Letter from the US: What NAFTA tells us about the TPP threat

June 14, 2015

The Trans-Pacific Partnership (TPP) being negotiated between the US and 11 other Pacific Rim nations — including Australia — is a treaty covering regulations and investments.

It is being negotiated in secret from the peoples of the affected nations, but not from the corporations that are set to benefit from the deal — as chapters leaked by WikiLeaks reveal. For the US side alone, about 600 corporate representatives are neck deep in the negotiations.

This fact alone gives the game away. The TPP will further the interests of the rich at the expense of workers and the poor. It will codify new regulations to facilitate more neoliberal changes to the economies of these countries.

At the same time, it will further the interests of the imperialist countries involved — the US, Australia, Canada, Japan and New Zealand — at the expense of the oppressed nations of Brunei, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam.

Capitalists in the poor countries will benefit as junior partners with the imperialists at the expense of their people.

In all 12 countries, there will be new regulations that weaken laws defending workers (including agricultural workers), small farmers and peasants, and the environment. But corporations will be empowered to overturn laws they do not like.

One objective will be to form a bloc of these countries against China, part of US President Barack Obama’s “pivot to Asia”.

'NAFTA on steroids'

We are not flying blind on the likely impacts of the TPP. The North American Free Trade Agreement, signed by the US, Canada and Mexico in 1993, has been in place for more than two decades.

The TPP has been referred to as “NAFTA on steroids”, so looking at the impacts of NAFTA gives a glimpse of what is in store with the TPP.

In 1993, then-US president Bill Clinton promised it would “promote more growth, more equality, better preservation of the environment and greater possibility of world peace … It will create 200,000 jobs in this country by 1995.”

What is the result two decades later? In all three countries, wealth inequality has mushroomed. In no year did the US add 200,000 jobs as a result of NAFTA.

In fact, hundreds of thousands of jobs were lost as US corporations used NAFTA’s investment incentives to relocate to Mexico to take advantage of low wages. No environmental laws were strengthened by NAFTA.

Big Pharma and chemical industries got their patents extended geographically, and won rights not to be regulated and inspected. Big Oil and Gas got absolute rights to natural resources to pump ever more greenhouse gases into the atmosphere.

Then-Mexican president Carlos Salinas also claimed “NAFTA is a job-creating agreement”. He added that it was “a wage-increasing agreement” and “an environmental improvement agreement”.


It was in Mexico where NAFTA wreaked the most harm.

NAFTA promoters said the pact would bring new US technology and capital to complement Mexico’s surplus labour. This in turn would lead Mexico to industrialise and raise productivity, which would cause wages in Mexico to rise.

The higher wages would expand economic opportunities, slowing migration to the US, the theory went.

The results are in. NAFTA failed to spur inclusive economic growth, pull Mexicans out of unemployment and underemployment, or reduce poverty. It has done the opposite.

An immediate result of NAFTA was to gut land reform embedded in Mexico's constitution. This vestige of the Mexican Revolution of the early 20th century guaranteed small plots of land to millions of rural Mexicans.

NAFTA also opened Mexico to imports of cheaper US corn, a staple of the Mexican diet. As corn prices plummeted, indebted farmers lost their land, which could now be acquired under NAFTA by rich Mexicans and US agribusiness. These forces consolidated prime acres into large plantations.

Between 1995 and 2005, 1.1 million peasants lost their land, and a further 1.4 million dependent on the farm sector were driven out of work. They swelled the ranks in the cities or joined those emigrating to the US as undocumented workers with scarce legal rights.

The urban poor have difficulty finding jobs. Many are in the “informal” sector, selling trinkets on the streets. Their ranks have risen since 1994 to half of the workforce.

Wages dropped so dramatically that today, a farm labourer earns one-third the wage they did before NAFTA.

Although the price of corn plummeted, the price of corn tortillas, a Mexican staple, skyrocketed in the pact’s first 10 years.

NAFTA included service sector and investment rules that facilitated the consolidation of grain trading, milling, baking and retailing. This meant that, in a short time, the relatively few remaining large firms were able to raise consumer prices.

The result has been a rise in the number of people going hungry.

At the higher prices, it is profitable for US firms to make tortillas and export them to Mexico. The decline of Mexican agriculture has meant a growing amount of food is imported from the US, including processed food, with the irony that obesity is growing amid hunger.


Today, more than half the population, and 60% of the rural population, lives below the poverty line. One in four are classified as extremely poor, unable to afford adequate food, and 20% of children are malnourished.

From 2006 to 2010, more than 12 million people joined the ranks of the poor.

Mexico has showed the slowest cut in poverty across Latin America since NAFTA.

A minimum wage worker can buy 38% fewer consumer goods today than before NAFTA. Clinton and Salinas promised NAFTA would lower the wage differential between Mexico and the US enough to slow emigration, but this differential has barely budged.

Mexican manufacturing workers made an average of US$4.53 an hour in 2011, while comparable US workers made $26.87. In Brazil, manufacturing wages were double those in Mexico, while they were triple in Argentina.

The flood of desperate people trying to get into the US has only accelerated.

It is true the better off have made gains. Tens of thousands of small businesses have gone under, but big US firms like Walmart and Costco have moved in, selling goods imported from Asia to the “new middle class”.

There are pockets of increased exports to the US. A recent strike in Mexico's Baja California pitted big agribusiness against very low-paid indigenous workers.

These big firms, owned by both US and Mexican tycoons, export an abundance of fruits, berries, tomatoes and other vegetables north each year, while Mexico cannot feed its hungry. The government, closely connected to the growers, used state violence against the workers.

All this has exacerbated social instability in the country, also furthered by the US “war on drugs”. One of Mexico’s big imports from the US is weapons.

With Mexico’s record on “growth, equality, wages and peace” under NAFTA, it is small wonder that the TPP is viewed with such trepidation.

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