Paranoia on the Frontier: NAFTA and the US Election
No other issue seeks to dominate the next few months than the troubles in the US economy. Besides the well documented mortgage lending scandal, the roots of the fragile US economy are the movement of large amounts of manufacturing jobs to China as well as the approximately one-third to one-half of US debt that is held by China, Japan and other foreign creditors in order to assist the US fund the wars in Iraq and Afghanistan. During the last week of campaigning a new nemesis has been created within the dialogue between Clinton and Obama, that is the NAFTA agreement and the threat Mexico and Canada pose to the US economy.
In reality the United States has often determined the course of NAFTA and its rulings since the agreement came into effect with Canada and Mexico in 1994. Until recently, Canada and Mexico have been the top trading partners with the United States, switching between Japan and the EU for top spot which has recently been adopted by China. Trade with the US and its neighbors is more than 92% with Canada and approximately 80-85% in Mexico and has increased more than 100 percent with both neighbors since 1994. The US’s NAFTA partners do not only export to the US, but import the majority of their goods from the United States, becoming a net benefit to US exporters in the process, especially those in border states such as Texas, California, Michigan and New York.
Problems encountered by the Canadian and Mexican governments often had to deal with the reality of the US holding a lot more economic weight and power in commercial activities, political weight, and control in official NAFTA hearings which often did not have any real power in enforcing its decision inside the US. Of great concern was NAFTA Chapter 11 which details the rights of companies to have legal recourse over government policies if they believed harm was done to them. This was one of the first times in international law where a company was represented without the support of a country, as before Chapter 11 only states had legal rights of representation under international law. In case law, American companies and policymakers who for the first time promoted the ability for a private company to gain a legal reward often supported this policy. The results were cases such as Metalclad, where a Mexican municipality was denied the right to stop the creation of a waste management plant, despite its concerns that it would harm the local environment. In S.D Myers, a Canadian law preventing the ban of toxic waste to the US was challenged as well, despite the regulations being there to protect the health and safety of the environment in both jurisdictions. Change only came in recent appeals in the NAFTA appeals hearing regarding Methanex, which challenged California state policy to prevent environmental damage inside the United States itself, the first of a number of appeals limiting the rights of companies over governments, namely the governments of California and the US.
Despite the recent criticisms by Clinton and Obama, it was Bill Clinton who ratified NAFTA during his time as President with no opposition from his wife, as well Obama who did little to appease the passing of NAFTA until the United States opened trade relations with China upon its acceptance into the WTO. The effect of the Methanex appeal is that the US trade policy has moved towards fair and equitable treatment of companies. As seen in the newest version of the US Trade Act and new trade agreements with Singapore and others, public policy is paramount over a companies rights over its investment as long the treatment is fair and equitable with due process and just compensation. This turn around took place not for Chapter 11’s negative effects on Mexico or Canada, but on the US itself. Policies from the US and American Labour Unions challenging Canadian softwood lumber, or taking the production of corn, a staple of Mexico, and limiting it through NAFTA rules was a power advantage of the United States over its greatest trading partners in many cases. As seen in NAFTA tribunal cases and trade policy, the US has nothing to fear from its neighbors, but more from its debt and poor leadership which has sent American jobs and money to China. Criticisms of Mexico and Canada have died out long ago, and do nothing but create scapegoats such as NAFTA in order to win votes in Ohio and Texas.
John McCain this week showed his prudency in this election campaign. Despite talk of referring to Mr. Obama as Barak Hussein Obama and actions by his opponents in defacing America’s good trading partners in Canada and Mexico, McCain had tried to keep the election campaign free of issues which seek to rip apart the country and mire the election in issues which do nothing more than to create a false crisis and give the Presidency to someone who can create the most paranoia for the American people. Ironically this tactic that was used so effectively by Bush is being countered not by the Democrats, but by another Republican. In reality, the Democrats are creating a lot of political tensions for something which has been created by American companies themselves. American companies have moved to Mexico and put Mexican companies out of the agriculture business while solidifying their control over staple Mexican products. American Auto manufactuers have taken advantage of the state sponsored health care system in Ontario to set up auto manufacturing in Canada. While these moves do hurt American manufacturing, it is the policies of American companies which have taken employment across the border. Companies such as Walmart and other retailers have created the most intense changes in the modern US economy by taking advantage of loose rules and laws in China who is slowly absorbing the world’s manufacturing base without Labour Rights or accountability to its employees. Clinton and Obama would do well focusing on China as opposed to scapegoating Mexico and Canada. These two countries do more to purchase American goods than any other countries in the world. It is hard to manage a relationship with a giant, but it is impossible when that giant claims to be the victim of trade, when its certain the American people are being set up to be the victim of politics.
March 4th, 2008 at 7:48 am
AMERICAN SOVEREIGNTY AND THE NORTH AMERICAN UNION
The term ‘Free Trade’ is usually defined as the absence of tariffs, quotas, or other governmental barriers to international trade. There is no doubt that some recent free trade agreements have not been very good for the American worker. On the other hand, the agreements have been great for the large multinational corporations, particularly those that have moved their manufacturing plants from the United States to China, Mexico and other low-wage countries where they can hire people there for a few dollars a week. These corporations can now produce their products without worrying about the costs of meeting OSHA requirements, providing employee health care or pensions for its workers and then they can bring their products back into the USA to sell. These products oftentimes are not made to the same quality standards as when they were produced in America and as recents incidents involving Chineese imports have shown, these products can pose health hazards to Americans as well.
The supporters of many free trade agreements, particularly the North American Free Trade Agreement (NAFTA), have always promised increased exports, better jobs and better wages. Under many of these free trade agreements, however, just the opposite has occurred. Under NAFTA, for example, the U.S. trade deficit has soared and now averages $55-65 Billion dollars per month; the U.S. has lost over a million manufacturing jobs and real wages in both the U.S. and Mexico have fallen significantly. In short, NAFTA has not been a friend to the citizenry of either the United States or Mexico.
In 2005, a new mechanism was created to speed the further expansion of the NAFTA free trade agreement into a North American Union. It is called the Strategic and Prosperity Partnership of North America (SPP)’ The SPP is designed to facilitate the establishment of a North America Union through the “economic integration” of the US, Mexico and Canada. The most important feature of the SPP is that it does not require congressional ratification or the passage of any federal legislation by the congress of the United States. This design places the negotiation fully within the authority of the executive branch in the United States. How else would Mexican truckers be able to begin operating in the USA over the objections of Congress, American truckers and most of the American people?
The people and their elected representatives in congress no longer seem to have a voice when it comes to international trade. This is definitely a national sovereignty issue. International trade issues that affect 300+ million Americans should be made by the people’s representatives in Congress, not by a handful of government bureaucrats and corporate elites who use their government connections to bypass congress and ignore our Constitution, which expressly grants Congress the sole authority to regulate international trade.
The goal of these international trade elite is to create an integrated North American Union, complete with a currency, a cross-national bureaucracy, and virtually borderless travel within the proposed Union. Like the European Union, a North American Union would represent another step toward the destruction of our national sovereignty. A free America, with limited, constitutional government, would just be a memory.
Not all free trade agreements are bad, but I believe that the United States of America must withdraw from any international agreements that infringe upon the freedom, sovereignty and independence of the American people.
By:
JOHN W. WALLACE
Candidate for Congress
New York’s 20th Congressional District
www.johnwallaceforcongress.com
March 5th, 2008 at 11:09 am
My impression as working in all three NAFTA countries on trade and immigration issues is that there is a strong sense in your response that trade and sovereignty are mutually exclusive, or perhaps at polar opposites. The United States are in the economic troubles it is in currently because of a trade deficit with China and the severe loss of manufacturing with a country as large and economically capable as China as well as assuming large amounts of debt in the process. The problem with considering NAFTA partners and other trade partners as wholly negative is that trade is necessary for growth, and some countries while having a negative effect on some in the US also create alot of jobs via trade as well as investment in the United States. If Canada or Mexico benefit at all from this trade it does not mean it hurts the United States. Americans purchase low cost items from China presently as they once did from Mexico. One of the reasons that the items are low cost are because like China, Mexico once did produce low costs items. Since NAFTA, the rise in real wages went up in Mexico, deterred several recessions and economic crisis since 1996 and for the last while helped improve rights for workers and produce proper employment for many in Mexico and allowed Americans to purchase items from people who had a proper degree of Labour Rights in most of the American companies working in Mexico. In reality Mexico developed a greater economy and labour rights because of its economic success under NAFTA. Currently China lacks rights for its workers but dominates the American market, which is where many Americans are losing their jobs.
Trade with Canada has always been essential, as Canada has been the US closest trading partner over both country’s histories. Canada and the US had strong trade relations with the Auto-Pact, which existed well before NAFTA and integrated the US and Canadian auto manufacturing plants. When jobs were lost in this industry in Detroit, they were lost as well in Ontario. In that Canadian region, 40% of the jobs are linked with the auto sector, much of which is Vertically Integrated with the US plants in Detroit. With recent losses to Asian auto manufacturers Canada has suffered as well. With 92% trade for Canada with the US, when there is a problem in America Canadians also suffer from decisions of American companies as do many Americans.
Regarding a North American Union, no one in the United States, Mexico or Canada wished for such a Union in any serious regard. It was an idea under neo-liberal economic theory which drove alot of US foreign policy in trade with its neighbors since NAFTA and beyond through almost every trade agreement that reducing economic barriers to trade would allow American companies to compete on par with foriegn competitors in their own countries. These agreements helped many American companies invest abroad without restrictions, but the theory never went beyond multilateral trade. In Canada and Mexico the belief is that culturally, economically and socially there is no desire for such a strong cultural and economic tie with the US. Beyond the difficulties of having economies which are several times smaller than the US, it would also lead to a loss of control over economic policy which have kept Mexico and Canada in heathy standing despite recent US economic troubles. A North American Union has never been a serious reality and is used mostly as a straw man arguement to create dissent against trade. No elected official would approach such a Union as it is assured they would not be successful in being elected.
With regards to trade agreements, the United States while passing legislation by means which many do not agree with, it is usually the US who has the advantage with trade agreements over its trading partners. Much of the newer agreements have been with smaller nations or ones which hope to have more developments as to create closer friendly ties with the US and helps the US promote development within those economies which often need to trade with the US to reduce poverty in their nation..a small sacrifice for the US, but a great help to countries which suffer from poverty and inequality.
Since the first city states the need for trade has been essential for local people and the progress of their business. When Americans sell billions of goods and services abroad there is never an issue, and allowing these goods to be sold into Canada and Mexico creates many jobs and profit fro Americans. Others have the right to sell to Americans as well, but if the relationship takes massive amounts of jobs away there needs to be action taking towards those trading relationships in order to create a fair and equitable response for all parties. American trade is not mutally exclusive and it necessary for growth, but targeting the correct problems is essential for the next President in order to keep cash flows coming into the US and going out to proper trading partners. Every country wants sovereignty, but no one has taken this away from the American people. It has always been the US to decide how it wishes to form policy and effect its own people. Americans need leaders who can choose policy and take actions before placing the blame on others for policy which will not help the average citizen and alienate good neighbors and trading relationships. This is essential to the progress of any Nation, America included.
March 15th, 2008 at 12:51 pm
[…] I was happy to read a clever article called: Linking NAFTA and Immigration by Ted Lewis of the San Diego Tribune as he discusses the campaign issues and how they are being spun to effect the campaign and America’s neighbours in a negative fashion. Lewis suggests that reform in NAFTA and effects on the poorest in the three member states needs to be addressed in a logical fashion, and not via lens of the complete benefit of free trade or lowbrow electioneering. Addressing poverty and its root causes of increased unemployment in Mexico needs to be addressed in any future NAFTA negotiation. Lewis states that much of the illegal immigration comes from a lack of economic progress in Mexico since the agreement began and has lead to massive amounts of immigration to the US. Lewis also mentions that the electioneering between Obama and Clinton creates arguments against free trade, and in my impression creates intentional dissent in the US against Canada and Mexico. While Obama was blamed for not being serious in changing NAFTA, Clinton has used this small scandal to re-ignite her campaign. Ironically the alienation of friendly foreign governments was always something linked with Bush, but support for the next Clinton Presidency may rest on the back of Canadians and Mexicans alike if it continues to hurt Obama. With much of the support for the Clinton campaign coming from the blue collar democrats in the northern states and America’s traditional industrial heartland, it makes sense that Clinton would use Canada and Mexico to blame for poor US policy in the past, much of which came under her husband’s term in office. In reality the Mexican economy has purged its traditional weaknesses since 1994 and has maintained a solidly valued Peso, growth in the long run and even produced a more equitable government with the PRI dominated Presidency toppling a few years after NAFTA came into effect. The reality is that Mexico is a developing nation in many ways and has problems which 10 years of trade policy could never resolve in its best performance. To end poverty and develop a country a generation is needed to end generations of poverty and inequality. Targeted anti-poverty policy is needed to help remove the 30% of Mexicans who live in poverty and have always lived in poverty. Economic progress in Mexico has created such negative results because the flow of money often reaches the poorest last. This is the trend in almost every country where poverty dominated the political agenda. No one has addressed this in the Obama camp, and with the Clinton campaign it seems that immigration and NAFTA come second to embarrassing Obama as much as possible. What poverty and success in Mexico’s economy can always be debated, the main issue of concern is that anti-immigrant and anti-NAFTA effects of running a negative campaign. It seems apparent that even though NAFTA is a mixed blessing, the current concerns with China seems to be targeted towards America’s neighbours. While China has a right to progress economically and diversify its society as it wishes, Americans need to debate how they want to proceed with their neighbours and China in a logical, fair and respectful manner and choose where they wish to take America in the future. No country can live in a vacuum, but every country has the ability to take measured and fair responses to grow its own economy and produce trade and development to assist its own people, create a net benefit in jobs and reduce poverty. In a response to one of the FPA’s blogs, a candidate for Congress in the US claimed the negative effects of NAFTA and America losing its sovereignty via NAFTA. I responded in kind in order to dispel myths which seek to create straw man arguments of America’s friends and neighbours. I encourage readers to read the responses to the blog and address their concerns in kind. All fair points of view are respected and I encourage open debate. The response is noted in the FPA’s Latin America Blog: Paranoia on the Frontier: NAFTA and the US Election […]
March 15th, 2008 at 1:12 pm
[…] In a response to one of the FPA’s blogs, a candidate for Congress in the US claimed the negative effects of NAFTA and America losing its sovereignty via NAFTA. I responded in kind in order to dispel myths which seek to create straw man arguments of America’s friends and neighbours. I encourage readers to read the responses to the blog and address their concerns in kind. All fair points of view are respected and I encourage open debate. The response is noted in the FPA’s Latin America Blog: Paranoia on the Frontier: NAFTA and the US Election […]
April 25th, 2008 at 1:14 pm
[…] Despite many in the US attacking Canada and Mexico for taking American jobs and wanting to integrate into the US, and many in Canada trying to tie Prime Minister Harper into the conservative right in the US to prompt and election, the Canadian Prime Minister has been strong in taking a stance on resolving NAFTA and other issues involoving its neighbors. Problems such as softwood lumber, defining Canada’s role in Afghanistan as a force to create a sustainable environment for aid, and environmental policies has done a great deal to benefit Canadians and Americans alike. Mr. Harper addressed Mrs. Clinton’s assessment of its neighbors as well, making the strong point that in this global energy crisis, Canada is one of the world’s largest exporters of petroleum and gas to the US and has a reserve some say as large as Saudi Arabia. […]