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NAFTA Made Outsourcing Easy

NAFTA supporters argued the pact would create jobs in the United States. More recently, supporters of FTAs with South Korea, Panama and Colombia made similar claims. But history has shown, and research supports that each new trade agreement may cost thousands of U.S. jobs.  According to EPI, the five states that experienced the largest percentage of local jobs displaced by trade with Mexico since NAFTA began are Michigan, Indiana, Kentucky, Ohio and Tennessee. The five that have the largest actual number of jobs displaced due to Mexico trade deficits are California, Texas, Michigan, Ohio and Illinois.

Contrary to the promises that NAFTA would create U.S. jobs, it made outsourcing to Mexico much more attractive for U.S. companies. Most of the jobs displaced by trade with Mexico—415,000 jobs, or 60.8 percent of the total 682,000 jobs lost—have been in manufacturing. 

When the United States loses jobs due to trade agreements, a major misconception is that an American company has been out-competed by a foreign-company and simply could not make its products as efficiently.  Since NAFTA, however, that has not been the case.  Instead, NAFTA (and the NAFTA-style trade agreements that have followed) provided large corporations with special incentives to invest outside the United States.  And many so-called “American” companies have done just that: shutting down U.S. manufacturing facilities and moving production—and jobs—offshore. 

The industries hardest hit by NAFTA have been computer and electronic parts (150,300 jobs lost or displaced, or 22 percent of the total number of jobs) and motor vehicles and parts (108,000 jobs, 15.8 percent). There has been a huge surge in motor vehicles and auto parts since 2007 years that cost 30,000 U.S. jobs, according to the report.

While trade and globalization are a fact of life, the AFL-CIO is working hard to shape American trade and globalization policies so they work for workers, not just corporations.  This means eliminating incentives that make it more attractive to invest outside the United States, including strong, enforceable labor standards and ensuring that trade rules do not interfere with our nation’s ability to enact domestic policy. 

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