Senate Committee
on Finance
North American Free Trade Agreement
Director: Audi Syarief
© 2009 Institute for Domestic & International Affairs, Inc.
This document is solely for use in preparation for Rutgers Model Congress 2009.
Use for any other purpose is not permitted without the expressed written consent of IDIA.
For more information, please write us at [email protected].
Policy Dilemma ______________________________________________________________ 1
Areas of Dispute ______________________________________________________________ 2
Environment _____________________________________________________________________ 2
Agriculture_______________________________________________________________________ 3
Labor ___________________________________________________________________________ 3
Automobiles ______________________________________________________________________ 4
Energy __________________________________________________________________________ 4
Immigration______________________________________________________________________ 5
Chronology __________________________________________________________________ 6
17 December 1992: North Atlantic Free Trade Agreement (NAFTA) Signed ________________ 6
21 February 1995: US Financially Assists Mexico in Peso Crisis ___________________________ 6
11 September 2001: Al-Queda Crashes Planes into World Trade Center and Pentagon _______ 8
22 March 2005: Security and Prosperity Partnership (SPP) of North America Launched ______ 8
Actors and Interests ___________________________________________________________ 9
United States _____________________________________________________________________ 9
Mexico __________________________________________________________________________ 9
Canada _________________________________________________________________________ 10
Democrats ______________________________________________________________________ 11
Republicans _____________________________________________________________________ 11
American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) _______ 12
Sierra Club _____________________________________________________________________ 13
National Association of Manufacturers (NAM) ________________________________________ 13
Discussion Questions _________________________________________________________ 16
Bibliography ________________________________________________________________ 17
For Further Reading______________________________________________________________ 17
Works Cited_____________________________________________________________________ 18
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Policy Dilemma
The North American Free Trade Agreement is a treaty signed by the United States,
Canada, and Mexico which prohibits artificial trade barriers such as tariffs between the
three countries.
NAFTA was designed to promote economic growth by spurring
competition in domestic markets and promoting investment from both domestic and
foreign sources. NAFTA members seek to achieve financial prosperity through
trilateralism. In this vein, NAFTA sets out to accomplish a number of goals; first, to
eliminate customs barriers and facilitate cross-border trade in goods and services.
Second, to guarantee conditions of equitable competition; third, to substantially increase
investment opportunities; fourth, to provide for protection and application of intellectual
property rights; fifth, to adopt efficient implementation, joint administration, and dispute
settlement procedures.1
Canada, the United States, and Mexico have made excellent progress in each of
those goals. North American firms are now more efficient and productive. They have
restructured to take advantage of “intra-industry specialization”. US-Mexico trade has
grown twice as fast as US trade outside of NAFTA, and foreign investment in Mexico
has soared. And while it is arguable how much of a role NAFTA played, the US and
Canadian economies have grown 3-4 per cent since 1993.2
However, the prediction that NAFTA would lead to closer cooperation on the
environment, water resources, migration, and other issues has not yet been realized.
Meanwhile, border security concerns—not an issue during NAFTA negotiations—are
now central to the national security of the United States. Security concerns have been
dealt with on an ad hoc and bilateral basis rather than in a multilateral fashion.
While NAFTA succeeded in its core goal of eradicating trade and investment
barriers, it only created opportunities—it did not guarantee investments or sales. NAFTA
was able to “bring the continent closer to free trade; this alone will not guarantee
1
“Objectives of NAFTA” North American Forum on Integration, http://www.finanafi.org/eng/integ/alena.asp?langue=eng&menu=integ (Accessed 10 March 2009)
2
Hufbaur, Gary Clyde. NAFTA Revisited: Achievements and Challenges p. 61-62
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prosperity, but without free trade, prosperity would prove more elusive.”3 The agreement
has much that can be improved upon—especially in bringing “good governance, good
infrastructure, and good education” to all parts of North America.4
Areas of Dispute
Environment
During the NAFTA ratification debates, Congress expressed concern that Mexico
had fewer environmental requirements and lax enforcement. NAFTA provisions
“encourage upward harmonization of standards and encourage parties to integrate
environmental protection and sustainable development into economic decision making.
The agreement’s standards provisions do not affect a country’s ability to determine its
own levels of protection for manufacturing and other process standards; however, the
investment provisions allow companies to challenge environmental measures that are
viewed as harming their investments.”5 Mexico has indeed struggled with maintaining a
clean environment especially after the huge surge of foreign factories construction.
The NAAEC was an additional document specifically focusing on the
environment, signed by the three NAFTA governments. It includes dispute settlement
provisions to address a party’s failure to enforce environmental laws. This side agreement
also created the North American Commission for Environmental Cooperation (NACEC),
which includes a Council, Joint Advisory Committee, and a Secretariat. The
Commission’s major goal is to broaden environmental cooperation among the parties.
Among its activities, the NACEC tries to evaluate the positive/negative environmental
effects of NAFTA.
3
Hufbaur, Gary Clyde. NAFTA Revisited: Achievements and Challenges, Institute for International Economics,
Washington DC, 2005. p. 63
4
Ibid.
5
Anderson, C.V. NAFTA Revistied, Nova Science Publishers, Inc. New York, 2003. P.105
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Agriculture
NAFTA does not have a unified agreement on agriculture—there are three
separate bilateral agreements instead. The US- Canada agreement maintains significant
restrictions and tariff rate quotas, particularly on trade in sugar, dairy, and poultry. By
contrast, the US agreement with Mexico is far more liberal but with high restrictions on
sensitive products. Those agreements have largely been successful with US agricultural
trade with Canada and Mexico more than doubling in value between 1993-2003 and
growing twice as fast as agricultural trade with the rest of the world.6
However, there are several disputes between the United States and its NAFTA
partners. American farmers are among the strongest critics of NAFTA. Agribusiness in
the United States has been forced to compete with imported products from Mexico and
Canada, driving prices down in what is often termed a “race to the botton.” In the fifteen
years since NAFTA, small farm earnings have dropped precipitously, though consumer
food prices have grown at record rates. 7
There is also growing concern about the
willingness of the three nations to honor the commitments outlined in NAFTA. In 2003,
the United States filed suit with Canada for unfairly increasing tariffs on US-imported
wheat, which violated Canada’s obligations under Article 17. In 2004, the United States
and Mexico finally started to settle a dispute over who should profit more from sugar
production.
Labor
Estimates of NAFTA’s impact on US jobs continue to range from extremely
positive to extremely negative. On the negative side, one study claimed that “NAFTA
eliminated 879, 280 actual and potential jobs between 1994 and 2002,” an assertion that
mounts to around 110,000 US jobs lost on account of NAFTA each year. 8 Another study
6
Hufbaur, Gary Clyde. NAFTA Revisited: Achievements and Challenges, Institute for International Economics,
Washington DC, 2005. p. 22
7
Public Citizen, “The Ten Year Track Record of the North American Free Trade Agreement,”
http://www.citizen.org/documents/NAFTA_10_ag.pdf, accessed March 16, 2009.
8
Hufbaur, Gary Clyde. NAFTA Revisited: Achievements and Challenges, p. 82
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found that new exports to Canada and Mexico during NAFTA’s first five years created
709, 988 jobs, or about 140,000 jobs annually. Despite heated debate over the numbers,
the reality is that the effect of NAFTA is small compared with the turnover of the US
labor market. Even if the worst estimate is correct, the job loss would only represent five
per cent of total annual displacement in the labor force.
Automobiles
Autos and auto parts account for 20 per cent of total intra-NAFTA trade, the
largest single sector. Liberalization began well before NAFTA, but the agreement
extended the process by integrating Mexico. The free trade agreement phased out
Mexican trade barriers, resulting in a ten-fold increase in auto trade from 1993 to 2003.9
Supply lines for vehicles routinely cross national boundaries, as parts and assembly work
is performed wherever it is most efficient. As a result, auto manufacturer have largely
relied on cheap Mexican labor to produce autos for markets in the United States and
Canada, controversially shifting a portion of manufacturing jobs and automobile profits
to the south. Furthermore, the reliance on just-in-time manufacturing processes makes
the industry sensitive to border disruptions. After the terrorist attacks of 11 September
2001, the United States shifted its priorities toward border security, which can potentially
be detrimental to the auto industry.
Energy
Energy accounts for approximately 7 per cent of intra-NAFTA trade, of which US
imports from Canada and Mexico represent the lion’s share. The value of total US energy
imports from NAFTA partners was $56 billion in 2003. In that same year, the United
States imported 2.1 million barrels per day (mmb/d) from Canada and 1.6 mmb/d from
Mexico. Canada is the leading source of US natural gas imports and Mexico is becoming
a significant net importer. The demand for energy in the United States is driving the
imbalance in energy trade. North American demand for energy is expected to grow by 1.5
9
Hufbaur, Gary Clyde. NAFTA Revisited: Achievements and Challenges, p. 20-23,
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per cent annually through 2025. Unless there is “greater energy production within North
America and sharply increased conservation efforts, much of this demand will have to be
met with extra-NAFTA imports.”10
Immigration
After NAFTA went into effect in 1994, experts expected that the bulk of the
additional jobs due to the free trade agreement would be created in Mexico. One hopedfor side effect of NAFTA was reduction in unauthorized migration. This did not happen.
Instead, the number of unauthorized Mexicans living in the United State rose from an
estimated 2.5 million in 1995 to 4.5 million in 2000, representing an annual increase of
400,000 a year. Greater Mexican immigration was expected after the Peso Crisis, but the
influx has been much more than anyone expected.
Since 1994, Congress has proposed three major US migration policy options:
guest workers, earned legalization, and legalization. The Bush administration pushed for
allowing employers to grant guest worker status to their immigrant workers, granting
them stay until they could apply for a visa in two years. Earned legalization involves
immigrants performing a minimum amount of work before being eligible to apply for a
visa. Legalization would give visas to all current illegal immigrants. All three have been
met with some opposition. One alternative is to use pilot guest worker programs to keep
track of workers and grant them temporary visas—it is a temporary fix that may help in
managing Mexico-US migration downward. Another alternative is to allow the influx of
immigrants decrease on its own, as it is predicted to do after 2010.11
10
11
Ibid.
Hufbaur, Gary Clyde. NAFTA Revisited: Achievements and Challenges. p. 464
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Chronology
17 December 1992: North Atlantic Free Trade Agreement
(NAFTA) Signed
After years of negotiation, the leaders of the United States, Mexico, and Canada
signed the North Atlantic Free Trade Agreement in San Antonio Texas. Each leader was
responsible for promoting the passage of the agreement in their respective countries.
President George H.W. Bush had negotiated the deal, but it was President Clinton who
oversaw its development in Congress. Prior its introduction to the House of
Representatives, Clinton added clauses that sought to protect American workers. Called
to question was the effect it would have on the U.S. economy and its workers. There were
also concerns about Mexico not catching up to Canada and the U.S. in environmental
law. The agreement managed to pass and would come into effect approximately one year
after the signing ceremony in Texas.
Academic Scholar Maxwell A. Cameron argues that NAFTA negotiations were
shaped by three factors “(1) asymmetries of power between the three states; (2) sharply
contrasting domestic political institutions; and (3) differences in the non-agreement
alternatives, patience, and risk orientations of the heads of government and chief
negotiators.”12 NAFTA needed to address and reconcile these differences in an effort to
unify the continent.
21 February 1995: US Financially Assists Mexico in Peso
Crisis
The Pesos Crisis is a economic panic that involved Mexico not being able to pay
off its external debt, which resulted in the government devaluing the peso by 15 per cent.
The crisis broke as newly inaugurated President Ernesto Zedillo returned to Mexico City
from the December 1994 Summit of the Americas held in Miami. In February 1995, the
Clinton administration crafted an international rescue package of historic proportion and
12
Cameron, Maxwell. The Making of NAFTA: How the Deal Was Done, Cornell University, Ithaca, New York,
2000. P.
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committed the United States to almost $20 billion in immediate assistance, plus $30
billion from other sources—despite opposition in Congress and reservations by key
donors in the International Monetary Fund (IMF). In return, Mexican policymakers
introduced stringent controls on monetary and fiscal policy. Due to NAFTA obligations,
however, Mexico largely abstained from the traditional trade protection and capital
controls usually deployed by developing countries in response to balance-of-payments
problems. Harsh medicine induced a deep but short-lived recession. By 1996, the
Mexican economy had revived. The US loans were fully repaid, with interest, ahead of
schedule in January 1997.
In some ways, NAFTA facilitated the speedy recovery. First, the US financial
rescue package helped Mexico restructure its short-term debt and ease its liquidity crisis.
Second, because of NAFTA obligations, Mexico followed a textbook recovery program
based on “fiscal constraint, tight money, and currency devaluation, rather than trade and
capital controls.”13 Third, open access to the US market helped prevent an even more
drastic recession in Mexico by spurring an export-led recovery in 1995-96.
In other ways, NAFTA may have caused the Peso Crisis in the first place. First,
NAFTA provided inadequate monitoring of financial institutions. The negotiators of the
free trade agreement could have agreed on mutual surveillance of fiscal policies.
However, both the Bush and Clinton administrations were not interested in changing the
traditional US style of macroeconomic policy and Canada and Mexico were not likely to
push the matter. Second, NAFTA inspired overconfidence in Mexico’s economic
prospects. After ratification, Wall Street assumed that economic gains to Mexico would
translate into quick financial returns and ended up splurging on investments.14
13
14
Hufbaur, Gary Clyde. NAFTA Revisited: Achievements and Challenges. p. 11
Hufbaur, Gary Clyde. NAFTA Revisited: Achievements and Challenges. p. 12
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11 September 2001: Al-Queda Crashes Planes into World
Trade Center and Pentagon
The terrorist attacks of 11 September 2001, brought security to the forefront of the
North American agenda. Following the attacks, the United States sharply elevated
security measures along its borders, causing lengthy delays. Firms that ship goods across
the NAFTA borders must now consider the “security tax” of border delays and the risk of
a total border shutdown. To increase security, the United States negotiated two separate
of bilateral agreements—Smart Borders and the Border Partnership Action Plan with
Canada and Mexico, respectively. Prior to those plans, each country maintained largely
separate policies toward refuges, border, immigration, screening of goods entering each
others territories, and intelligence gathering.15 Both Canada and Mexico were now
imagined as a possible North American security perimeter; together they could wage a
new war on international terrorism. This new relationship causes some tension between
the three states and shifts the possibility of a more united economic policy and/or
currency to the background.
22 March 2005: Security and Prosperity Partnership (SPP) of
North America Launched
In their trilateral summit in Waco, Texas, the leaders of Canada, the United States
and Mexico launch the Security and Prosperity Partnership of North America. The
agreement outlines an agenda for greater cooperation in areas as diverse as security,
transportation, environment, and public health. The partnership created a council that
“considers issues that could be addressed trilaterally or bilaterally, … provide strategic
medium and long-term advice, … and offers ideas on the private sector’s role in
promoting North American competitiveness.”16 The group is a continuation on the United
States’ focus on security in a post 9/11 world. While all three countries are participating
15
Hussain, Imtiaz. North American Homeland Security: Back to Bilateralism?, Praeger Security International,
London, 2008. p. 46
16
Security and Prosperity Partnership of North America: Next Steps, Fact Sheet, Security and Prosperity Partnership
of North America, http://www.spp.gov/factsheet.asp (Accessed 14 March 2009)
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in each group, the organization itself does not form a strong trilateral bond but rather
relies on bilateral relationships.
Actors and Interests
United States
For the United States, NAFTA was an economic opportunity to capitalize on a
growing export market to Latin America and a political opportunity to repair the
sometimes-unstable relationship with Mexico. At the same time, NAFTA was seen as a
way to support the growth of democratic practices in Mexico and as part of the long-term
response to chronic migration pressures. In addition, US officials hoped the regional talks
would spur progress on free trade because the Uruguay Round of Trade Negotiations
between world governments was moving slowly. NAFTA was also a fallback if the
Uruguay Round fell through completely.
NAFTA reforms also promised to open new doors for US exporters, who were
facing Mexican industrial tariffs five times greater on average than US tariffs. They could
now reach a growing market of almost 100 million people. US officials also recognized
the imports from Mexico would likely contain higher US content than competing imports
from Asia, providing additional benefits. Increased Mexican sales in the US market
would in turn spur increased Mexican purchases from US firms.17
Mexico
For Mexico, NAFTA represented a way to lock in the reforms of the apertura, or
“market opening,” that President Miguel de la Madrid introduced in the mid-1980s to
transform Mexico’s formerly state-centered economy in the wake of the devastating debt
crisis of the 1980s. Mexico needed more rapid growth to provide new opportunities for
its young, expanding population. Given the legacy of the debt crisis of 1982, low
domestic savings, and an increasingly overvalued peso, the most practical way to propel
17
Hufbaur, Gary Clyde. NAFTA Revisited: Achievements and Challenges, p. 2
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growth was to import goods and capital, creating more competition in the Mexican
market.
The free trade agreement with the United States was crucial to maintaining secure
access to Mexico’s largest market. But NAFTA also served to prevent a “roll back” of the
apertura reforms toward liberal trade by raising the political cost of doing so. The
obligations of the treaty made it much easier to deflect protectionist demands of industrial
and special interest groups. The trade pact thus was “an integral part of the plan to create
a more stable policy environment—so that Mexico could attract greater foreign direct
investment—with its embedded technology and management skills—to build and finance
growth.”18 Mexico now has an increased interest in attracting foreign investment and
continuing to grow.
Canada
For Canada, the latecomer to the NAFTA table, the objectives were less
ambitious. Initially, Canadian officials suspected that a new agreement with Mexico
would erode the hard-fought gains of the Canada-United States Free Trade Agreement
(CUSFTA), which had come into force only in 1989. CUSFTA had eliminated all tariffs
on trade and established a “dispute settlement mechanism that guaranteed the impartial
application of each partner’s anti-dumping and countervailing duty laws.”19 The
Canadian unions felt that Mexico’s low wages would undercut Canada’s competitive
advantage in the US market, possibly diverting US investment away from Canada. Trade
between Canada and Mexico was small and the prospective deal seemed unlikely to
redress CUSFTA shortcomings on trade remedies. Canada was also less worried about
migration flows than their US counterparts. However, as it became clear in September
1990 that the United States and Mexico were going to move ahead with or without
Canada, the Canadian government decided that it had more to gain by joining the
negotiations than by staying on the sideline. Involvement allowed the government to
18
Hufbaur, Gary Clyde. NAFTA Revisited: Achievements and Challenges. p. 2-3
“1989 – Free Trade Agreement: Eliminating Barriers to Trade”, Government of Canada
http://www.canadianeconomy.gc.ca/English/economy/1989economic.html (Accessed 10 March 2009)
19
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minimize the risks to Canada of US-Mexico free trade and offered an opportunity to
extract commercial concessions from the United States.20 Canada still has a strong
interest in maintaining free trade, while at the same time its policies have not been driven
by security concerns to the same extent as the United States.
Democrats
Since the 2008 presidential election, there has been a surge in opposition to
NAFTA as it stands currently by the Democratic Party. Prior to the Ohio Democratic
Presidential Primary, both candidates Obama and Clinton “threatened to withdraw from
the 14-year-old North American Free Trade Agreement if Mexico and Canada refuse to
negotiate changes.”21 Democrats attributed the loss of 231, 200 manufacturing jobs in
Ohio to companies outsourcing to Mexico. While President Obama has yet to fulfill his
promise to renegotiate NAFTA, he did bring it up in his first official visit to Canada.
However, it is known that Canada “continues to champion free trade and has warned that
any attempt to renegotiate part of the deal could see the whole thing unravel.”22 Canada is
already somewhat wary of the $787 billion economic stimulus package, which includes
protectionist provisions for US steal and other industries. In short, Democrats have an
interest in satisfying their constituencies in places hit hard by job loss. However, with the
current economic recession, they may be wary of making any sudden moves.
Republicans
Since the surge in Democratic opposition to NAFTA in 2008, Republicans have
maintained their support for NAFTA. In a speech in Detroit, John McCain asserted that
“Barack Obama does not understand [that NAFTA has provided our economy with a
framework in which we can become more competitive]… What truly would be
20
Hufbaur, Gary Clyde. NAFTA Revisited: Achievements and Challenges. p. 4-5
Mooney, Brian C. “Democrats compete to Oubash NAFTA”, Boston Globe, 29 February 2008
http://www.boston.com/news/nation/articles/2008/02/29/democrats_compete_to_outbash_nafta/ (Accessed 13
March 2009)
22
MacAskill, Ewen. “Obama raises Nafta Renegotiation during First Official Visit to Canada”, guardian.co.uk 19
February 2009, http://www.guardian.co.uk/world/2009/feb/19/barack-obama-stephen-harper-canada-visit
21
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devastating is to jeopardize the trade expansion of NAFTA through a misguided,
isolationist impulse that would inevitably and understandably alienate a key partner like
Canada.”23 During his administration, President George W. Bush also staunchly
supported free trade and NAFTA specifically. In fact, when elected to office in 2000, he
had planned to add Chile, Brazil, Argentina, and others to NAFTA. 24 In short,
Republicans have an interest in preserving free trade with other countries, even those not
included in NAFTA. They would be cautious in re-negotiating NAFTA if the party ever
chose to push that agenda forward.
American Federation of Labor and Congress of Industrial
Organizations (AFL-CIO)
The AFL-CIO is the largest federation of unions in the US, making up 56 national
and international unions and representing 10 million workers. It’s mission is to “improve
the lives of working families—to bring economic justice to the workplace and social
justice to our nation.”25 The AFL-CIO works to accomplish this through creating a
strong political voice for its workers. On the case of NAFTA, the AFL-CIO have been
opposed to the agreement from the very beginning.
In her 2006 testimony to the United State Committee on Finance, AFL-CIO policy
director Thea Lee criticizes the agreement. She asserts that “workers in all three NAFTA
countries have seen their wages fall or stagnate, as job insecurity and inequality have
grown. At the same time, NAFTA rules have disadvantaged North American family
farmers, many small businesses, consumers, and the environment relative to
multinational corporate interests.”26 She went on to say that NAFTA restricts the ability
of governments to regulate services delivered across border and doesn’t allow
23
Montanaro, Domenico. “McCain: Hitting Obama on NAFTA”. First Read, MSNBC, 2- June 2008
http://firstread.msnbc.msn.com/archive/2008/06/20/1157183.aspx (Acessed 14 March 2009)
24
“George W. Bush on Free Trade”, On the Issues,
http://www.ontheissues.org/celeb/George_W__Bush_Free_Trade.htm
25
“What We Stand for: Mission and Goals of the AFL-CIO”, AFL- CIO: America’s Union Movement,
http://www.aflcio.org/aboutus/thisistheaflcio/mission/
26
Lee, Thea M., “NAFTA at Year Twelve”, Subcommittee on Trade of the United States Senate Committee on
Finance, 11 September 2006 http://www.aflcio.org/issues/jobseconomy/globaleconomy/tradeagreements.cfm
(Accessed 13 March 2009)
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governments in Canada, Mexico, and the U.S. to include local preferences in making
purchasing decisions. In short, the AFL-CIO does not believe that workers’ rights are
being protected with NAFTA. The organization has a strong interest in scrapping the
NAFTA model entirely and implementing a plan for increased international trade that
keeps in mind the rights of the worker.
Sierra Club
The Sierra Club is the oldest and largest grassroots environmental organization in
the United States. Its mission is “to explore, enjoy, and protect the wild places of the
earth; To practice and promote the responsible use of the earth’s ecosystems and
resources; to educate and enlist humanity to protect and restore the quality of the natural
and human environment; and to use all lawful means to carry out these objectives.”27 The
non-profit’s official stance on NAFTA is that NAFTA transferred enormous power from
democratic governments to multi-national corporations, which puts North America at
higher risk to dirty air, unsafe drinking water, and food-borne illnesses.28
Primarily concerned with the environment, the Sierra Club stresses the negative
impact NAFTA has had in Mexico. They estimate the cost of NAFTA-related
environmental damage to Mexico in 1999 alone to be $47 billion. NAFTA is responsible
for the increase in manufacturing plants, which in turn has increased air pollution. The
Sierra Club also claims that new chemical intensive production methods have harmed
Mexico’s natural resources.29 In sum, the Sierra Club has an interest in strengthening
environmental protection in all three countries. It has legitimate concerns with the lack of
effective environmental regulations in the free trade process.
National Association of Manufacturers (NAM)
The National Association of Manufacturers is the largest industrial trade
association, representing small and large manufacturers in every industrial sector and in
27
“Missions and Goals”, The Sierra Club Foundation, http://www.sierraclub.org/foundation/inside/background.asp
“Responsible Trade: NAFTA”, Sierra Club, http://www.sierraclub.org/trade/nafta/
29
“NAFTA’s Impact on Mexico”, Sierra Club, http://www.sierraclub.org/trade/nafta/
28
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all 50 states. Its mission is to “advocate on behalf of its members to enhance the
competitiveness of manufactures by shaping a legislative and regulatory environment
conducive to U.S. economic growth.”30 In short, the NAM advocates a pro-growth, promanufacturing agenda. It serves its member firms by reinforcing their legislative
activities and providing salient information to the public.
On NAFTA, the National Association of Manufacturers takes the position that the
free trade agreement has only helped our economy. The survey, conducted jointly by
NAM, Deloitte, the Manufacturing Institute, and CME shows that 49 per cent of
manufacturers in the United States, Canada, and Mexico have found that the NAFTA
agreement has enabled them to grow their business both within and outside North
America. Another 41 per cent report that NAFTA has had a neutral or lightly positive
effect. And only 10 per cent say that NAFTA has had a negative impact.31
30
:”Mission Statement”, National Association of Manufacturers, http://www.nam.org/
“U.S., Canadian Manufacturers Groups Say Business Survey Confirms Success of NAFTA”, National Association
of Manufactureres, 18 April 2008 http://news.thomasnet.com/companystory/543307 (Accessed 13 March 2009)
31
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Conclusion
NAFTA has had success in eliminating trade barriers and increasing investments,
but the underlying question is whether the benefits outweigh the cost. The document
should be analyzed according to its effect in several important categories—Agriculture,
Labor, Automobiles, the Environment are a few. Also important to keep in mind are the
different international and local actors that have influence in negotiations. The United
States government, for example, has made security its primary objective after the events
of 9/11. That interest needs to be reconciled with Mexico and Canada so that a beneficial
trilateral relationship can exist.
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Discussion Questions
• Which areas of the NAFTA agreement are in dire need of reform? Are there any
that don’t need to be changed at all?
• How have Republicans and Democrats historically felt about free trade? What are
the current platforms of each party? Is there any possibility for compromise
between the two parties?
• Assess the increased importance of security in a Post 9/11 world and what it
means for any trilateral negotiations.
• Should other countries be included in the North American free trade agreement?
• What are the major actors in the NAFTA discussion? How do their interests
conflict and how can they possibly come to a compromise?
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Bibliography
For Further Reading
Hufbaur, Gary Clyde. NAFTA Revisited: Achievements and Challenges, Institute for
International Economics, Washington DC, 2005.
This book has been invaluable to the development of this brief. Pay special
attention to the overview in the beginning as it give an excellent
background on the agreement that will help you with the rest of book.
Hufbaur goes on to talk about dispute settlements, agriculture, the
automotive sector, energy, and Mexico-US migration. The last chapter of
the book is dedicated to his recommendations, which may serve as a good
basis for your own solutions.
Hussain, Imtiaz. North American Homeland Security: Back to Bilateralism?, Praeger
Security International, London, 2008.
This book’s value is in its recent account on the relationship between
Canada, the United States, and Mexico. It makes the argument NAFTA and
other trilateral agreements have had not integrated North America as they
intended to. The best way to use this source is to read the first chapter and
then use the index to find parts of the book that deal with the free trade
agreement.
North American Forum on Integration, http://www.finanafi.org/eng/integ/alena.asp?langue=eng&menu=integ (Accessed 10 March 2009)
This is the website of the North American Forum on Integration, which
seeks to make decision-makers aware of the challenges posed by
integration between the three NAFTA countries. Check out the yearly
conference reports to see how the discussion has changed over the past few
years. The overviews of NAFTA as it relates to integration are also helpful.
Finally, the related links gives a good list of further sources.
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Works Cited
“1989 – Free Trade Agreement: Eliminating Barriers to Trade”, Government of Canada
http://www.canadianeconomy.gc.ca/English/economy/1989economic.html
(Accessed 10 March 2009)
Anderson, C.V. NAFTA Revistied, Nova Science Publishers, Inc. New York, 2003.
“George W. Bush on Free Trade”, On the Issues,
http://www.ontheissues.org/celeb/George_W__Bush_Free_Trade.htm
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