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Sat Jun 13, 2015, 10:38 AM

NAFTA at 20

**Posting in response to some of the misinformation I see referenced on NAFTA as
well as the letter posted that was written by Caroline Kennedy..which pretty much
blew my mind. Fair Trade seems to be lost in the equation.





The North American Free Trade Agreement took effect on January 1, 1994.

NAFTA opponents – including labor, environmental, consumer and religious groups – argued that NAFTA would launch a race-to-the-bottom in wages, destroy hundreds of thousands of good U.S. jobs, undermine democratic control of domestic policy-making and threaten health, environmental and food safety standards.

NAFTA promoters – including many of the world's largest corporations – promised it would create hundreds of thousands of new high-wage U.S. jobs, raise living standards in the U.S., Mexico and Canada, improve environmental conditions and transform Mexico from a poor developing country into a booming new market for U.S. exports.

Why such divergent views? NAFTA was a radical experiment – never before had a merger of three nations with such radically different levels of development been attempted. Plus, until NAFTA, "trade" agreements only dealt with cutting tariffs and lifting quotas to set the terms of trade in goods between countries. But NAFTA contained 900 pages of one-size-fits-all rules to which each nation was required to conform all of its domestic laws – regardless of whether voters and their democratically-elected representatives had previously rejected the very same policies in Congress, state legislatures or city councils.

NAFTA requires limits on the safety and inspection of meat sold in our grocery stores; new patent rules that raised medicine prices; constraints on your local government's ability to zone against sprawl or toxic industries; and elimination of preferences for spending your tax dollars on U.S.-made products or locally-grown food. In fact, calling NAFTA a "trade" agreement is misleading, NAFTA is really an investment agreement. Its core provisions grant foreign investors a remarkable set of new rights and privileges that promote relocation abroad of factories and jobs and the privatization and deregulation of essential services, such as water, energy and health care.

Remarkably, many of NAFTA's most passionate boosters in Congress and among economists never read the agreement. They made their pie-in-the-sky promises of NAFTA benefits based on trade theory and ideological prejudice for anything with the term "free trade" attached to it.


Now, twenty years later, the time for conjecture and promises is over: the data are in and they clearly show the damage NAFTA has wrought for millions of people in the U.S., Mexico and Canada. Thankfully, the failed NAFTA model – a watered down version of which is also contained in the World Trade Organization (WTO) – is merely one among many options.

Throughout the world, people suffering with the consequences of this disastrous experiment are organizing to demand the better world we know is possible – but we face a race against time. The same interests who got us into NAFTA are pushing to expand it to include 31 more countries in Central and South America through the proposed Central American Free Trade Agreement (CAFTA) Peru was added in 2007; and there are NAFTA expansions with Panama and Colombia as well. The largest NAFTA expansion to date, the Trans-Pacific Partnership (TPP) is currently under negotiation.

Chart: See all corporate investor-state cases launched under NAFTA and other U.S. 'free trade' agreements
Infographic: NAFTA Terms Replicated in TPP
Read the new report from Public Citizen's Global Trade Watch: NAFTA at 20 – One Million U.S. Jobs Lost, Mass Displacement and Instability in Mexico, Record Income Inequality, Scores of Corporate Attacks on Environmental and Health Laws.

in full: http://www.citizen.org/Page.aspx?pid=531

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Response to Jefferson23 (Original post)

Sat Jun 13, 2015, 10:50 AM

1. Yet Mexico and Canada asked to be part of the TPP. NAFTA must not have been so bad.

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Response to Hoyt (Reply #1)

Sat Jun 13, 2015, 10:56 AM

2. When a government agrees that means the people of that country have benefited?



NAFTA has also had a detrimental effect on Mexican workers as well. The increased export of U.S. subsidized corn destroyed the livelihoods of 1 million Mexican campesino farmers and the roughly 1.4 million workers whose livelihoods depended on such agriculture. The displacement of such workers has created downward wage pressure, and 60% of the rural population in Mexico still falls below the poverty line, despite the promises made by NAFTA's boosters.

http://www.dailykos.com/story/2014/01/01/1255736/-NAFTA-at-20-An-Unhappy-Birthday-and-a-Look-at-the-Roll-Call-Votes-on-Free-Trade-Deals#

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Response to Jefferson23 (Reply #2)

Sat Jun 13, 2015, 11:04 AM

3. Those poor farmers were making $0.50 a day, now they are getting jobs much better.

The newly announced Audi plant will pay them $8/hour. NAFTA, and similar trade agreements, are helping a lot of people in Mexico. And, it will get better. That's not to say life is perfect, but it is better than it would be without foreign investment. Hence, Mexico asked to be part of TPP and a bunch of other trade agreements.

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Response to Hoyt (Reply #3)

Sat Jun 13, 2015, 11:05 AM

4. You have any documented support for that? n/t

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Response to Hoyt (Reply #3)

Sat Jun 13, 2015, 11:28 AM

5. NAFTA has been a disaster for Mexico.

 

Nafta has cut a path of destruction through Mexico. Since the agreement went into force in 1994, the country’s annual per capita growth flat-lined to an average of just 1.2 percent -- one of the lowest in the hemisphere. Its real wage has declined and unemployment is up.
<snip>
Not all of Mexico’s problems can be laid at Nafta’s doorstep. But many have a direct causal link. The agreement drastically restructured Mexico’s economy and closed off other development paths by prohibiting protective tariffs, support for strategic sectors and financial controls.

http://www.nytimes.com/roomfordebate/2013/11/24/what-weve-learned-from-nafta/under-nafta-mexico-suffered-and-the-united-states-felt-its-pain

Mexico ranks 18th of 20 Latin American countries in growth of real GDP per person, the most basic economic measure of living standards.

From 1960-1980, Mexican real GDP per person almost doubled, growing by 98.7 percent. By comparison, in the past 20 years it has grown by just 18.6 percent.

Mexico’s per capita GDP growth of just 18.6 percent over the past 20 years is about half of the rate of growth achieved by the rest of Latin America.

If NAFTA had been successful in restoring Mexico’s pre-1980 growth rate–when developmentalist economic policies were the norm–Mexico today would be a relatively high income country, with income per person significantly higher than that of Portugal or Greece. It is unlikely that immigration reform would be a major political issue in the United States, since relatively few Mexicans would seek to cross the border.

http://www.cepr.net/documents/nafta-20-years-2014-02.pdf

Mexico wants to be a part of TPP because their government is as corrupt as ours.

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Response to truebluegreen (Reply #5)

Sat Jun 13, 2015, 06:23 PM

11. Thanks for that post..appreciate it. n/t

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Response to Jefferson23 (Reply #11)

Sat Jun 13, 2015, 06:27 PM

12. Thank you for yours. nt

 

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Response to Hoyt (Reply #3)

Sat Jun 13, 2015, 12:38 PM

9. Life is so good now there that immigrants have stopped

coming to the US hoping to make a living. not

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Response to Hoyt (Reply #3)

Sat Jun 13, 2015, 01:04 PM

10. Now we are in an even race to the bottom, Hoyt...

… and that is not good for anyone, given the productivity of all and global corporatism, which is quite in the other direction.

The idea of trade agreements and tariffs are so that all boats are lifted, not so many more can joint the bottom. The idea is not, " Now my back isn't hurting as much to support the top 1%, now that your country has given me more of their mutton". That is unsustainable, regardless of what 50 cents a day turns into.

When everybody does better, then everybody does better.

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Response to Jefferson23 (Original post)

Sat Jun 13, 2015, 11:53 AM

6. effect of NAFTA seems impossible to determine

We have a huge complicated economy. How would we know if a trade deal helps or hurts? A million other things are happening. For instance Clinton had about 30 million new jobs after nafta passed. I doubt nafta caused them. I think trade economists would at least have a small bit of understanding of the effects but they have to be largely guessing. So this article says the bad effects of nafta are
clear. But it provides no clear proof. Because one change in a sea of a million changes is not going to provide clear proof of anything. I think it's just religious argument on both sides. Bur Stiglitz opposes the new trade deal and he seems super smart. So I will follow that religious leader on this one. And pray he's right.
'

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Response to Cicada (Reply #6)

Sat Jun 13, 2015, 12:26 PM

7. It's not that complicated when by design there was no balance..keep in mind this was at the 10th

anniversary..and continues to prove problematic today.

The Broken Promise of Nafta
By Joseph E. Stiglitz
Published: January 6, 2004



The celebrations of Nafta's 10th anniversary are far more muted than those involved in its creation might have hoped. In the United States, the North American Free Trade Agreement has failed to fulfill the most dire warnings of its opponents and the most fervent expectations of its supporters. In Mexico, however, the treaty remains controversial and even harmful -- as do America's efforts to liberalize trade throughout the hemisphere.

There is some good news. In America, the ''giant sucking sound of jobs being pulled out of this country'' that Ross Perot predicted never quite materialized. The first six years of Nafta saw unemployment in the United States fall to new lows. (Of course, to most economists there was little basis for Mr. Perot's worries in the first place. Maintaining full employment is the concern of monetary and fiscal policy, not of trade policy.) Nafta has brought some benefits to Mexico as well; it was trade with America, fueled by Nafta -- not the bailout of Wall Street lenders -- that was responsible for Mexico's quick recovery after the financial crisis of December 1994.

But while Mexico benefited in the early days, especially with exports from factories near the United States border, those benefits have waned, both with the weakening of the American economy and intense competition from China. Meanwhile, poor Mexican corn farmers face an uphill battle competing with highly subsidized American corn, while relatively better-off Mexican city dwellers benefit from lower corn prices. And as all but one of Mexico's major banks have been sold to foreign banks, local small- and medium-sized enterprises -- particularly in nonexport sectors like small retail -- worry about access to credit.

Growth in Mexico over the past 10 years has been a bleak 1 percent on a per capita basis -- better than in much of the rest of Latin America, but far poorer than earlier in the century. From 1948 to 1973, Mexico grew at an average annual rate of 3.2 percent per capita. (By contrast, in the 10 years of Nafta, even with the East Asian crisis, Korean growth averaged 4.3 percent and China's 7 percent in per capita terms.)

And while the hope was that Nafta would reduce income disparities between the United States and its southern neighbor, in fact they have grown -- by 10.6 percent in the last decade. Meanwhile, there has been disappointing progress in reducing poverty in Mexico, where real wages have been falling at the rate of 0.2 percent a year.

These outcomes should not have come as a surprise. Nafta does give Mexico a slight advantage over other trading partners. But with its low tax base, low investment in education and technology, and high inequality, Mexico would have a hard time competing with a dynamic China. Nafta enhanced Mexico's ability to supply American manufacturing firms with low-cost parts, but it did not make Mexico into an independently productive economy.

When President Bill Clinton first asked the Council of Economic Advisers about the economic importance of Nafta, early in his administration, our response was that potential geopolitical benefits were far more important than the economic benefits. (Similarly, the European Union, for all of the economic benefits that it has brought, is mainly a political project.)

America perhaps stood more to gain economically than Mexico, but the concrete gains were likely to be small on both sides. Tariff rates on both sides were already very low, with Mexico's tariffs being slightly higher than America's, and Nafta would not eliminate important nontariff barriers. The disparity in income across the Mexican border is among the largest anywhere, and the resulting migration pressure was enormous. Doing what little America could do to enhance growth in Mexico would be good for Mexico, and good for America; and it was the right thing to do for our neighbor to the south.

Unfortunately, much of the goodwill that the United States might have expected has been squandered. First, America attempted to use barriers to keep out Mexican products that began to make inroads in our markets -- from tomatoes to avocados to trucks to brooms. Despite the impressive efforts of workers' rights groups, efforts to ease the life of immigrants have stalled. Recent moves in California to prevent illegal immigrants from receiving driver's licenses and medical care have been a depressing sign that conditions for Mexican immigrants in this country are getting worse.

remainder: http://www.nytimes.com/2004/01/06/opinion/the-broken-promise-of-nafta.html

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Response to Jefferson23 (Original post)

Sat Jun 13, 2015, 12:35 PM

8. When Greece joined the EU its per capita GDP was $5,400. Portugal's was $8,600. Mexico was $5,637

when NAFTA came into effect.
... never before had a merger of three nations with such radically different levels of development been attempted.

Technically true since the EU involved more than 3 nations but the idea of a "merger of ... nations with such ... different levels of development" was not new in the mid-1990's. Neither was the idea of 'merging' poor and rich countries on the same continent.

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