Tag Archives: Nafta

NAFTA Effect: Global Manufacturers Bet on Dirt-Cheap Mexico, by Don Quijones

Mexico’s low wages are still compelling for many manufacturers. From Don Quijones at wolfstreet.com:

That wages have remained so low for so long is not by accident; it’s by design.

President Trump’s repeated bashing of the North American Free Trade Agreement between the US, Canada, and Mexico has failed to dull the allure of Mexico’s maquiladoras for global manufacturers looking to cash in on the country’s much cheaper labor costs. Tecma Group, a firm that helps US and Canadian firms relocate to Mexico, has more business than ever. In the past few weeks alone, it has helped a cleaning equipment company and packaging company move.

Mexico Consulting Associates, headquartered in Chicago, has three new clients interested in Mexico. Keith Patridge, who heads McAllen Economic Development, estimates that at least 12 companies will be installed this year in the north-western city of Reynosa. Another firm, Tacna Services, has helped two companies get set up in the Baja California area.

The southward migration of U.S. companies continues unchecked even as Trump threatens to abandon NAFTA, provoking fear and consternation among manufacturers that have production and supply chains spread across the three countries. If Trump followed through on his threat, traded goods would be subject to tariffs of around 3.5% in the case of Mexican companies and 7% in the case of US ones, according to Benito Barber, an economist for Latin America for Nomura Holdings.

On Tuesday a new coalition of major automakers, suppliers, and car dealers urged Trump not to withdraw from NAFTA. The members of the “Driving American Jobs” coalition include trade associations that represent major global car manufacturers such as General Motors, Toyota Motor, Volkswagen, Hyundai Motor, and Ford Motor.

The coalition has sponsored an advertising campaign aimed at convincing the White House and American voters that NAFTA has been instrumental in boosting production and employment in the US auto industry — a dubious claim given that all global vehicle manufacturers, which can manufacture just about anywhere in the world, always search for cheap labor to maximize the bottom line.

And in NAFTA-land the cheapest labor is in Mexico, where assembly line workers earn an average hourly wage of around $2.50. The average hourly wage for workers in US motor vehicles manufacturing is $28.70 and in auto parts manufacturing it’s $18.19, according the Bureau of Labor Statistics.

To continue reading: NAFTA Effect: Global Manufacturers Bet on Dirt-Cheap Mexico

Advertisements

After Fake Promises of Transparency, NAFTA Negotiations Start in Secrecy. And Lobbying is Heating Up, by Wolf Richter

Meet the new trade agreement, same as the old trade agreeement. From Wolf Richter at wolfstreet.com:

Americans aren’t allowed to know what’s being negotiated at their expense.

The first round of re-negotiating the North American Free Trade Agreement between the US, Canada, and Mexico began on Wednesday and is scheduled to last through Sunday. And the one thing we know about it is this: Despite promises in March by US Trade Representative Robert Lighthizer (USTR) that the negotiations would be transparent, the USTR now considers the documents and negotiations “classified” and they’ll be cloaked in secrecy.

But corporate lobbyists have access. And they’re all over it.

The Electronic Frontier Foundation put it this way:

Once again, following the failed model of the Trans-Pacific Partnership (TPP), the USTR will be keeping the negotiating texts secret, and in an actual regression from the TPP will be holding no public stakeholder events alongside the first round. This may or may not set a precedent for future rounds, that will rotate between the three countries every few weeks thereafter, with a scheduled end date of mid-2018.

But during his confirmation hearing in March, Lighthizer had promised to make the negotiations transparent and to listen to more stakeholders and the public. The EFF reported at the time that in response to Senator Ron Wyden question – “What specific steps will you take to improve transparency and consultations with the public?” – Lighthizer replied in writing (emphasis added):

“If confirmed, I will ensure that USTR follows the TPA [Trade Promotion Authority, aka. Fast Track] requirements related to transparency in any potential trade agreement negotiation. I will also look forward to discussing with you ways to ensure that USTR fully understands and takes into account the views of a broad cross-section of stakeholders, including labor, environmental organizations, and public health groups, during the course of any trade negotiation.

He said that “we can do more” to ensure that we “have a broad and vigorous dialogue with the full range of stakeholders in our country.”

Senator Maria Cantwell tried to have Lighthizer address the skewed Trade Advisory Committees that currently advise the USTR, by asking:

“Do you agree that it is problematic for a select group of primarily corporate elites to have special access to shape US trade proposals that are not generally available to American workers and those impacted by our flawed trade deals?”

To continue reading: After Fake Promises of Transparency, NAFTA Negotiations Start in Secrecy. And Lobbying is Heating Up

Renegotiating NAFTA Is A Good Idea – For Mexico, by Frances Cuppola

Notwithstanding President Trump’s rhetoric, NAFTA has not been that good a deal for Mexico. Frances Coppula asks some good questions. From Coppula at forbes.com:

President Trump is not happy with the North American Free Trade Association (NAFTA). During the Presidential campaign, he described it as the ‘worst trade agreement the U.S. ever signed’. He blames it for the loss of large numbers of manufacturing jobs across the border to Mexico, where wages are lower. According to the White House website’s new page on trade, ‘blue-collar towns and cities have watched their factories close and good-paying jobs move overseas, while Americans face a mounting trade deficit and a devastated manufacturing base.’

At the same time, President Trump complains about the flow of migrants across the border from Mexico to the US. They take American jobs and American money, apparently. So, he plans to build a wall to stem the flow, and make Mexico pay for it. Exactly how he plans to make Mexico pay for it is as yet unclear: suggestions range from a 20% tax on American imports from Mexico (which my colleague Tim Worstall was quick to point out would in practice be paid by American businesses and consumers), to a withholding tax on remittances from Mexicans working in the U.S.

I sympathise hugely with the Americans who feel that they are losing out. Well-paid manufacturing jobs have indeed declined in the last decade or two, partly replaced by poorer-paying service jobs. But something is not right here. If all the good jobs have gone across the border, how come so many Mexicans have come to the U.S. to work? We should not kid ourselves that this is an easy option. The Mexican border is already heavily policed, and just about the only open route is a long and dangerous desert crossing in which many migrants lose their lives. Why would so many people risk that crossing, if all they had to do was wait for the good jobs to come to them?

To continue reading: Renegotiating NAFTA Is A Good Idea – For Mexico

Hideous Constellation of Threats and Challenges Facing Mexico, by Don Quijones

Mexico is steadily moving up the list of candidates to initiate the next global economic and financial crisis, the snowball that starts the avalanche. From Don Quijones at wolfstreet.com:

Things are rapidly going from bad to worse in Mexico. Hundreds of people were arrested and a handful of people killed over the past week as peaceful protests against the government’s hike of gasoline prices (by as much as 20% in some states) descended into widespread looting and rioting. The mood on the street was hardly helped when Mexico’s deeply unpopular president, Enrique Peña Nieto, tried to defend his actions by asking the public, “What would you have done?”

For a lot of people, the answer’s clear: a lot of things, very differently. Right at the top of the list would be launching an all-out war against the endemic culture of corruption plaguing virtually all levels of government. But now, time is fast running out as Mexico now faces a hideous constellation of threats and challenges, all at the same time.

NAFTA Hangover

There are few bigger threats to Mexico right now than the President Elect Donald Trump, who last week announced the appointment of Robert Lighthizer as the United States’ new Trade Representative. Lighthizer, a trade lawyer and vocal supporter of protectionist policies, is expected to play a leading role in the renegotiation of NAFTA, which helped transform Mexico into a low-cost industrial powerhouse while also shackling its economic fate to its northern neighbor:

The U.S. accounts for 80% of Mexico’s exports, 49% of its imports, and 60% of all its foreign direct investment.

To continue reading: Hideous Constellation of Threats and Challenges Facing Mexico

The Secret Global Court – Why Corporate Criminals and Corrupt Politicians Desperately Want the TPP, by Michael Krieger

Remember this acronym: ISDS. It stands for investor-state dispute settlement. It means that a company operating in a country can appeal to an authority higher than the country’s highest court in disputes with the country’s government. That higher authority is usually three arbitrators, usually private attorneys. How do three-attorney panels overrule national governments and courts? So-called free trade agreements, like NAFTA and the proposed Trans-Pacific Partnership, which President Obama is going to try to ram through a lame-duck Congress after the election. From Michael Krieger at libertyblitzkrieg.com:

Obama needs to ensure he gets well compensated after leaving office for a job well done protecting, defending and further enriching the global oligarch class. This is precisely why he’s so adamant about passing the TPP during the upcoming lame duck session of Congress, when he knows “representatives” who no longer face reelection can be coerced or bribed into voting for this monumental public betrayal.

The Trans-Pacific Partnership (TPP) ins’t really a free trade deal, it’s a way for global oligarchs to consolidate, grow and protect their enormous wealth. The investor-state dispute settlement system (ISDS) is perhaps the most nefarious and objectionable aspect of the deal, with this shadowy court system being used to accomplish the following for the super rich and powerful:

1) Eliminate sovereign risk from their investments.

2) Earn money by scouring the world for potential ISDS “opportunities” and then speculating on them.

3) Escape prosecution from criminality on a global basis.

The whole thing is absolutely disgusting and epitomizes all that is wrong and unethical about the world today. As such, stopping the TPP from passage is probably the most important near-term challenge ahead for all of us who want to make the world a better place (or at least prevent it from getting much, much worse).

Before getting into today’s article, I want to commend Chris Hamby and BuzzFeed for publishing this extremely timely and important work. We can only hope that it will inform millions of Americans sufficiently to create the needed pushback to prevent the TPP from ever becoming law.

So without further ado, let’s get on with it. What follows are excerpts from Part 1 of a four part investigative series. My snippets don’t do this work the justice it deserves; as such, I strongly encourage you to read the entire piece and share it with everyone you know.

Now, from the blockbuster piece, The Court That Rules the World:

Imagine a private, global super court that empowers corporations to bend countries to their will.

Say a nation tries to prosecute a corrupt CEO or ban dangerous pollution. Imagine that a company could turn to this super court and sue the whole country for daring to interfere with its profits, demanding hundreds of millions or even billions of dollars as retribution.

Imagine that this court is so powerful that nations often must heed its rulings as if they came from their own supreme courts, with no meaningful way to appeal. That it operates unconstrained by precedent or any significant public oversight, often keeping its proceedings and sometimes even its decisions secret. That the people who decide its cases are largely elite Western corporate attorneys who have a vested interest in expanding the court’s authority because they profit from it directly, arguing cases one day and then sitting in judgment another. That some of them half-jokingly refer to themselves as “The Club” or “The Mafia.”

And imagine that the penalties this court has imposed have been so crushing — and its decisions so unpredictable — that some nations dare not risk a trial, responding to the mere threat of a lawsuit by offering vast concessions, such as rolling back their own laws or even wiping away the punishments of convicted criminals.

This system is already in place, operating behind closed doors in office buildings and conference rooms in cities around the world. Known as investor-state dispute settlement, or ISDS, it is written into a vast network of treaties that govern international trade and investment, including NAFTA and the Trans-Pacific Partnership, which Congress must soon decide whether to ratify.

To continue reading: The Secret Global Court – Why Corporate Criminals and Corrupt Politicians Desperately Want the TPP