El Paso, Texas — Fair trade advocates released a new report today which finds the proposed Trans-Pacific Partnership (TPP) trade agreement threatens the Texas-Mexico border economy.
Since the implementation of NAFTA in the mid-1990s, much of Texas’ economy has transitioned from being a hub of production into a center for customs brokerage, logistics, distribution, transportation, accounting and other services that support production operations in Mexico. According to the report, these Texan jobs, as well as Mexican maquiladora jobs, are both threatened by the TPP.
"The community is leading the charge against the TPP because the majority of border people will be negatively affected by it,” said Lorena Andrade, director of La Mujer Obrera. “Communities, women and their families never recovered from NAFTA and the environmental effects from these lax trade deals continue to contaminate and harm our communities.”
"Border communities are well versed in the effects of free trade,” said Dylan Corbett, executive director of the Hope Border Institute. “These agreements are notorious for exacerbating inequality and for their indifference to their negative economic, environmental and human impacts. Representative Beto O'Rourke has stated that he is still undecided as to how he will vote on TPP. O'Rourke needs to listen to the community, local leadership and those that know the effects of the TPP first-hand."
“Trade is good, but that doesn’t mean every trade agreement is a smart deal,” said Bob Cash, director of the Texas Fair Trade Coalition. “The TPP would erode existing preferences for Mexican industry under NAFTA, threatening both Mexican businesses and the Texan businesses set up to service them. This would be a devastating move for the border economy that supports so many working families in our region.”
According to the report, the TPP would erode preferences for Mexican-made goods imported into the United States under the North American Free Trade Agreement (NAFTA), displacing industry located in Mexico with less-expensive Asian-made goods. “The TPP & the Border Economy” discusses three specific Mexican industries that would be undermined by the TPP:
· Electronics: One of Mexico’s other largest goods export categories to the United States is computer and electronic products. This sector is threatened by TPP incentives for multinational firms to relocate electronics production to countries such as Malaysia and Vietnam, with their closer proximity to low-cost electronic inputs from China and often more-competitive labor costs.
· Apparel: The TPP would likewise eliminate much of the advantage Mexican and Central American nations’ apparel industries have in accessing the U.S. market. Vietnam, for instance, is the second cheapest apparel production venue in the world, while Mexico is only the twenty-first. Tariffs are a significant reason why U.S. brands source in Mexico and Central America, rather than less-expensive countries like Vietnam. The TPP’s tariffs reductions would make North American production operations much less competitive.
· Automobiles and Auto Parts: Before NAFTA, there were only a handful of carmakers in Mexico. Today, Mexico is the fourth nation in the world for auto exports, behind Germany, South Korea and Japan. Under the TPP, tariffs on Japanese cars imported to the United States will be eliminated and the pact’s weak “rules of origin” allow for considerably more parts to be sourced from China and elsewhere.
The claims in the report are bolstered by Mexican industry representatives, who have been issuing the same warnings about the TPP for years.
“We’re going to lose what we have gained under NAFTA,” Oscar Albin, executive director of National Auto Parts Industry, Mexico’s industry association, told the Wall Street Journal in September 2015. “We’re going to lose production of auto parts and the United States is going to lose the prime materials markets. This is a grave danger.”
José María Rebollo Lang, director general of Mexico’s plastic industry group Anipac, told Plastics News in March 2016. “Vietnam exports a lot. We should recognize that people from Asia are very capable.”
“The U.S.-Mexico border region is among THE most unequal in the entire world, measured in GDP per capita and legal minimum-wage terms. Although the rate of trade growth and volume of trade have increased after twenty years of NAFTA, two issues remain unchanged: 1) the inequality gap between both countries and 2) Mexican assembly-line workers’ wages in our region which continue at perpetually low levels of approximately US$5 per day,” said Dr. Kathy Stoudt, a professor whose research focuses on the U.S./Mexico border. "TPP will NOT improve those low wages, but TPP will reduce the number of jobs in the region. The risk to shared prosperity in our borderlands is greater with TPP than without it.”
More than 174,764 Texan jobs have already been certified as lost to offshoring or imports since NAFTA under just one narrow U.S. government program called Trade Adjustment Assistance (TAA). The TAA numbers significantly undercount trade-related job loss because the program only covers a subset of jobs lost to trade and only counts job losses that are voluntarily reported to the agency.
A copy of the report is online at: http://www.citizenstrade.org/ctc/texas/files/TXFTC_TPPBorderEconomyReport_ElPaso.pdf