Web Preface

Not This NAFTA is a document issued by Chicago DSA in 1993 during the campaign to persuade Congress to not ratify the North American Free Trade Agreement (NAFTA). The document had its start as an open letter to Congressman Fawell from Chicago DSA's West Suburban Branch that was presented to the staff at his district office at the conclusion of an informational picket outside the office. While time has changed the context and specifics addressed by this document, the essential point remains: the rigidly "free market" neo-liberal ideology that informs NAFTA is not the only option and there are actual examples (e.g. the European Social Charter) that demonstrate practical possible alternatives.

The North American Free Trade Agreement is a fatally flawed agreement for the vast majority of Americans. It will benefit only a small percentage of the population in Canada, Mexico and the United States. An agreement that only protects the rights of property does not create a "level playing field". Rather it creates a system in which the incentive is toward the lowest denominator. The society with the least protection for the working people, its consumers, and the environment will have a distinct advantage. Yet the fundamental concept of a North American trade agreement may be a good one, and it's not as if we lack a working model of what could be at least an acceptable agreement. The current proposed agreement is a recipe for disaster.

The working class in this country is already in crisis. Thanks to twelve years of neo-liberal economic policies, "trickle down economics", the wealth of this country has shifted drastically. At least 60 percent of the increase in wealth generated from these years went to the top 1 percent of families. The richest 1 percent of the population doubled its average income during that time while the bottom 80 percent saw their incomes decline in real wages by approximately 7 percent. The richest 1 percent of the population now own 36 percent of the wealth in this country.

This grotesque economic exploitation has led to a society in which there are currently 30 million working American families in the U.S. living below the poverty line. The North American Free Trade Agreement will not help these families. According to a report published by the International Trade Commission in February of 1991, "unskilled workers in the U.S. would suffer a slight decline in income, but skilled workers and owners of capital services would benefit". Ironically, what this same pro-NAFTA report fails to mention is that, based upon its own criteria, more than 70 percent of the U.S. work force falls into the category of "unskilled". In essence, this NAFTA will contribute to the entrenchment of these economic inequalities.

This NAFTA would undermine U.S. food, health and safety, and environmental standards. Paragraph 4 of Article 715 of the Agreement permits a government to adopt provisional sanitary or phytosanitary standards that have not gone through established risk-assessment procedures. Furthermore, Annex 2004 states that, "if any Party considers it is being nullified or impaired as a result of the application of any measure that is not inconsistent with this agreement, the Party may have recourse to dispute settlement." Consequently, U.S. consumer safety and environmental laws could be challenged.

A North American FAIR Trade Agreement would have tough environmental and safety standards written into it to ensure, for example, the clean up of the border area in Mexico. This is an area that the American Medical Association characterized as a "virtual cesspool and breeding ground for infectious disease". Unfortunately, this NAFTA does not contain a funding mechanism to pay for the current environmental disaster in this region. Furthermore, prevention must take top priority in all three countries. A North American FAIR Trade Agreement would have specific timetables, firm funding commitments, and requirements for improvements in infrastructure. It would also include right-to-know provisions.

Furthermore, this NAFTA's dispute resolution mechanism is completely undemocratic and contrary to most U.S. law and precedent. It does not allow any participation by public and non-governmental organizations. It is based upon secrecy: according to Article 2017 of the Agreement, all documentation submitted during the dispute resolution proceedings is restricted from public access until the final report is issued and even then may be published only if all parties agree to the release of the findings. A North American FAIR Trade Agreement would enable participation and observation by all interested parties, including workers, consumers, environmentalists and human rights activists.

This agreement does not provide any means for trade-related enforcement of environmental, health, labor or safety standards. Although Article 1114 acknowledges that "it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures", it fails to offer a meaningful enforcement mechanism. A North American FAIR Trade Agreement should expressly provide that any failure to enforce environmental, safety and labor standards would constitute a basis for a legal challenge as an unfair trade practice.

The current agreement undermines U.S. jobs, wages and working conditions. Any agreement would result in a reallocation of production in Canada, Mexico and the United States, resulting in people losing their jobs. A FAIR trade agreement would include a plan for retraining these displaced workers. The current agreement does not. Many U.S. corporations will use this lack of planning as a tool to their advantage. In a Wall Street Journal poll of 455 U.S. business executives, a quarter freely admitted that they will use NAFTA to bargain down wages. 40 percent said that if NAFTA is ratified, they would likely shift some production to Mexico.

A North American FAIR Trade Agreement would take deliberate steps to upwardly harmonize labor standards. Countries acceding to the European Community, for example, must agree to meet and enforce certain labor, political and social standards in order to receive development funds for improvement of infrastructure and schools.

For a harbinger of what is in store for America under the current agreement, we must look no further than our brothers and sisters in Canada to see what lower American wages have done to their jobs. Canadians have lost 315,000 jobs as a result of their trade agreement with the U.S. Mexican workers earn approximately $1.85 an hour and less than that ($0.65 an hour) if they work for a U.S. firm. Given these facts, there is no economic impetus for keeping jobs in this country. Many studies, including NAFTA: An Assessment (which was heavily relied upon by George Bush), indicate that America will lose approximately 324,000 to 550,000 high-wage jobs in the next decade, despite minor growth of jobs in some sectors. This is approximately double the 550,000 jobs already lost to Mexico and will only contribute to the eulogy of job loss and environmental degradation in both countries.

"Trickle down" economics has been bad for the majority of U.S. citizens. It will be even worse for Mexicans. In Mexico, as in the U.S., NAFTA will benefit a small portion of the population who have a clear history of not distributing economic rewards to workers. The Mexican government currently has an explicit policy of competing internationally through low wages and lax enforcement of its own labor and environmental standards. In the maquiladora factories, a predominantly female work force suffers from low wages (approximately $0.60 an hour), violation of worker rights, and hazardous working conditions.

Displacement of workers in this country will be complicated by the displacement of approximately 850,000 to 2,000,000 members of Mexican farm families once their small farming communities (ejidos) are overrun by huge, "efficient" multi-national farming corporations. This displacement will force these families to either move to already crowded Mexican urban centers, or will force them to migrate to the U.S. in search of better jobs, thereby eradicating any of the current agreement's alleged gains in lowering the numbers of illegal immigrants.

Make no mistake, Chicago DSA is not advocating protectionism. We want a FAIR trade agreement that insures that American, Mexican and Canadian workers and their families are not grievously injured. As our allies in the European Community are showing us, this is not only a possibility, but a moral and economic imperative. The European Market mechanism has two characteristics which we want duplicated in a North American trade agreement.

First, we want a Social Charter that will lay down the social qualifications which must be met in order to be a member of NAFTA. These qualifications must include: modern labor laws; Canadian style right-to-organize laws; a viable minimum wage law; rights to social assistance and vocational training; and health and safety protections.

The Social Charter must repeal free-trade advantages when continued violations of basic human and community rights occur. For example, Mexico must hold honest elections. While covering Mexico's last federal election, the Miami Herald noted eastern-bloc political tactics: "Irregularities included polling stations moved from their original locations, registered voters removed from voting lists, duplicate IDs and repeat voting, ballot-box stuffing, opposition observers denied access to polling stations, and voter intimidation."

Wholesale murder of human rights activists is not uncommon in Mexico. In May of 1990, Norma Corona Sapien, president of the Sinola Human Rights Commission, was assassinated. Later, a Federal Judicial Police Commander was arrested and charged with the murder. Mexico also has the highest number of murdered journalists in Latin America. During the current administration of President Salinas, 17 journalists have been murdered. One journalist was murdered for publishing an article in which he described the drug-trafficking of the Judicial Police and a former Deputy Attorney General.

Trade unionists are regularly harassed, arrested and tortured. In January of 1990, 100 armed goons attacked workers striking at a Ford plant in Cuatitlan. One worker in this case was murdered and fourteen were seriously injured. On April 29, 1991, independent trade unionist Baulio Aguilar Reyes was abducted from his care by the Federal District Judicial Police and beaten. He was then detained for 40 hours during which time he was physically and mentally tortured by police officers and questioned about his and his brother's labor activities.

Second, we want a NAFTA which contains a Regional Development fund. In Europe, this $68 billion fund exists in order to narrow the income gap between the richer and poorer countries in the market: a gap which is only one-fifth as wide as the per capita gap between the U.S. and Mexico. The aim of such a fund in NAFTA would be three-fold:

• improve infrastructure in all three countries;
• harmonize labor, environmental and consumer standards;
• subsidize adjustment costs.

In Europe, for example, Ireland has benefited most from the Regional Development Fund. It receives 8 percent of its annual Gross Domestic Product from European Community aid. Portugal, with a Gross Domestic Product of 75 percent of the European average, receives a similar massive injection of resources. This is hardly a sign of charity. Out of every 100 "ecus" the European Community invests in Portugal, 46 return to other member states by way of increase exports to Portugal. Relatively speaking, Mexico would need to receive $20 to $25 billion a year in similar aid from the U.S. and Canada.

The massive outlay in capital could be paid for in any number of ways, including:

• a tax on cross-border transactions;
• a tax on windfall profits that may companies will make by moving to Mexico;
• creation of a North American Development Bank and an adjustment fund to compensate the poorest areas or those hit hardest by job relocation;
• a requirement that companies leaving workers behind must pay an exit tax; and
• a reinstatement of higher taxes on corporations and the wealthy since both will gain the most from NAFTA.

This last proposal could be done by closing the loopholes in the net operating loss deductions. In 1988, U.S. corporations were getting $51.4 billion in tax write-offs from the net operating loss deduction. In the 1980s, corporations escaped from paying $92.2 billion in taxes thanks to interest deductions. Under these lax tax laws, taxes paid by corporations increased by 264% between the 1950s and the 1980s. During that same time, tax payments by individuals increased by 1,041% Stricter laws, ensuring that corporations pay their fair share of taxes will assist in paying for a Regional Development fund.

In conclusion, we want a completely new NAFTA that will harmonize and homogenize not only tariffs, but upwardly adjust standards, be they labor, environmental or health related. We want the highest common denominator intrinsic in a NAFTA, not the lowest. We want a NAFTA that will assure that a greater society and market is created for all and not just for the privileged holders of money and power. We have a fantastic opportunity to create a market, and hence a society, from anchorage to Tierra del Fuego which will not hold profits in the highest esteem but rather the dignity and industriousness of each and every member of the member states.

Appendix

Introduction

European Community History

The European Community began as the European Coal and Steel Community in 1952. By 1958 the European Coal and Steel Community had become the European Community, soon to be popularly known as the "Common Market." In these years the major players were France and Germany. Both were anxious to better their post-war economic position by cooperating on trade matters. Beside these two giants, the early European Community included only Belgium, Italy, Luxembourg and the Netherlands (Britain, Ireland, and Denmark would join in 1973, Greece in 1981, and Portugal and Spain in 1986). Questions of Europe's full economic and increased political union ("Euro-federalism") would wait until the late 1970's.

The European Parliament was first directly elected in 1979 from the member states. This has led to the marginal increase of the European Parliament's powers against those of the historically more conservative Council of Ministers. Since then, the European Parliament has become one the most progressive international institutions in history as well as the first to be directly elected by citizens. It has passed important initiatives on foreign policy, human rights, ecological protection, and social welfare. The European Parliament has become the central focus for continental discussions of social and economic policy. Well-organized blocs (formally recognized by the Parliament as "political groups") maneuver to shape European Parliament policy. In January of 1993, the largest of these blocs were the Socialists (controlling 198 out of 518 seats) and the conservative/Christian Democratic European People's Party (with 162). Other blocs include the Greens (with 28 seats) and the Liberal Democratic and Reformists (with 46). The communist Left Unity group has recently lost its parliamentary recognition for lack of seats.

In 1984 the European Community began formal discussion of creating a single European market, allowing for the free flow of persons, goods, services, and capital. This led to the drafting of the Maastricht Treaty (which includes the Social Charter), the current plan for economic and monetary union and closer political ties between European Community countries, including a common foreign policy. In May of 1993, Denmark became the tenth member state to approve the Maastricht Treaty.

Structure of the European Community

The European Parliament exercises some direct democratic control over the running of the European Community. Its 518 members are elected every five years. The Council of Ministers is comprised of government ministers from each member state. They make final decisions on laws to be applied throughout the Community. The European Council is comprised of heads of government and meets two or three times a year to discuss general issues confronting the Community. The European Commission (aka "the executive civil service") consists of 17 Commissioners of all 12 nationalities. It makes proposals for legislation, upholds the Treaties, and ensures respect for existing European Community laws. The Court of Justice has judges from all the Community countries and passes judgement on disputes arising from the application and interpretation of Community law. The Court of Auditors is responsible for the Community's finances.

Background on the Social Charter

As discussion of economic and monetary union progressed, and the influence of the European Parliament increased, the so-called "social dimensions" of European union enjoyed more attention. By the end of 1988, French socialist Jacque Delors, president of the European Commission, campaigned for a package of social welfare guarantees to be realized with the common market. Delors promised a "social Europe" based on "industrial democracy." In the spring of 1989, conservative opposition was soundly defeated as the European Parliament voted for drafting a "Social Charter." By September, the aims of the Charter were spelled out, including provisions for education and job training, free movement of workers, the right to collective bargaining, the right to strike, worker participation, a continental minimum wage, adequate health and safety standards for workers, a shorter working week, stronger regulations on child labor, and civil rights for women, minorities, the elderly, and the handicapped. By December, the final draft passed the European Council 11 votes to 1, with Britain's Margaret Thatcher casting the dissenting vote.

Since then, "The Community Charter of Fundamental Social Rights for Workers" has served as a springboard for a number of progressive European Community initiatives. Primarily a statement of intent, implementation of the Charter falls into the policy-making jurisdiction of the European Commission and the Parliament's various subcommittees. Among the most prominent of these initiatives are the European Community's encouragement of worker-participation, the continental minimum wage, occupational health and safety standards, and economic development programs. In May of 1992, the Social Charter's implementation was seriously hindered by Britain's refusal to respect its legality. By withholding voluntary cooperation with European Community policy, Britain drastically undermined the Charter's influence. Many in the European Community are now working to rout Britain's political opposition and force its legal compliance. The Social Charter's influence was greatly strengthened by its inclusion in the Maastricht Treaty. In recent months, the Charter has launched programs to help recent immigrants, part-time workers, and the Community's fifty million citizens still living in poverty.
 

The European Community Charter of Fundamental Social Rights for Workers

Title I - Fundamental Social Rights of Workers

Freedom of Movement

1. Every worker of the European Community shall have the right to freedom of movement throughout the territory of the Community, subject to restrictions justified on grounds of public order, public safety or public health.

2. The right to freedom of movement shall enable any worker to engage in any occupation or profession in the Community in accordance with the principles of equal treatment as regards access to employment, working conditions and social protection in the host country.

3. The right to freedom of movement shall also imply:

i) harmonization of conditions of residence in all Member States, particularly those concerning family reunification;
ii) elimination of obstacles arising from the non-recognition of diplomas or equivalent occupational qualifications;
iii) improvement of the living and working conditions of frontier workers.

Employment and Renumeration

4. Every individual shall be free to choose and engage in an occupation according to the regulations governing each occupation.

5. All employment shall be fairly renumerated. To this end, in accordance with arrangements applying in each country:

i) workers shall be assured of an equitable wage, i.e. a wage sufficient to enable them to have a decent standards of living;
ii) workers subject to terms of employment other than an open-ended full-time contract shall benefit from an equitable reference wage;
iii) wages may be withheld, seized or transferred only in accordance with national law; such provisions should entail measures enabling the worker concerned to continue to enjoy the necessary means of subsistence for him or herself and his family.

6. Every individual must be able to have access to public placement services free of charge.

Improvement of Living and Working Conditions

7. The completion of the internal market must lead to an improvement in the living and working conditions of workers in the European Community. This process must result from an approximation of these conditions while the improvement is being maintained, as regards in particular the duration and organization of working time and forms of employment other than open-ended contracts, such as fixed-term contracts, part-time working, temporary work and seasonal work.

The improvement must cover, where necessary, the development of certain aspects of employment regulations such as procedures for collective redundancies and those regarding bankruptcies.

8. Every worker of the European Community shall have a right to a weekly rest period and to annual paid leave, the duration of which must be progressively harmonized in accordance with national practices.

9. The conditions of employment of every worker of the European Community shall be stipulated in laws, a collective agreement or a contract of employment according to arrangements applying in each country.

Social Protection

According to the arrangements applying in each country:

10. Every worker of the European Community shall have a right to adequate social protection and shall, whatever his status and whatever the size of the undertaking in which he is employed, enjoy an adequate level of social security benefits.

Persons who have been unable to either enter or re-enter the labour market and have no means of subsistence must be able to receive sufficient resources and social assistance in keeping with their particular situation.

Freedom of Association and Collective Bargaining

11. Employers and workers of the European Community shall have the right of association in order to constitute professional organizations or trade unions of their choice for the defense of their economic and social interests.

Every employer and every worker shall have the freedom to join or not to join such organizations without any personal or occupational damage being thereby suffered by him.

12. Employers or employers' organizations, on the one hand, and workers' organizations, on the other, shall have the right to negotiate and conclude collective agreements under the conditions laid down by national legislation and practice.

The dialogue between the two sides of industry at European level which must be developed, may, if the parties deem it desirable, result in contractual relations in particular at inter-occupational and sectoral level.

13. The right to resort to collective action in the event of a conflict of interests shall include the right to strike, subject to the obligations arising under national regulations and collective agreements.

In order to facilitate the settlement of industrial disputes the establishment and utilization at the appropriate levels of conciliation, mediation and arbitration procedures should be encouraged in accordance with national practice.

14. The internal legal order of the Member States shall determine under which conditions and to what extent the rights provided for Articles 11 and 13 apply to the armed forces, the police and civil service.

Vocational Training

15. Every worker of the European Community must be able to have access to vocational training and to benefit therefrom throughout his working life. In conditions governing access to such training there may be no discrimination on grounds of nationality.

The competent public authorities, undertakings or the two sides of industry, each within their own sphere of competence, should set up continuing and permanent training systems enabling every person to undergo retraining, more especially through leave for training purposes, to improve his skills or to acquire new skills, particularly in the light of technical development.

Equal Treatment for Men and Women

16. Equal treatment for men and women must be assured. Equal opportunities for men and women must
be developed.

To this end, action should be intensified to ensure the implementation of the principle of equality between men and women as regards in particular access to employment, renumeration, working conditions, social protection, education, vocational training and career development.

Measures should also be developed enabling men and women to reconcile their occupational and family obligations.

Information, Consultation and Participation of Workers

17. Information, consultation and participation of workers must be developed along appropriate lines, taking account of the practices in force in the various Member States.

This shall apply especially in companies or groups of companies having establishments or companies in two or more Member States of the European Community.

18. Such information, consultation and participation must be implemented in due time, particularly in the following cases:

i) when technological changes which, from the point of view of working conditions and work organization, have major implications for the work force, are introduced into undertakings;
ii) in connection with restructuring operations in undertakings or in cases of mergers having an impact on the employment of workers;
iii) in cases of collective redundancy procedures;
iv) when transfrontier workers in particular are affected by employment policies pursued by the undertaking where they are employed.

Health Protection and Safety at the Workplace

19. Every worker must enjoy satisfactory health and safety conditions in his working environment. Appropriate measures must be taken in order to achieve further harmonization of conditions in this area while maintaining the improvements made.

These measures shall take account, in particular, of the need for the training, information, consultation and balanced participation of workers as regards the risks incurred and the steps to eliminate or reduce them.

The provisions regarding implementation of the internal market shall help to ensure such protection.

Protection of Children and Adolescents

20. Without prejudice to such rules as may be more favourable to young people, in particular those ensuring their preparation for work through vocational training, and subject to derogations limited to certain light work, the minimum employment age must not be lower than the minimum school-leaving age and, in any case, not lower than 15 years.

21. Young people who are in gainful employment must receive equitable renumeration in accordance with national practice.

22 Appropriate measures must be taken to adjust labour regulations applicable to young workers so that their specific development and vocational training and access to employment are met.

The duration of work must, in particular, be limited - without it being possible to circumvent this limitation through recourse to overtime - and night work prohibited in the case of workers of under 18 years of age, save in the case of certain jobs laid down in national legislation or regulations.

23. Following the end of compulsory education, young people must be entitled to receive initial vocational training of a sufficient duration to enable them to adapt to the requirement of their future working life; for young workers, such training should take place during working hours.

Elderly Persons

According to the arrangements applying in each country:

24. Every worker of the European Community must, at the time of retirement, be able to enjoy resources affording him or her a decent standard of living.

25. Every person who has reached retirement age but who is not entitled to a pension or who does not have other means of subsistence must be entitled to sufficient resources and to medical and social assistance specifically suited to his needs.

Disabled Persons

26. All disabled persons, whatever the origin and nature of their disablement, must be entitled to additional concrete measures aimed at improving their social and professional integration.

These measures must concern, in particular, according to capacities of the beneficiaries, vocational training, ergonomics, accessibility, mobility, means of transport and housing.

Title II - Implementation of the Charter

27. It is more particularly the responsibility of the Member States in accordance with national practices, notably through legislative measures or collective agreements to guarantee the fundamental social rights in this Charter and to implement the social measures indispensable to the smooth operation of the internal market as part of a strategy of economic and social cohesion.

28. The European Council invites the Commission to submit as soon as possible initiatives which fall within its powers, as provided for in the Treaties, with a view to the adoption of legal instruments for the effective implementation, as and when the internal market is completed, of those rights which come within the Community's area of competence.

29. The Commission shall establish each year, during the last three months, a report on the application of the Charter by the Member States and by the European Community.

30. The report of the Commission shall be forwarded to the European Council, the European Parliament and the Economic and Social Committee.