The Cap Times recently printed an op-ed by Kurt Bauer, president and CEO of Wisconsin Manufacturers and Commerce (our state’s leading corporate lobby). He urged Congress to ratify the US-Mexico-Canada Agreement, the administration’s proposed replacement for NAFTA.
Bauer argues that implementation “will be supporting job, wage and economic growth across the state”
Even the government’s own analysis of the USMCA does not support this WMC assertion. Our trade law requires that any new trade agreement must be analyzed by the International Trade Commission, an independent federal agency. What were the ITC’s findings regarding the proposed USMCA?
• Jobs. The ITC projects that USMCA will add 175,000 U.S. jobs — over six years. The U.S. economy usually adds well over 200,000 jobs per month aside from any changes in trade agreements. 175,000 jobs over six years is hardly noticeable.
• Wages. The new NAFTA will have essentially no effect on U.S. wages: the ITC report projects an increase of 0.27% in wages, again over six years.
• Economic growth. Once more, practically no effect at all. The USMCA will increase our gross national product by 0.35% over six years. That’s $68.2 billion — in an economy of over $19 trillion per year.
Even these minuscule gains are questionable. Previous ITC analyses of trade agreements have been wildly over-optimistic.
Furthermore, the USMCA as drafted will lock in higher prices for new expensive “biologic” drugs by limiting competition from generics (“biosimilars”). We need to be cutting drug prices, not providing new guarantees for drug company super-profits.
The USMCA also provides incentives for U.S. corporations to move jobs to Mexico, with its lower wages and lax environmental standards.
Even with required improvements in Mexican labor law, wages for Mexican workers will not rise enough to stop the continuing outflow of jobs from the U.S. to Mexico. Mexican manufacturing wages are projected to rise a maximum of 51 cents over six years — to $3.51 per hour. These wages would still be lower than average manufacturing worker wages in China.
The ITC report does not even mention the effect of environmental standards, probably because they are as weak in USMCA as they are currently in NAFTA. Thus, lower environmental costs in Mexico would continue to promote the exodus of U.S. jobs.
No real economic gains combined with continued incentives for US corporations to outsource jobs to Mexico require that Congress fix this proposed trade agreement before voting on it.
Labor and environmental standards need to be greatly strengthened and effective enforcement provisions added to the agreement. Also, special protections for drug companies that increase drug prices need to be removed.
Only with these changes should Congress approve USMCA, the "new NAFTA."
David Newby is president of the Wisconsin Fair Trade Coalition.
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