NAFTA has hurt living standards, think-tank says
Wed Sep 27, 2:14 PM ET
The North American Free Trade Agreement has lowered the standard of living for workers in the United States, Mexico and Canada, according to a new report.
Signed in 1994, the trade deal was touted as a win-win situation for all three signatories. But the Economic Policy Institute, a Washington think-tank, said that NAFTA has led to cuts in social spending and prompted wages to stagnate or even fall.
"Twelve years later, it is clear that the costs to workers outweighed the benefits in all three nations," the report said. "Workers' share of the gains from rising productivity fell and the proportion of income and wealth going to those at the very top of the economic pyramid grew."
In the United States, the promise of more jobs proved elusive, the study noted, with NAFTA contributing to the most anemic employment recovery in recent history.
Mexico's benefits from closer commercial ties with the United States also largely failed to materialize, the study found. There was a visible boost in employment, but much of it took place in very low-wage maquiladora industries.
As for Canada, its embrace of the regional free-trade agreement has led to severe cuts in social programs, EPI said, noting that government transfers to individuals had dropped from 11.5 percent of gross domestic product in 1994 to just 7.8 percent currently.
Wed Sep 27, 2:14 PM ET
The North American Free Trade Agreement has lowered the standard of living for workers in the United States, Mexico and Canada, according to a new report.
Signed in 1994, the trade deal was touted as a win-win situation for all three signatories. But the Economic Policy Institute, a Washington think-tank, said that NAFTA has led to cuts in social spending and prompted wages to stagnate or even fall.
"Twelve years later, it is clear that the costs to workers outweighed the benefits in all three nations," the report said. "Workers' share of the gains from rising productivity fell and the proportion of income and wealth going to those at the very top of the economic pyramid grew."
In the United States, the promise of more jobs proved elusive, the study noted, with NAFTA contributing to the most anemic employment recovery in recent history.
Mexico's benefits from closer commercial ties with the United States also largely failed to materialize, the study found. There was a visible boost in employment, but much of it took place in very low-wage maquiladora industries.
As for Canada, its embrace of the regional free-trade agreement has led to severe cuts in social programs, EPI said, noting that government transfers to individuals had dropped from 11.5 percent of gross domestic product in 1994 to just 7.8 percent currently.
