Afta NAFTA.

As free trade erodes the power of organized labor, union leaders are beginning to fight back.

In Santiago on May 19, Commerce Secretary William Daley was at pains to reassure his Chilean hosts of the Clinton Administration's commitment to expanding the North American Free Trade Agreement. His task was complicated by the fact that during the 104th Congress, 110 representatives co-sponsored the NAFTA Accountability Act, a piece of legislation aimed at reversing the hemispherizing of free trade. Worse, its advocates included leaders of his own party.

The global capitalist transformation that President Clinton is overseeing faces strong opposition from both ends of the political spectrum. Lashed by Patrick J. Buchanan's blistering protectionist attacks during the 1996 primaries, Republicans distanced themselves from the trade-opening policies of Presidents Reagan and Bush.

Democratic strategists, aware that market globalization would weaken key labor constituencies, never embraced these GOP-negotiated pacts. "[D]rawn down by lower wages in Mexico," Rep. Dick Gephardt warned Congress, "our standard of living will continue to stagnate or decline.... the Agreement could exacerbate our worst economic problems: disappearing jobs and declining real incomes."

Thus were NAFTA and the Uruguay GATT round, products of a broad policy consensus, orphaned politically. Nevertheless, the orphans have thrived, Over the last three years, U.S. exports have increased 37 per cent. North American trade has increased 43 per cent, a gain of $127 billion annually. "If that gain in trade were a country," notes Heritage Foundation analyst Jack Sweeney, "it would be America's fourth largest trading partner."

During the NAFTA debate of 1993, the pact's proponents maintained that freer trade would, like any other tax cut, stimulate increased employment. These gains, concentrated in the high-wage export sectors of the economy, would exert a benign influence on Americans' income. Opponents countered that NAFTA, however it affected employment, would depress wages. Factor equalization in international labor markets would deindustrialize America.

Three years into globalization, it is no longer necessary to speculate: the free traders were right. In the triennium preceding NAFTA, worker compensation --wages plus benefits--registered only modest gains. Hourly cash compensation, adjusted for inflation, actually declined. But from 1993 through 1996, both hourly wages and total compensation increased in real dollars. Other measures of wealth--per-capita gross domestic product, disposable personal income, personal consumption expenditures--all rose substantially.

The best news came where the worst was predicted. After 1976, when 19.6 million Americans worked in manufacturing, U.S. industrial employment fell steadily. By 1982, 19.1 million were so employed; by 1992, 16.9 million. At the end of 1996--three years into the latest round of globalization--manufacturing employment had rebounded to, 18.3 million.

The correlation between the increasing prosperity of American workers and international tax-cut treaties such as NAFTA is clear.

Never has so much good economic news been greeted with such incredulity by leaders in both parties. "We have got to find a way to export products to Mexico, not just our jobs and capital," lamented Minority Whip David Bonior, following a year of record growth in U.S. exports to Mexico and sturdy industrial-employment gains. "American companies are closing factories here," said Pat Buchanan, "and from Monterrey to Mexico City a new Detroit is rising."

The statistical fabrications upon which the myth of NAFTA failure is built are readily traced. Organized opposition to the world trading system is financed by the institution that has the most to lose from the new prosperity: unions.

Labor attorney Mike Dolan is the field director of Global Trade Watch, an umbrella group formed by his direct employer: Ralph Nader's Public Citizen. He has been touring the nation, reactivating the 1993 anti-NAFTA coalition. His express intent is to block fast track, the cornerstone of Administration-negotiated agreements for freer trade.

Dolan's audiences include trade unionists, movement ecologists, and elements of the Catholic Left. A typical anti-NAFTA working session, "Exploring the Impact of Globalization," held in Kansas City March 7 and 8, was cosponsored by the Missouri AFL-CIO, United Autoworkers Local 249, Teamsters Local 41, the Roman Catholic Diocesan Office of Peace and Justice, and the Kansas Sierra Club. The majority of the 150 in attendance were union members. The focus of the conference was not the impact of NAFTA, but how to lobby congressmen and the press.

Dolan's chief presentation tool is a Global Trade Watch publication, NAFTA's Broken Promises: Failure to Create Jobs, which he co-authored. Against the blizzard of data proving the sector-by-sector success of trade liberalization, Dolan produces a flurry of anecdotes, liberally supplemented by outright lies. "The jobs that are being created [under NAFTA] are lower-paying jobs," he told his Kansas City audience. "The 500,000 laid off are not getting jobs equal to what they had. Why? Because the jobs being laid off are primarily in the higher-paying sectors--automotives, electronics, apparel."

But employment is booming in electronics and automotives. The low-pay U.S. apparel sector did lose 100,000 workers since 1993--the same number it lost in the three years preceding NAFTA. But the treaty saved the heavy end of the American textile industry. U.S. companies shifted apparel plants from East Asia to Mexico, enabling U.S. textile mills to regain their business in unfinished cloth.

"Exports support 11.5 million American jobs and have fueled one-third of our total economic growth since 1993," said Secretary Daley, "creating 1.4 million new jobs. These jobs pay more and provide higher benefits to U.S. workers than jobs in companies that do not export."

That Daley is now marketing free-trade policy to his labor-dominated party exemplifies the Administration's dilemma. Unions are rejecting global capitalism with a Democratic face, and they are making the Administration feel their pain. Labor's congressional shop stewards introduced the NAFTA Accountability Act, which reinterprets Clinton's trade success as failure. Its sponsors include such senior House Democrats as David Bonior, Ron Dellums, David Obey, Maxine Waters, and John Conyers.

Under the NAFTA Accountability Act, Congress would monitor the success of free trade in North America, certifying or &certifying the agreement on the basis of American interests in job creation, domestic manufactures, and agriculture. But in detail, the act resurrects the discredited bilateralism of the 1930s. Trade is judged on an industry-by-industry basis, and all restructuring is implicitly condemned. The act's crude calculation of merchandise trade balances would, if generally applied, halt trade not only with Mexico, but also with Japan, Canada, Germany, Taiwan, Sweden, France, India, Portugal, and Israel.

Even its sponsors don't take it seriously. Dolan concedes that the votes don't exist to repeal NAFTA. "We're lighting a backfire," he explained to the unionists in Kansas City. "It's a vehicle around which to organize." The purpose of the act is to stall what the Clinton Administration wants: hemispheric trade liberalization based on NAFTA rules.

Global merchandise markets mean global labor markets. Since 1993, according to a Cornell research team headed by Kate Bronfenbrenner, employers have used the threat of plant relocation to discourage unionization. Since 1993, such threats sharply increased union defeats in shop elections. Plant relocation has been a common strategy for union busting throughout the years of factory rationalization, or downsizing. NAFTA incrementally reinforced a long-term trend toward freer labor markets.

Private-sector unions at their peak--1953 --accounted for 36 per cent of total U.S. employment. By 1996, attrition had reduced union jobs to 10.2 per cent of the private workforce. But the worst news for union officials was not that their organizations faced extinction, but that workers would benefit thereby. As recently as 1982, union members enjoyed a 7.1 per cent advantage in total compensation. When Bill Clinton assumed office in 1993, collective bargaining yielded a meager 1.4 per cent edge. Since then, the lines have crossed. By March of 1997, union members earned 0.8 per cent less in total compensation than their non-union counterparts.

It is in this context that the hysterical disavowal of global trade by congressional Democrats becomes comprehensible. President Clinton's most significant economic triumph is premised on policies incompatible with the survival of his party's activist base. Union PACs spent $49.2 million on federally reported elections over the last cycle and another $9.5 million in soft money. Ninety three per cent of that money went to Democrats. The value of union-sponsored phone banks, mailing services, and get-out-the-vote drives dwarfed these recorded sums.

But if the failure of Democrats to capitalize on the success of the Administration's trade policies highlights deep fissures within the party, Republicans have no such excuse. GOP sponsors of the NAFTA Accountability Act in the 104th Congress included such high-profile conservatives as Duncan Hunter, Zach Wamp, Helen Chenoweth, and Gerald Solomon. In a speech before Congress on March 12, 1996, Hunter claimed that between one and five million jobs had been lost to corporate downsizing over the past three years. "We seem to be giving our own country away" through NAFTA, GATT, the World Bank, and foreign adventurism, he said: "billions and billions to other countries while our owen people head for the unemployment office or have to settle for jobs in fast-food restaurants."

The Buchananite backlash within the Republican Party is built on two serious misconceptions. First, some conservatives believe rapprochement with trade unions is possible on the basis of social policy. "There exists a range of issues," wrote Buchanan in The New Majority, "where ... socially conservative Democrats are aligned on one side and liberal Democrats on the other." Such issues do indeed form the basis on which Republicans appeal to individual union members--but not to their unions.

A second Republican error is the notion that protectionism would preserve our "social contract" between nation and worker. "[T]here are higher things in life," Buchanan wrote, "than the bottom line on a balance sheet, or being able to buy Hong Kong suits at the cheapest possible price. Community and country are two of those things."

But protectionism will clearly wreck the social contract in a thriving economy that is 23 per cent devoted to an international trade employing 11.5 million domestic workers. In America, economic freedom is part of the social contract.

It was the achievement of Presidents Reagan and Bush to create an environment in which free labor could outperform the political labor model which was Marxism's last pragmatic claim on workers' allegiance. Republicans must understand the implications of a prosperous non-union workforce, and tailor their labor policy to the needs of a growing non-union majority.

But first they'll have to take credit for their historic successes.

Mr. Nadler is editor of K.C. Jones, a mid-western political monthly.