Advocates for trade agreements like NAFTA, the U.S.-China WTO Accession Agreement, and the proposed Free Trade Area of the Americas (FTAA) invariably tout such deals as market-opening initiatives that will increase U.S. exports, thereby creating high-wage jobs for American workers.
It’s true that NAFTA and other trade agreements have helped increase U.S. exports, but free trade advocates conveniently overlook the other side of the trade equation: imports.
In 2002, the U.S. trade deficit in goods and services reached a staggering $418 billion, up from $358.3 billion in 2001.
Automotive trade accounted for $123 billion of the 2002 U.S. trade deficit.
Before NAFTA, the U.S. had a modest trade surplus with Mexico. Since NAFTA went into effect on January 1, 1994, the U.S. trade deficit with Mexico has increased each year, hitting $37.1 billion last year — $25.7 billion in automotive trade alone. In 2002, the U.S. trade deficit with Canada was $48.2 billion — $14.7 billion in automotive trade.
But Mexican workers aren’t NAFTA winners: The total cost for wages and benefits for Mexican production workers is $2.34 an hour, compared to $2.40 an hour in 1993 before NAFTA went into effect.
China has surpassed Japan as the single largest contributor to the U.S. trade deficit. In 2001, the U.S. trade deficit with China was $83.1 billion; in 2002, it soared to $103.1 billion.
No official government data is available on Chinese workers’ wages. However, in a May 19 article in Automotive News Europe, J. Ferron, a partner with Price Waterhouse Coopers LLP in Detroit, estimated that the average factory worker in China earns $363 a year.
Shrinking Manufacturing Employment
Severely flawed U.S. trade policies are a major factor in the loss of manufac-turing jobs in America. In an Economic Policy Institute report published in 2000, economist Rob Scott estimated that the imbalance in trade had caused a net loss of 3.2 million U.S. jobs from 1992 through 1999.
The U.S. has lost more than 2 million manufacturing jobs since the beginning of George W. Bush’s presidency.
In December 2002, total manufacturing employment fell to 16.5 million – the lowest level since 1961.
The manufacturing industry continues to be plagued by steady job loss, with an employment decline of 53,000 jobs in May 2003 alone.
