in 1993 to $2.56 billion in 1999.
There are now more than 9,000 border patrol agents, more than double
the number in 1993. In 1999, 356 migrants died in desperate attempts
to elude the patrol while crossing the border.
- US FARMERS: In 1995, Congress justified cuts in agricultural subsidies
by claiming that increased exports would in part make up the difference. Instead,
US farmers, at the mercy of volatile international markets and weather, are facing
their worst crisis since the 1980s. In 2000, the price of corn sunk to the lowest
level in a quarter century - $1.80 per bushel compared to $5 as recently as 1995.
Family farmers are expected to drop to less than 1% of the total population.
- US AGRIBUSINESS: By contrast, the corporations that helped
pressure Mexico to allow duty-free US corn imports under NAFTA have
done very well. Cargill, the world’s largest grain trader and the top ranked
private US company had net earnings in 1999 of $597 million,
up from $350 million in 1992. In 1999, the firm further increased its
power by purchasing part of its closest competitor, Continental Grain.
NAFTA has failed to deliver on its proponents’ promises to increase economic growth, to create more and better jobs and to strengthen democracy in the region. It has been devastating for working people in all three countries and has led to increased pressure on Canada and Mexico to conform to US foreign policy goals. Most alarmingly, the three governments are working to extend this failed model throughout the Americas in the proposed Free Trade Area of the Americas.
Sarah Anderson, Seven Years Under NAFTA, Institute for Policy Studies, August 2001
Sarah Anderson and John Cavanagh (with Thea Lee), Field Guide to the Global Economy, New Press, 2000
Lori Wallach & Robert Naiman, NAFTA: Four and a Half Years Later, The Ecologist, May/June 1998
Gaia index ~
(c) Keith Parkins 2003
-- September 2003 rev 0