John Terada, attending the University of Texas in Austin, impressed the judges with his insightful essay about trade.

Globalization in the last quarter of the century has exploded into a hot topic issue. This is especially true today pending an unprecedented presidential election. Globalization has brought itself both benefits and downsides. There is the positive aspect to consider, in which integration of economic and cultural interactions provide a proliferation of trade and a sense of connection with the wide expanse of the world. On the other hand, globalization presents the intricate issue of environmental regulation, fair workers’ rights, and shifts in the workforce that have not been maintained. While globalization began to slowly develop when European explorers began their quests westward and delved into the massive continents of Africa and Asia, it has now dramatically affected the daily lives of American working families. The World Trade Organization and free trade agreements such as NAFTA and CAFTA have unfolded a frightening dilemma. Between 1994 and 2000, it has swiped three million jobs, or 2.4 percent of the American workforce. All in all, it has slashed jobs in every single state since the NAFTA and WTO have been in effect in 1994 and 1995, respectively. While trade activity has gone up and proponents strongly urge more such trades to exist, we must first evaluate the ramifications of these treaties and agreements.

            The United Nations labor organization, known as the International Labour Organization, has suggested examining these agreements due to the fact that there is a growing divide among the rich and poor nations and even within these countries. The International Herald Tribune has confirmed that in the United States—in which exists the greatest gap among the rich and poor—the top 10 percent claimed 48.5 percent of total income. That is an alarming statistic, seeing that this gap is the largest since 1928. In the United States, two-thirds of the three million jobs lost came from manufacturing with others from financial and insurance, transportation, and communication sectors. Hardest hit states include California, Ohio, Texas, Michigan, Illinois, Pennsylvania, and New York, where more than 100,000 of their residents lost their jobs to unfair foreign competition. Some may argue a protectionist economy may stimulate domestic industries. The world, though, will rapidly pass us by while we attempt to rebuild our economy in an “isolated” environment. Obviously, this does not seem like a viable solution when there is no way for isolationism to occur in a rapidly interconnected world and placing high tariffs on foreign goods may encourage others to do so for our exports.

            The United States, because it is a wealthy nation compared to others, has been coerced to place a downward pressure on wages due to the integration of global free trade while enticing consumers with cheaper goods due to lower costs. It is this balance that creates a complicated situation: preferring cheaper goods or preventing loss of jobs and lower wages. The Economic Policy Institute has vigorously studied this issue and has tested economic theory to these global trade agreements. In theory, it has concluded that American wages will in fact be lowered and labor-intensive jobs will be lost. Production workers make up 75 percent of the American workforce.  In addition, 70 percent of workers do not have a 4-year college degree. Thus, globalization can indeed cause major, detrimental and permanent harm by cutting wages or entirely laying off workers to sustain their competitiveness with the rest of the world. It is estimated that 22 to 29 percent of American work can be offshorable in the next one to two decades. The implication is, as global trade agreements occur, trade between countries may increase but it will greatly affect shifts in jobs and wages in America.

            The North American Free Trade Agreement has boasted that 794,174 jobs were created. This is far misleading when the Economic Policy Institute has found that 1,673,454 jobs were lost, creating a net loss of 879,280. American investors have moved factories away from the unionized North to the cheaper, less unionized South and Mexico. With this in effect, normal working families like John Sonnier’s faced a grim future. His plastic pellet making company, A. Schulman, moved its factory to Mexico in 2003. He was forced to job hunt, and this came to a halt after unsuccessful attempts to find any. He began a home vinyl siding business, but with tireless work and having a tough time, he passed away from a heart attack in 2005—his insurance policy barely covering his burial costs and none to be left for his wife and children. This unfortunate story is not the exception, as one-third of those who lost jobs have completely disappeared from the labor force. The average, hard-working American family is now taking much of the heat. With manufacturing jobs going elsewhere, the existing manufacturers must lower wages to compete. In the quaint town of Chillicothe, Ohio, as documented by 60 Minutes, a paper company is facing hurdles to provide $20 an hour pay with full benefits. The owner of the factory disputes that other foreign paper companies are paying one-fortieth of that and do not worry of environmental regulation. Kenny Schoenholtz is facing a huge strain in which his once secure employment in the paper industry for 27 years is now facing a layoff in November. Tearfully, he comments on having to deal with an ailing wife, covering heightened expenses, and an unknown job prospect. Millions are trying to cope and make ends meet during this dark period of uncertainty. This blue collar, middle class state of Ohio has faced rampant home foreclosures and is coupled with high costs of goods and limited healthcare. In this state alone, 236,000 manufacturing jobs were wiped out, equivalent to a 23.3 percent drop. In 1995, General Motors was the top employer in the state while Wal-Mart Stores was ranked sixth. Today, that has all switched as GM drops employment from 63,200 to a mere 12,300. Jeff Faux, the author of The Global Class War, puts this grave situation this way: “NAFTA rules protect the interests of large corporate investors while undercutting workers’ rights, environmental protections, and democratic accountability…The time for a continent-wide debate over the future of this agreement, which was negotiated by and for the rich and powerful in all three countries, is now overdue.” Still, supporters of the NAFTA say exports have increased $104 billion between 1994 and 2004. Unfortunately in that same time span, imports have grown faster at $211.3 billion. Just as the paper industry in Ohio faced pressure to lower wages and benefits, studies show average wages in the U.S. that compete with U.S. imports from Mexico pay one to five percent more than jobs in industries that export to Mexico. Equalizing wages seems to be an inevitable conclusion for American manufacturers. For those that were reemployed, Americans faced a tough drop in wages of almost 11 to 13 percent. Because the manufacturing sector has a higher productivity than other sectors and has a higher unionization rate for earning higher share of marginal product, removing manufacturing jobs have an enormous effect on not only American families but to the American economy overall.

            In 2005, the Central American Free Trade Agreement was heavily pushed to be implemented. Many opposition groups decry it as the continuation of a failed NAFTA. The deal has lost one million jobs in the United States while exacerbating trade deficits with Canada and Mexico. The poll conducted by Americans for Fair Trade indicates a majority (74 percent) are against the CAFTA even if it reduces consumer prices but leads to job loss. Shortfalls of CAFTA include the lacking protection for workers, taking away middle class jobs, and permitting corporate exploitation. While the Office of U.S. Trade Representatives emphasizes that U.S. agricultural exports totaled $1.6 billion in 2003, the Department of Commerce statistic actually reports it as being $834 million. They claim that with a large population and substantial purchasing power, the agreement with Central American nations and the Dominican Republic would expand U.S. farm exports. It is important to indicate here that CAFTA is a poor market for U.S. farm goods, for the GDP per capita is considerably low and extreme poverty is widespread. In fact, the United States endured an $812 billion dollar deficit with CAFTA countries in agricultural products in 2004. This deep concern for CAFTA on Americans is voiced by the AFL-CIO Executive Vice President Linda Chavez-Thompson. She told the House International Relations Subcommittee, “Instead of improving things, CAFTA will further oppress workers, depress wages in Central America, and cost jobs in the United States.”

            My personal experience with the World Trade Organization, NAFTA, and CAFTA has been interesting, for I have faced both sides of the benefits and downsides of the international trade agreements, especially that of NAFTA. Before, my family and I lived in the Midwestern states of Illinois and Michigan. This had allowed me to endure the hardships faced by many living and working in these states. It was definitely much harder for my family to live in Michigan, with the extremely high cost of goods, keeping up with energy costs, house payments, and healthcare. As did many in the Detroit area, my father worked in the auto industry and I witnessed the strain businesses in this field faced as factories were being replaced elsewhere or closed indefinitely. Fortunately, my father did not face such deplorable conditions, but it is undoubted that many men and women in the community did. With tough times luring and my father working tirelessly, it is no wonder we decided to move to the South Texas area called the Rio Grande Valley. It has been a 180 degree transformation from Michigan. From the warm climate to the distinct culture, the area faced a different economic situation. Here, maquiladoras dot across the border from the port of Brownsville to the city of McAllen. Because it is a major supplier of workers, my father became a manager of one of many companies that built maquiladoras in the Mexican side of the border. Thus, my father drives daily to the Mexican city of Reynosa and drives back home to the American side. It is fortunate that my father was able to find a job here. Still, it is a disheartening feeling to imagine how many families are unable to relocate as easily and find job security. I have come to discover not to be against globalization and trade agreements in general, but against how it has been functioning and wrongfully places the burden among the breadwinning American families. A free trade must constitute a fair trade, where exploitation of people, workers, and jobs can be eliminated. All numbers and percentages aside, the global trade agreements draws a vivid picture. While it is a great opportunity for the United States to produce more goods and trade with others on a larger scale, it must have the consideration of its working families who have helped built the powerhouse America has become. The country owes its citizens at least that right: the right to live without worry and fear of what is to come.