CASE AGAINST NAFTA

CASE AGAINST NAFTA

NAFTA: NO LABOUR OR ENVIRONMENTAL LAWS

Bonior, a congressman Democrat anti-NAFTA leader is quoted, “ I didn’t think they would proceed with a trade agreement between a developing country and a developed country at this large a scale without requiring the developing country, Mexico in this case, to raise its standards, similar to what had been done in the European Union with Greece and Portugal” (MacArthur, 2000, p. 149).

IN WASHINGTON:
FREE TRADE WAS A LOBBYIST CAMPAIGN
FREE TRADE: NO FREE VOTE/REFERENDUM

Paul Krugman…wrote in Foreign Affairs, “for the United States, NAFTA is essentially a foreign policy rather than an economic issue”(MacArthur, 2000, p. 133). By his own admission, a former Clinton aide indicates that the passing of NAFTA was obtained illegally, and would require a two-thirds majority of congress, rather than the slim 25 extra votes which passed NAFTA, resulting from an in-excess of fifty million dollar lobbyist and vote-buying campaign in congress, funded by multinational American corporate interests. There was no free debate or referendum on the issue of NAFTA among the American electorate.



AMERICAN REAL WAGES: PEAKED IN 1979

“The median US weekly wage was still $17.51 below its 1979 high of $558.47 (1998 dollars)” (MacArthur, 2000, p. 8). While Perot perceived a, “loud sucking sound “ of jobs heading south of the border, it appears more like a slow, steady drip.

MEXICO: A BASKET CASE ECONOMY

The reason Mexico sought a free trade agreement under NAFTA had nothing to do with free trade and everything to do with a, “balance of payments problem”(MacArthur, 2000, p. 91).

“Most Mexicans were profoundly skeptical about an agreement whose rationale was difficult to understand” (Carranza, 2002, p. 149).

Over half of the Mexican people live below the poverty line, with real wages having peaked in 1975, reduced again by nearly 40% during the 1994 peso devaluation crisis, from various accounts caused by the mismanagement of then President Carlos Salinas under the possible mistaken belief that artificially inflated peso valuations would be supported by the Clinton administration, with American maquilladora interests, the impending NAFTA ratifications, and the handover of power to Zedilla. (MacArthur, 2000;Carranza, 2002)

“From the Mexican perspective, Jorge Castaneda (then Mexican Foreign Minister) was right: NAFTA was an investment agreement designed to protect American corporations in Mexico, lock in the low wage rate, for a nervous political oligarchy” (Macarthur, 2000, p. 133). But proponents of NAFTA claimed that American jobs would be created, through increased exports to Mexican consumers. However, exports have risen, but are destined for component assembly in maquilladoras, and reshipment back to the US for sale in the US market. Mexico is thus a lucrative, low wage, high pollution environment, where American companies may recoup fifty percent of gross costs of operation as opposed to remaining in the US.

CANADIAN DUALITY: WHERE GOES THE WATER?

“Chretien secured three pages of side agreements, including a unilateral and altogether meaningless five-paragraph declaration on energy security and a non-binding joint statement calling for the three countries to spend the next two years talking about (jaw-boning) subsidies and dumping” (Macarthur, 2000, p. 268).

As a result of NAFTA, and WTO membership, the sovereign rights of Canada to maintain environmental regulations and protection of surface water rights are being challenged. Due to the number of economic agreements, a number of interpretations of products or goods are being applied to water rights and whether or not, according to trade agreements rather than constitutional sovereignty, Canada can or cannot restrict export of bulk water shipments to other NAFTA members. (Girourard, 2002)

FREE TRADE EFFECTS ON BUSINESS

MEXICAN CORN FIASCO: US FARM SUBSIDIZED DUMPING

A Carnegie Endowment report from 2003 claims that dumping of US corn in Mexico due to free trade has caused 1.3 million farmers to leave their lands to date, joining the ranks of urban unemployed and forcing migration of others to the US to work as crop-pickers (Pollan, 2004). Cheaper US corn subsidized by the federal government, allows their producers to undersell Third-World farmers in the name of free trade. Mexican farmers must now use more intensive and destructive chemical or water-use practices to become more cost-effective to compete in their home markets. The Mexican agrarian economy mostly produces food for export to the US, while many Mexicans go hungry, or undernourished. Mexican farmers try to survive by switching to development of animal feedlots, thus aggregating sewage and water pollution. Small Mexican farmers have maintained diverse genetic strains of corn while American producers in the name of free trade; use only a few modified strains. Mexican traditional varieties were used to recover corn production it the US following a blight, which decimated corn crops after a fungus scourge in 1970. Therefore, free trade in corn from the US adds the destruction of biological diversity in corn genetics, and the dissolution of the domestic Mexican corn farmer, where corn was actually invented.

“An export driven Mexican economy resulting from free trade has developed a more unequal distribution of income and evidence of falling real wages in a majority of the country’s workers” (de la Garza 1994; Robinson, 1998-99; Dussel Peters 2000; Marina Flores 2001; in Gereffi, Spener, and Bair , 2002, p.328).

FDI-FREE US TRADE DEFICITS WITH MEXICO AFTER NAFTA (CLINTON PROMISED DEFICITS WOULD NOT HAPPEN)

The trade deficit with Mexico has grown steadily since the institution of free trade. The US trade deficit with Mexico has increased from two billion dollars before NAFTA to 63 billion dollars after NAFTA. The trade deficit after NAFTA increased 1,150 %. The major reason is suggested that US companies set up in Mexico for the purpose of production of raw or semi-finished goods for export back to the U.S. But it is impossible to determine if the processing or production of goods in Mexico reduces their cost to consumers, as the U.S. imports goods from all over the world. The majority of US investment in Mexico has been in maquilladoras, or free trade zones. 3,100 maquilladora plants represent 45% of all Mexican exports. From 1993 to 1998, maquilladora exports rose 135%. This does not represent growth in direct investment in Mexico due to NAFTA (Shahabuddin, 2003).

US APPAREL AND TEXTILE INDUSTRY (GROWTH OF SWEAT SHOPS) AFTER NAFTA (GOOD JOBS?)

Research reveals “…half the industry and as many as sixty percent of the contractor shops are major labour-law violators” (Ross,2002, p. 117). The causes of these violations of human rights on American soil, by American companies are defined as reduced ability of government to enforce labour laws, increased power of major retailers with greater sales concentrations (Walmart, etc.), competitive pressures of massive increases of imports from low-wage manufacturing nations (such as maquilladoras in Mexico), and a large pool of undereducated, low-skilled immigrant (legal and illegal) workforce (such as former Mexican corn-farmers) forced from their lands by subsidized, cheaper American corn exports.


Bibliography

Carranza, M.E. (2002), ‘Critical debates: Neighbours or partners? NAFTA and the politics of regional economic integration in North America’, Latin American Politics and Society, vol. 44, iss.3, pp.141-159.

Gereffi, G., Spener, D., and Bair J. (2002), ‘NAFTA and Uneven Development in the North American Apparel Industry’, in Gereffi, Spener, and Bair (Eds.), Free Trade and Uneven Development: The North American Apparel Industry After NAFTA, Temple University Press, pp. 327-340.

Girouard, R.J. (2003), ‘Water export restrictions: A case study of WTO dispute settlement strategies and outcomes’, Georgetown International Environmental Law Review, vol. 15, iss. 2, pp. 247-300.

MacArthur, J.R. (2000), The Selling of “Free Trade”, Hill and Wang, New York.

Pollan, M. (2004), ‘A flood of US corn rips at the heart of Mexico’s farms’, The Ecologist, vol. 34, iss. 5, pp. 6-8. http://80-proquest.umi.com.ezproxy.uow.edu.au [Accessed, 26 September, 2004]

Ross, R.J.S. (2002), ‘The New Sweatshops in the United States: How New, How Real, How Many, and Why?’, in Gereffi, Spener, and Bair (Eds.), Free Trade and Uneven Development: The North American Apparel Industry After NAFTA, Temple University Press, pp. 100-122.

Shahabuddin, S. (2003), ‘NAFTA: Does it have any effect on the U.S.A. economy?’, International Journal of Management, vol. 20, iss. 3, pp.306-403. http://80-proquest.umi.com.ezproxy.uow.edu.au [Accessed, 26 September, 2004]