How Detroit Benefits from NAFTA

[Octafish]

45. When Wal-Mart Went to Mexico

Harvard University Press Blog
April 26, 2012

(Electronically reproduced from To Serve God and Wal-Mart: The Making of Christian Free Enterprise, by Bethany Moreton, Cambridge, Mass.: Harvard University Press. Copyright © 2009 by the President and Fellows of Harvard College. All rights reserved.)

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By far the most robust line of defense against NAFTA came from labor, galvanized by the ten-to-one wage differential between the United States and Mexico. The AFL-CIO began organizing against the fast-track status back in 1990, even before business coalesced around supporting it. The unions gained high-profile help from an unexpected quarter when Ross Perot, a third-party presidential candidate in 1992, made his opposition to NAFTA a cornerstone of his campaign. A year after the election, as debate over NAFTA heated up in the House of Representatives, the Texas billionaire’s warning of the “giant sucking sound” from the south was reinvigorated. Thus by the fall of 1993, when the new Wal-Mart opened in Mexico City, the two major camps had staked out their positions: Was Mexico a vast reservoir of low-wage workers, willing to sell themselves to American companies for pennies on the dollar? Or was it an enormous untapped market, full of the same shop-happy rubes who roamed discount aisles in Arkansas and Texas?

Wal-Mart discovered which notes to hit for free trade’s domestic American audience. Late in the summer of 1993, the company had sent representatives to Washington for the International Mass Retailers Association lobbying trip. The trip had been intended to reiterate the industry’s support in terms long familiar to the hosts. “NAFTA is a real key opportunity to bolster U.S. manufacturing,” explained Bobby Martin, executive vice president and Wal-Mart’s man on the NAFTA excursion. The Clinton administration, of course, was receptive to this line of argument. The White House arranged meetings for the delegation with Secretary of the Treasury Lloyd Bentsen and U.S. trade representative Mickey Kantor that a participant described as “something of a pep rally.”

But in meetings with congressional representatives, the discount delegation awoke to the very real danger of NAFTA’s failure. Congressmen told the merchants that their constituent mail ran nine-to-one against ratification. NAFTA, the retailers learned, was “in deep trouble.” The message from Capitol Hill was clear: If the retailers wanted to see NAFTA passed, it was up to them to persuade the Americans in their stores. “We’ll have to fight every step of the way,” warned Democratic senator Bill Bradley, the upper house’s quarterback for NAFTA. “You will have to let everyone you employ know why this is important and get them involved in the process too.” But these efforts alone would not be enough. In contrast to all other trade agreements since World War II, the NAFTA fight was being carried out in public, with significant grassroots involvement—mostly against its passage. Convincing employees had always been part of business’s contribution. Now it would need to mobilize its customers, too.

Back in Bentonville, the company wasted no time. CEO David Glass wrote to all of Wal-Mart’s suppliers—the manufacturers of its products—encouraging them to “write or visit your member of Congress” and “become involved” in the fight to secure NAFTA’s passage. Glass offered his assistance and asked to be updated on their activities. Now the pro-NAFTA forces were back in the game. In mid-September, President Clinton himself reopened the offensive with a fiery speech that convened most of the state governors and three former presidents to demonstrate the bipartisan support for free trade. With the Cold War won, Americans faced a changing geography of “blocs.” Asia and Europe would consolidate, so Americans needed to act fast to secure their leadership of the Western hemisphere. NAFTA had the potential to put Americans in the driver’s seat of “a free trade zone stretching from the Arctic to the tropics, the largest in the world.”

A week later the International Mass Retail Association was back in Washington. Wal-Mart’s corporate counsel Ralph Carter, under the title “director of Wal-Mart trade policy,” spoke for the entire retail group in its testimony before the Trade Subcommittee of the House Ways and Means Committee on September 21, 1993. NAFTA, he assured the congressional panel, was “right for America and especially right for American workers.”

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Understand why Walton billionaires luv NAFTA, but Bill Bradley?