United States
Secretary of Commerce Carols Gutierrez
Trade agreements such as the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) have opened markets and lowered trade barriers in the United States and around the world. Free trade has resulted in a greater variety of goods at lower prices. However, some studies have found that the benefits of trade agreements come at a high cost. Critics of trade agreements contend that they have led to lost jobs, higher trade deficits and weaker unions and have fueled a worldwide "race to the bottom" in workers' wages.
Loss of Jobs
A 2003 report by the Economic Policy Institute (EPI), a policy research organization in Washington, D.C., stated that, since the implementation of NAFTA in 1994, the U.S. economy has lost millions of jobs. The bulk of these losses have been concentrated in the nation's manufacturing sector-traditionally a source of higher-paying jobs for workers without college degrees. The EPI analysis concluded that increased imports from Canada and Mexico under NAFTA displace both domestic goods and the workers who produce them.
Depressed Wages
Critics of trade agreements contend that such pacts reduce workers' wages and contribute to rising wage gaps between rich and poor. In its report on NAFTA, EPI reported that the treaty has had the greatest effect on the wages of U.S. workers without college degrees. This occurs because expanded trade lowers the prices of foreign-made goods, exerting downward pressure on the wages of domestic workers who produce the same products. Further, the elimination of many manufacturing jobs in the United States has lowered average wages because the displaced workers often find jobs in the lower-paying service sector. The Brookings Institution, assessing the impact of NAFTA, agreed that international trade explains part of the downward trend in wages for low-skilled workers, but it identified technological change as a more significant factor.
Weaker Collective Bargaining
Some of the loudest voices against trade liberalization agreements have come from organized labor. According to EPI, unions' fears are well-founded. The institute's report stated that NAFTA has weakened the bargaining power of workers. Trade agreements make it easier for employers to wring concessions from workers by threatening to close plants, outsource certain functions or relocate operations overseas.
Rising Trade Deficits
The U.S. economy has experienced rising trade deficits-importing more than it exports-since the 1970s. EPI reported that the gap between exports and imports has widened dramatically since NAFTA's passage in 1993. Proponents of free trade tout increased exports as a benefit of trade pacts. EPI concedes the growth in exports but charges that supporters of free trade ignore both the increase in imports and the related loss of domestic jobs.
