Trade Deal Renegotiation Summit
NAFTA Renegotiation
Becca Chant
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INDEX
Summary of the Issue ............................................................. 2
Related Legislation ................................................................. 3-4
Major Aspects of the Issue ..................................................... 5-7
Actors and Interests ................................................................ 8
Discussion Questions ............................................................. 9
Bibliography/Research Links ............................................. 10-11
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Summary of the Issue
The North American Free Trade Agreement (NAFTA), aims to encourage
economic transaction between Canada, the United States, and Mexico through the
de-regulation of commerce and promotion of business development. The treaty
created a tri-nation trade-bloc, and was signed by the three nations on January 1st,
1994, with all financial restrictions on trade being eliminated on January 1st, 2008.
Now in 2017, President Trump of the United States has called for a
renegotiation of the treaty. Delegates attending the summit should consider the
history of trade between the three nations, the impact it has had on the economic
health, labor rights, and environment of each country, as well as interacting factors
such as immigration. The summit should conclude in a consensus-based agreement
to continue with the current trade deal, make amendments, or repeal and redraft
some trade agreement between Canada, Mexico and the United States.
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Related Legislation
Neoliberalism - NAFTA is considered a neoliberal policy, as it promotes
business through de-regulation. Neoliberalism is economic-political ideology, that as
writer and political activist George Monbiot points out, “so pervasive has
neoliberalism become that we seldom even recognize it as an ideology” .
Neoliberalism is a laissez-faire economic strategy that encourages free-market
capitalism, many times through the de-regulation and promotion of businesses. In
the case of NAFTA, the ultimate goal is increased production, economic and job
development. This “new” economic liberalism has been embraced by every
President of the United States since Ronald Reagan. As this term and ideology is so
closely related to NAFTA, it is essential to have a proper understand of what it
means.
Trade and Tariff Act of 1984 (US) - Passed by Congress under Ronald
Reagan, this gave the President power to negotiate free trade agreements without
consulting Congress, only requiring rejection or approval once negotiated.
Canada-U.S. Free Trade Agreement - In 1988 Canada and the United
States signed the precedent for NAFTA, a free trade agreement eliminating tariffs
and economic limits between the United States and Canada.
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North American Free Trade Agreement (NAFTA) - Approved in 1994,
NAFTA eliminates economic barriers to trade, to encourage commerce between the
US, Canada and Mexico. It protects intellectual property rights and establishes
procedure to resolve trade disputes.
North American Commission for Environmental Cooperation
(NACEC or CEC) - Three-part organization aiming to prevent trade conflicts and
enforce environmental regulations between the signatures of NAFTA. Following the
creation of this organization, the NACEC was cut to an annual budget of 9 million
USD, leaving the organization with little enforcement power.
North American Agreement on Labor Cooperation (NAALC) - A side
agreement to NAFTA, NAALC seeks to hold each nation responsible for enforcing
labor protections. The effectiveness of this treaty is debateable, as the next section
will cover.
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Major Aspects of the Issue
Labor Rights and Violations - All three nations in NAFTA have their own
labor laws. Over the last 20 years most of the labor and jobs created through
NAFTA have been concentrated in Mexico. While the Mexican Constitution of
1917 was the first constitution in the world to include a clause ensuring the right to
bargain, and one of the foundations of the Mexican Revolution was worker’s rights,
the Mexican government currently lacks the necessary funds to enforce these laws.
The United States also faces similar issues with enforcement of labor laws and poor
working conditions, especially for industrial and agricultural workers, and
immigrants. Following NAFTA Mexico saw dramatic increase in maquiladoras,
factories run by foreign companies that mainly export product. These factories
predominantly sprung up along the US-Mexico border, and benefited from the
decreased regulations under NAFTA. By the end of 1994, 58% of Mexican exports
were produced in the “Maquiladora Zone”, as compared to 12% eleven years
earlier. While maquiladoras employ about 500,000 Mexicans, wages in Mexico have
dropped since the inception of NAFTA.
Environmental Degradation - Environmentalist call the US-Mexico border
the “Maquiladora Zone”, the 2,000 mile-long and 100km-wide zone with loose
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regulations and high rates of pollutants. Many of the factories along this border
produce carbon-intensive goods and produce other pollutants into the air and water
ways. From 1985 to 1999, solid waste production in Mexico increased by 108%,
water pollution by 29%, and air pollution in urban areas by 97%. Hazardous waste
produced in maquiladoras was only being disposed of properly 12% of the time,
and toxic emissions and byproducts produced as a result of production and
transport of goods have been linked to increased cancer, asthma, respiratory
diseases, and birth defects occurrences along the border. NAFTA allows for
companies to challenge standards and regulations on a federal, state or local level if
that standard is higher in that region than in another, a “technical or non-tariff”
barrier to trade. As Canada tends to have higher standards of environmental
regulation than the United States or Mexico, this is a concern for the Canadian
government and people to maintain a clean and healthy environment while adhering
the treaty.
Employment - Public Citizen published a report in 2014 for NAFTA’s 20th
year. The report found that roughly one million US jobs have been lost as a result of
NAFTA, instead of the promised 200,000 increase in jobs per year as promised by
President Bill Clinton. The study also links NAFTA to increased income inequality
in the United States and Mexico.
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International Competition - NAFTA aims to make the North American
bloc more competitive with the world. Amending or a more drastic change like
abolishing NAFTA could risk the nations of the North American bloc losing a
competitive edge with an increasingly tariff-free and globalized world. After China
joined the World Trade Organization in 2001, many factories established in Mexico
following NAFTA lost jobs overseas. Owners of these companies worry that
increasing tariffs and amending NAFTA could tank business.
Immigration - The consolidation of employment to maquiladoras in Mexico
has significantly hurt rural agrarian workers, a contributing factor to undocumented
immigration to the United States. Public Citizen’s report found that around one
million Mexican campesino farmers have been displaced as a product of NAFTA,
because of imported U.S. industrial-farmed subsidized corn. The number of
undocumented Mexican immigrants in the United States increased from 3.9 million
in 1992 to 12 million in 2005. Many undocumented Mexican immigrants who come
to the United States as migrant farmers face new challenges including few labor
protections and fear of deportation.
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Actors and Interests
All three nations have huge stakes in the the outcome of this summit. While
NAFTA is still somewhat favorable in public opinion in Canada , it has gone down
in recent years in the United States and is low in Mexico . The representatives of
each nation will all be negotiating this treaty, but the people who this will have the
most impact on will not be present: the working class of North America.
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Discussion Questions
1. How can this summit ensure the protection of workers rights and the
environment while also encouraging economic productivity? Is that possible?
What should the summit prioritize?
2. Can neoliberalism function with any regulations?
3. Can higher-regulated economies still encourage economic development?
4. What impacts will the outcomes of these talks have on the people who
elected the representatives attending this summit?
5. What are representatives willing to sacrifice in the name of efficiency,
productivity, and economic growth?
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Bibliography/Research Links
Articles that give accurate and brief histories on NAFTA:
http://www.huffingtonpost.com/lori-wallach/nafta-at-20-one-million-u_b_4550207.ht
ml
https://www.thebalance.com/history-of-nafta-3306272
Articles that give in-depth analysis of the impacts of NAFTA:
http://www.law.harvard.edu/programs/lwp/nafta.pdf
http://www.citizen.org/documents/NAFTA-at-20.pdf
Other articles:
https://ustr.gov/issue-areas/industry-manufacturing/industrial-tariffs/free-trade-agree
ments#
https://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-g
eorge-monbiot
https://www.thebalance.com/history-of-nafta-3306272
https://www.thebalance.com/history-of-nafta-3306272
https://library.brown.edu/create/modernlatinamerica/chapters/chapter-12-strategies-f
or-economic-developmen/nafta-free-trade-and-the-environment-in-mexico/
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http://lawdigitalcommons.bc.edu/cgi/viewcontent.cgi?article=1001&context=ja
wps
https://www.hrw.org/reports/2001/nafta/nafta0401-04.htm
https://www.hrw.org/reports/2000/uslabor/USLBR008-03.htm#P273_52046