NAFTA at 10:
Where do we go from here?
by Jeff Faux
The Nation magazine, February
Ten years ago, the North American Free
Trade Agreement was sold to the people of the United States, Mexico
and Canada as a simple treaty eliminating tariffs on goods crossing
the three countries' borders. But NAFTA is much more: It is the
constitution of an emerging continental economy that recognizes
one citizen-the business corporation. It gives corporations ,
~ extraordinary protections from government policies that might
t limit future profits, and extraordinary rights to force the
privatization of virtually all civilian public services. Disputes
are settled by secret tribunals of experts, many of whom are employed
privately as corporate lawyers and consultants. At the same time,
NAFTA excludes protections for workers, the environment and the
public that are part of the social contract established through
long political struggle in each of the countries.
As Jorge Castaneda, Mexico's recent foreign
secretary, observed, NAFTA was "an accord among magnates
and potentates: an agreement for the rich and powerful...effectively
excluding ordinary people in all three societies." Thus was
NAFTA a model for the neoliberal governance of the global economy.
The business-backed politicians who pushed
the agreement through the three legislatures promised that NAFTA
would generate prosperity that would more than compensate "ordinary"
people for its lack of social protections. Foreign investors would
make Mexico an economic tiger, turning its poor workers into middle-class
consumers who would then buy US and Canadian goods, creating more
jobs in the high-wage countries.
But as soon as the ink was dry on NAFTA,
US factories began to shift production to maquiladora factories
along the border, where the Mexican government assures a docile
labor force and virtually no environmental restrictions. The US
trade surplus with Mexico quickly turned into a deficit, and since
then at least a half-million jobs have been lost, many of them
in small towns and rural areas where there are no job alternatives.
Meanwhile, Mexico's overall growth rate
has been half of what it needs to be just to generate enough jobs
for its growing labor force. The NAFTA-inspired strategy of export-led
growth undermined Mexican industries that sold to the domestic
market as well as the sixty -year-old social bargain in which
workers and peasant farmers shared the benefits of growth in exchange
for their support for a privileged oligarchy. NAFTA provided the
oligarchs with new partners-the multinational corporations-allowing
them to abandon their obligations to their fellow Mexicans. Average
real wages in Mexican manufacturing are actually lower than they
were ten years ago. Two and a half million farmers and their families
have been driven out of their local markets and off their land
by heavily subsidized US and Canadian agribusiness. For most Mexicans,
half of whom live in poverty, basic food has gotten even more
expensive: Today the Mexican minimum wage buys less than half
the tortillas it bought in 1994. As a result, hundreds of thousands
of Mexicans continue to risk their lives crossing the border to
get low-wage jobs in the United States.
Canada, which since 1989 has had a similar
trade agreement with the United States, and which does much less
business with Mexico, was less directly affected. But NAFTA strengthened
Canadian corporations' ability to threaten workers and governments
with moving south, helping undermine the country's traditionally
strong labor and social standards.
In all three countries NAFTA has worsened
the distribution of income and wealth. While ordinary people paid
the costs, the benefits went to the continent's "rich and
powerful." Canadian and US corporate investors got guaranteed
access to Mexico's cheap labor as well as its privatized public
assets. Mexican elites brokered the deals. In one example, well-connected
Mexicans bought the country's second-largest commercial bank from
the government for $3.3 billion and sold it to Citigroup for $12.5
Yet despite its failures, NAFTA set in
motion the economic integration of Canada, Mexico and the United
States, which cannot now be stopped. Every day, more intracontinental
connections in finance, marketing, production and other business
networks are being hard-wired for a consolidated North American
market. Ford pickup trucks are assembled in Mexico with engines
from Ontario and transmissions from Ohio and Michigan. Canadian,
Mexican and US investors have created a labyrinth of interconnected
corporate assets. After a temporary post-9/11 slowdown, the cross-border
movement of people- unskilled workers, educated professionals,
Expanded markets require expanded rules.
Out of public sight, the rulebooks are being filled in by NAFTA
tribunals, trigovernmental commissions, administrative judges.
Business-supported academic centers are humming with new proposals,
ranging from guestworker programs, to the privatization of Canadian
water and Mexican oil, to continental business tax policies. As
a former Canadian ambassador to the United States recently commented,
"Few days go by without new ideas for deepening NAFTA."
But while corporate business and its political
clients are organized continentally, progressives are not. One
reason is that the opposition to NAFTA in all three countries
was in large part rooted in economic and political nationalism.
The political heat that almost defeated the agreement in the US
Congress was fueled by the specter of American jobs moving to
Mexico. The Canadian opposition painted NAFTA as a threat to Americanize
Canadian culture. In Mexico, opposition was rooted in its people's
historic mistrust of Yankee imperialism.
Once the fight over NAFTA was settled,
opposition groups moved back to domestic issues or moved on to
defend against neoliberalism in other global settings, such as
the proposed Free Trade Area of the Americas and the new round
of World Trade Organization negotiations. These are important
battles, but the capacity of North American activists to influence
these negotiations is marginal. For example, if the FTAA is permanently
derailed, it will not be over a lack of social protections but
because Latin American and US business interests cannot make a
Back home, however, North American opponents
of neoliberalism-because they can be a force in the domestic politics
of all three nations-have more leverage to develop a socially
responsive model of economic integration between rich and poor
economies. Indeed, given the influence of the United States in
setting the rules for the global economy, a visible, sustained
challenge to the NAFTA model here may be the most important contribution
progressives on this continent can make to the building of a more
just global economic system.
A continental progressive movement would
build on its existing infrastructure in each nation-labor, environmentalists,
human rights activists, progressive churches and populist legislators-and
the fact that the majority of ordinary citizens in all three nations
want a market system with social protections.
One initial organizing step might be to
connect existing demands to rewrite NAFTA. For example, over the
past year Mexican farmers demonstrated throughout the country-including
breaking down the door to the Mexican Congress-demanding that
NAFTA's agricultural provisions be changed. Had US and Canadian
small farmers, labor unions and environmentalists joined them
with their own demands, the Mexican government would not have
been able to isolate the farmers with the argument that changing
NAFTA is politically impossible.
A new continental agreement could include
financial assistance from the United States and Canada to Mexico
for building the economic and social infrastructure it needs for
growth, just as the European community has redistributed funds
to its poorest members in order to create a stronger and more
balanced economy. Continentwide enforceable labor, human rights
and environmental protections ought to be established to prevent
the erosion of living standards in Canada and the United States,
and to insure that Mexican workers share in the benefits of rising
productivity. Provisions of NAFTA that erode the ability of the
local public sectors in all three countries to promote the welfare
of their citizens should be stricken.
Progressive legislators in all three countries
could begin working out proposals covering issues such as corporate
governance, public health and safety, and investment in education
that could be simultaneously introduced in all three capitals.
A continental labor organizing campaign against a single employer
could have an electrifying effect-demonstrating that workers in
Canada, Mexico and the United States have more in common with
one another than with the CEOs who may share their formal nationality.
Creating a continental political consciousness
does not mean forming one nation. Few are ready for that-particularly
the majority of Mexicans and Canadians appalled by the US governing
class's current imperial obsessions. But despite all the obvious
difficulties, if progressives do not want to see a continental
society built on NAFTA's reactionary template, they have little
choice but to grasp hands across the borders and work together
to build an economy that serves the continent's "ordinary"
[The CentralAmerican Free TradeAgreement
(CAFTA) is the latest effort by the Bush Administration to extend
NAFTA southward. Read Mark Engler s analysis at www.thenation.com.]
Jeff Faux was the founding president,
and is now distinguished fellow, of the Economic Policy Institute.
He is writing a book on the future of North America s political
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