A £100 billion plan to create a single market between Europe and the United States will be unveiled this week as part of a government effort to show that having a close relationship with America is worth jobs and money.

Gordon Brown, the Chancellor, will announce an independent inquiry into removing all trade barriers between the US, Britain and the rest of the European Union.

Officials hope the deal will put the row over US steel tariffs into context, by saying that difficulties over specific areas are insignificant against the wider need to stay close to America economically.

Brown will say that the new inquiry should mirror the Cecchini report in 1988 that paved the way for the introduction of a single market in Europe. The report said that removing tariffs would add 4.5 per cent to Europe's GDP, cut prices by 6 per cent and increase employment by 1.75 per cent.

Treasury officials will now produce a series of figures that they will suggest could be the value of a wide-ranging free-trade deal with America.

They will say that such an agreement would be worth £100bn a year to the EU, which would be able to export its goods much more easily to America. It would also raise economic growth by 2 per cent, and it could create as many as one million jobs across the Continent, thousands of them in Britain.

'Just as in 1988, when Europe was at the outset of the great project to move towards deeper ... integration, the Cecchini report broke down the barriers preventing the creation of a single market in Europe by clearly showing the benefits in commerce and jobs,' Brown will say in a speech tomorrow.

'So the UK, the US and other countries have agreed to proceed with a major trans-atlantic review on how we can move beyond the old trade disputes and reap the benefits of greater trade and investment liberalisation.'

The Chancellor will make the speech at the Confederation of British Industry conference in Birmingham alongside John Snow, the US Treasury Secretary.

Whitehall sources said it was only by being close allies of America that such deals were possible, and pointed out that the prospect of a Europe-wide deal was being announced in Britain, rather than in Brussels.

'What binds America and Britain together is not simply a shared history but shared values,' Brown will say, backing Prime Minister's pro-American stance.

As part of a package of measures to sweeten President Bush's visit to Britain this week, new bursaries for British entrepreneurs to be sent to American business schools will be announced.

The awards, provisionally entitled Greenspan Scholarships after the chairman of the US Federal Reserve, will go to people trying to launch projects in deprived areas of the UK. They will study for a term with the £10,000 awards at Ivy League institutions such as Harvard and Princeton.
 

 
This week thousands of demonstrators will fill Miami streets, in a show of opposition to free trade unseen (at least in this country) since the battles in Seattle four years ago. Opponents plan to hit the proposal for a Free Trade Area of the Americas with the same one-two punch that forced trade ministers to end talks in Cancun in October with no new agreement. While a sea of grassroots opponents lay siege in the streets to the Miami hall where ministers meet once again, inside the meeting itself the new leftwing governments of Latin America - Brazil, Ecuador, Argentina and Venezuela - have already formed an implacable opposition.

As demonstration and debate unfold, in the eye of the storm is the one free trade agreement that already provides an idea of what the Americas can expect from the Bush free trade plan. In just a few short weeks, the North American Free Trade Agreement will be ten years old. And for FTAA's opponents, that ten-year history of devastation, wreaked in Mexico and the US both, will be the key argument in stopping its extension to the rest of Latin America.

The communities of working people and the poor, on both sides of the border, have paid the price for trade liberalization, while the benefits have been reaped by the tiny clique who promoted NAFTA ten years ago.

In one of life's ironies, successive Secretaries of the US Department of Labor - among NAFTA's most ardent supporters - have kept close track of the treaty's high cost in US jobs. By 2002, the department had certified that 408,000 workers qualified for extensions of unemployment benefits, because their employers had moved their jobs south of the border.

Most observers believe this is a vast undercount. According to NAFTA At Seven, a report by the Economic Policy Institute, "NAFTA eliminated 766,030 actual and potential U.S. jobs between 1994 and 2000 because of the rapid growth in the net U.S. export deficit with Mexico and Canada."

While the job picture for US workers was grim, NAFTA's impact on Mexican jobs was devastating. Before leaving office (and Mexico itself, pursued by charges of corruption), President Carlos Salinas de Gortari promised Mexicans they would gain the jobs the US lost. And on tours to the US to promote the treaty, he promised that this job gain, although painful for US workers, would halt the northward flow of Mexican job seekers.

NAFTA's first year saw instead the loss of over a million jobs all across Mexico, in the wake of economic crisis. To attract investment, NAFTA-related reforms required the privatization of factories, railroads, airlines and other large enterprises. This led to further huge waves of layoffs. And because unemployment and economic desperation in Mexico increased, immigration to the US has been the only hope for survival for millions of Mexicans.

For a while, however, it seemed that the growth of maquiladora factories along the border would make up for at least part of the job loss. By 2001, over 1,300,000 workers were employed in over 2000 border plants, according to the Maquiladora Industry Association. But tying the jobs of so many Mexicans to the US market, for which the plants were producing, proved a disaster as well. When US consumers stopped buying as the recession hit in 2001, maquiladoras also began shedding workers. The Mexican government estimates that over 400,000 jobs disappeared in the process -- as the saying goes on the border, when the US economy catches cold, Mexico gets pneumonia. A two-year PR campaign by the association and the Mexican government to blame the loss in border jobs on Chinese competition then sought to obscure the obvious fact that the plants produced far more goods than a recession-plagued market in the US could absorb.

But the most serious consequence of NAFTA has been its failure to protect the rights of workers as promised by its supporters. To attract investment to the maquiladoras, Mexican government authorities cooperated with investors and compliant official unions in maintaining a low-wage economy, reinforced with a system of labor control.

According to Martha Ojeda, director of the Coalition for Justice in the Maquiladoras, the government-mandated minimum wage for workers on the border is about $4.20. She estimates that a majority of maquiladora workers earn close to this wage.

A study by the Center for Reflection, Education and Action, a religious research group, found that at the minimum wage, it took a maquiladora worker in Juarez almost an hour to earn enough money to buy a kilo (2.2 pounds) of rice, and a worker in Tijuana an hour and a half. And yet another study by the Economics Faculty of the National Autonomous University in Mexico City says Mexican wages have lost 81% of their buying power in the last two decades.

To enforce this system, maquiladora workers are required to belong to unions that have no intention of raising those low wages or helping them end exhausting and dangerous working conditions. Throughout NAFTA's ten-year history, workers have sought to break free in a long labor war waged from plant to plant along the border. They have organized independent unions, willing to fight for a larger share of the enormous wealth the factories produce. But these efforts have been met with firings, plant closures, and even physical violence.

Ten years of hearings held under NAFTA's labor sideagreement have documented extensive violations of labor rights. In those few instances in which workers have successfully formed independent unions, as they did at Tijuana's Han Young plant in 1998-9, their strikes were broken, despite guarantees under Mexico's Constitution and Federal Labor Law.

NAFTA's sponsors promised that the treaty's labor sideagreement would protect workers, even though the treaty itself was intended to demolish all barriers to foreign investment. The sideagreement proved toothleess. In ten years not one fired worker has been returned to his or her job, and not one independent union has gained legal status and a contract as a result of the NAFTA process.

Instead, the historical labor protections built into Mexico's legal system have been systematically undermined and eliminated as obstacles to investment. Even when Mexican judges held that strikes were legal, as did Maria Lourdes Villagomez Guillon of the Federal 5th District in 1998, and Pedro Fernandez Reyes Colin of the First Collegial Court of the Fifteenth District (Baja California's highest judicial authority) in 1999, their decisions were defied with impunity by government authorities. Under NAFTA, breaking strikes and unions on the border has become an integral part of economic development, and legal protections for workers have been swept away.

Four years ago, at the height of the protests against the World Trade Organization, Zwelenzima Vavi, the head of the South African Congress of Trade Unions, described the alternative to NAFTA and the free trade philosophy underpinning it. "In the pursuit of profit," he said, "governments are told to remove worker protections, and then use that as an inducement for investment. But development is a wider concept. It includes social development, and the living conditions of the people. Development can't exist with mass unemployment and poverty."

As the opposition gathers in Miami, these are the words that critics of NAFTA and FTAA will put before the world.
 

 
A reader recently wrote us:

Imagine my tremendous consternation at being caught, even after having read Alien Nation, by this dinner line:

"Our economy is better off with immigrants. They do the jobs nobody else wants to do."

No, I said to the last part. They just underbid.

But I couldn't address the first part, maybe because it's so large and unsubstantiated a claim. I just mentioned such things as: the shutdown of public hospitals in Los Angeles, welfare, crime, etc.

Do you know of anyone with a statistical answer to the challenge, 'America is better off economically with the immigrants'?

Statistical answer : surprisingly, this is actually one of the best-established findings in immigration economics -- albeit the least publicized.

The 1995 findings of Harvard economist George Borjas [George Borjas, "The Economic Benefits from Immigration," Journal of Economic Perspectives, Spring 1995.]were confirmed by the National Research Council's 1997 report The New Americans: essentially all the increase in Gross Domestic product [GDP] brought about by immigration is captured by the immigrants themselves, in the form of wages. Virtually no benefit accrues to native-born Americans.

(And once transfer payments like welfare, education and healthcare are factored in, immigration becomes a net cost -- for example, over $1,000 in annual extra taxes per native-born household in California. Americans are financing their own dispossession).

Even less publicized: the Borjas model reveals the true economic consequence of immigration: a massive redistribution of wealth within the American native-born community-basically, from labor to capital, because of immigration's impact on wages.

The key variable: the rate at which native-born wages fall as the total number of workers rises-the so-called "price elasticity" of labor. Borjas estimates that each 10% increase in immigrant workers reduces native wages by about 3.5%. About 14% of employed workers in 2002 were immigrants. So the reduction in native wages attributable to immigrants that year was approximately 4.9% (35% of 14%).

As our reader told his dinner companions, it's true that immigrants don't do work Americans won't do -- they just do it for less.

But, more importantly, immigrants do indeed do one dirty job: make it easier for Americans to exploit each other.

I've recalculated this immigration impact on the basis of the latest government data. This is how it came out:

Net economic gain from the immigrant presence to native-born Americans, before transfer payments: just 0.2 percent of GDP (that is, two-tenth of one percent!) In today's 10.4 trillion economy, that comes to a mere $84 per native-born American.

Native-born capital-owners' gain as a result of immigration: about 3.1% of GDP, or $323.8 billion. This goes to employers and, for example, upper-income owners of stocks and employers of servants.

Native-born workers' loss as a result of immigration: about 2.9% of GDP -- $323.8 billion in a $10.4 trillion economy, or a remarkable $2,578 for each native-born worker every year.

Remember, these are averages. Unskilled native workers lose far more than the 4.9% average wage loss. Black Americans in particular are big losers. But recent research shows that even college graduates, once thought immune to immigrant competition, face wage reductions. [See: George Borjas, "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration in the Labor Market," NBER, June 2003.]

There are far fewer owners of capital than there are workers in the US. The economic benefits of immigration are concentrated in the elite. The losses widely dispersed among ordinary Americans.

That's why the politics of immigration are so difficult -- and why you've only seen this finding, although it's the consensus among academic economists, reported in VDARE.COM.