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Debunking Trade Myths

To hide the facts about failed trade policies, proponents are changing the data

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Agriculture and Development

The worldwide gulf between rich and poor has widened under the NAFTA/WTO trade model. In the early 1990s, proponents of the WTO and NAFTA touted these pacts as keys to poverty reduction in developing nations and a more equitable global economic system. That same argument is being raised again today to promote the Doha Round WTO expansion. However, during the NAFTA-WTO era, income inequality between developed and developing nations, and between rich and poor within developing nations, has increased. One United Nations study concluded that, "in almost all developing countries that have undertaken rapid trade liberalization, wage inequality has increased, most often in the context of declining industrial employment of unskilled workers and large absolute falls in their real wages, on the order of 20-30 percent in Latin American countries."

The 15 year record of NAFTA demonstrates the devastating impact our current trade model has on developing nations. The displaced rural poor have had little choice but to immigrate to wealthy countries or join swelling urban workforces. As a recent exposé put it: "as cheap American foodstuffs flooded Mexico’s markets and as U.S. agribusiness moved in, 1.1 million small farmers — and 1.4 million other Mexicans dependent upon the farm sector — were driven out of work between 1993 and 2005. Wages dropped so precipitously that today the income of a farm laborer is one-third that of what it was before NAFTA. As jobs disappeared and wages sank, many of these rural Mexicans emigrated, swelling the ranks of the 12 million illegal immigrants living incognito and competing for low-wage jobs in the United States." Indeed, a review of Mexican income growth rates, inequality, and manufacturing value-added shows that Mexico fared better before the introduction of neoliberalism in the 1990s relative to outcomes post-neoliberalism and post-NAFTA.


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