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NAFTA REVISTED: WHO WON? WHO LOST? WHO CARES?

In Foreign Policy, Jobs, Latin America, Mexico, NLLSA, Politics, U.S. Government on January 5, 2010 by nllsachair

George Cisneros-

The 2008 presidential campaign sparked renewed interest and controversy over the North American Free Trade Agreement (NAFTA). It was as if though the American public had forgotten about the “giant sucking sound,” a colorful phrase coined by Ross Perot during the 1992 presidential campaign to depict massive U.S. job loss to Mexico and other negative effects he believed would result from NAFTA. In 2008, candidates from both parties revisited the agreement and again used NAFTA as a political weapon to sway potential voters. With thousands of manufacturing jobs lost in Michigan’s automotive industry, there needed to be a scapegoat, and our neighbor to the south was a good defenseless target. Republicans pointed at NAFTA as the primary culprit for the situation in Detroit, ignoring failures from top executives and other failed policies. Democrats pressured by such attacks from the right and by powerful union leaders, vowed to renegotiate the agreement executed by the Clinton administration fourteen years prior. However, nobody actually addressed the core issues of NAFTA and its effects on the North American economies.

The North American Free Trade Agreement was executed by the United States, Mexico, and Canada on December 17, 1992, and became effective on January 1, 1994. The Agreement was seen as a comprehensive, multi-layered document that would institute numerous structures, guidelines, and rules relative to trade between all three countries. The objectives of NAFTA included the elimination of trade barriers, heightened investment opportunities, and the promotion of fair competition. A utopian image would be a European Union style block in North America. In 2010, it is important to ask, who were the real winners in NAFTA? Who were the losers? And who really cares after the election has been decided?

It is imperative to acknowledge that there have been many positive aspects to NAFTA for all three countries. Trade between the three countries increased significantly. Between 1993 and 2006, trade among NAFTA partners climbed 197%, from $297 billion to $883 billion. Today, Canada and Mexico are the first and third greatest trading partners with the U.S., respectively. According to one study, foreign direct investment induced by NAFTA increased 70% in Mexico in 1994 and was up by 435% a decade later. However, this did not translate into booming economy for Mexico. Rather, Mexico has remained stagnant and its economy has grown relatively slow, even under Mexican standards. It is true that some U.S. manufacturing jobs have been lost to Mexico; however, it has been a miniscule number and although any job lost is a tragedy, the exaggeration does not merit the level of scrutiny it has received.

The truth of the matter is that Mexico has been the real loser in this agreement. Despite its comparative advantages, such as its proximity to the world’s largest economy, it has not faired as well as other countries such as, China, Brazil, and India who do not participate in NAFTA. Mexico, has been side swiped by China, who has replaced it as the second largest trading partner with the U.S. Hundreds of thousands of jobs have been lost in Mexico to China especially in Mexico’s maquiladora industry on its northern border. If there is anyone that must be blamed it must be the greedy corporate executives, who have chased cheap labor across the pacific. NAFTA may have worked for Mexico 25 years earlier; however, it came in the era of globalization, which meant greater competition, improved technology, communication, and travel. This has allowed corporate America to exploit cheap labor and increase profits. The dream of integrating the three economies has been forgotten.

Currently, a new debate has surged regarding Mexican trucks and allowing them access to U.S. roads, which was a program stipulated in NAFTA. At present, U.S. truckers have complete access to Mexican highways, but Mexican trucks are confined to a 20-mile zone north of the border. For deliveries beyond that zone, the goods they carry must be transferred to U.S. trucks. Not only is this a double standard, but it violates both the letter and the spirit of the North American Free Trade Agreement, which opened U.S. borders for motor carrier access. The xenophobic fear of more “illegal aliens” and drugs sneaking into the country has put a halt to following through with certain portions of the agreement. This is just another example of the constant set backs that Mexico has had to deal with because of dependency on the U.S. economy. Many economists believe that Mexico would have faired much better without NAFTA. Mexico could have followed countries such as Brazil, China and India, where the governments have a much greater say in economic policy.

In 2010, many people care and more people need to care about NAFTA. Those who are directly affected are the least vulnerable of society. Mexican farmers and U.S. factory workers care a lot. Mexican farmers have to compete with agricultural imports, while U.S. factory workers fear cheap foreign labor. It is time to revisit NAFTA and analyze it in the globalized context. How can NAFTA work for Mexican as well as for American workers? How can the xenophobic rhetoric be eliminated when dealing with the realities of a global economy? These are the questions that we must ponder in 2010 when thinking of “free trade” agreements.

George Cisneros, NLLSA’s Public Relations Director, is a second-year law student at Columbia Law School.

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One Response to “NAFTA REVISTED: WHO WON? WHO LOST? WHO CARES?”

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