
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, August 20, 1993                   TAG: 9309290290
SECTION: EDITORIAL                    PAGE: A11   EDITION: METRO 
SOURCE: RAY MARSHALL
DATELINE:                                 LENGTH: Medium

NIX NAFTA

AS READERS of this year's best seller, "Jurassic Park," understand, complex systems never quite work the way the planners hoped. Yet supporters of the proposed North American Free Trade Agreement would have us believe this is a risk-free, cost-free ``win-win'' deal. However, there are many things we know now about U.S.-Mexico economic relations and the proposed agreement that suggest some substantial risks for both the United States and Mexico, particularly for workers and the environment in both countries.

1. Incomes in both Mexico and the United States will become more unequal. Even NAFTA's supporters agree that there would be winners and losers. The U.S. International Trade Commission found that the principal winners in this country would be higher-skilled workers and owners of capital. Other workers, estimated at 70 percent of our workforce, already hard hit, would lose the most. If NAFTA succeeds in reducing the 15-1 wage differential between the United States and Mexico's export plants, it probably will be primarily due to falling wages in the United States.

2. NAFTA is not mainly about trade. It is about politics and investment. NAFTA and the free-trade ideology behind it are a part of the low-wage competitive strategy pursued in this country over the past 12 years and by the Salinas government in Mexico. This strategy limits growth in productivity and incomes, and dampens the expansion of markets needed for a true win-win solution. NAFTA provides an incentive for high-performance companies from Asia and Europe, as well as the United States, to move operations to Mexico. Those operations will compete with U.S.-based producers not only in the U.S. market but overseas.

3. Political and economic oligarchies in Mexico, reinforced by American companies with similar strategies, will have little interest in sharing power with Mexican workers. They will continue to use their political and economic power to prevent the emergence of a free labor movement and to limit improvements in workers' wages and working conditions.

4. The low-wage, low-production cost strategy inherent in NAFTA assures that environmental degradtion is likely to accompany increased investment. The Salinas government's strategy for economic development is based on export-led growth built on low operating costs, including highly polluting industrial production methods banned in the United States.

It doesn't have to work out this way.

If U.S., Mexican and Canadian negotiators truly wanted to craft rules for economic relations that raised standards in all three countries, they could do so. Because European countries generally have high-income strategies, the European Community's policies are designed to narrow wage gaps by raising low wage levels, not by reducing those in countries with higher wages. The EC therefore has substantial, widespread gains to show for its efforts.

Labor standards were added to every important U.S. trade law passed during the 1980s, especially the Omnibus Trade Act of 1988 which permits the United States to impose countervailing duties on imports found to be produced under conditions that violate human or labor rights. But more is needed when dealing with an immediate neighbor with whom we share a 2,000-mile border.

Higher labor standards will help disperse the benefit of trade and economic development more widely throughout our societies, thereby a) raising the level of overall demand, and b) forcing firms to compete on the basis of efficiency and innovation - not on the basis of environmental and human degradation as is now the case. There are therefore both efficiency and equity reasons for labor standards.

It's time to get beyond the ``competitiveness'' slogan: The basic principle of highly competitive markets, absent an appropriate set of rules, is that giving an advantage to low-wage producers tends to cause bad standards to drive out the good.

As drafted, NAFTA fails to regulate the goods coming into the United States and set meaningful requirements for the conditions under which they are produced. If the Clinton administration accepts this approach, the trade agreement will force down the environmental and labor standards we have worked so hard to improve. In turn, this will unleash a set of unpredictable economic forces that will accelerate our descent into a Jurassic society governed by the unrestrained Darwinian rule of ``survival of the fittest.''

\ Ray Marshall holds the Andre and Bernard Rapoport Chair in Economics and Public Affairs at the University of Texas. He served as secretary of labor under President Carter.

by CNB