NAFTA Plus or Minus?

In his first public appearance after six weeks of convalescence, Mexico’s President Vicente Fox grandiosely announced that the current phase of NAFTA is over, and that Mexico, the U.S., and Canada will embark in June on negotiations toward a “new phase of NAFTA.” What’s been dubbed as the “NAFTA Plus” would include, according to Fox, “more development, more trade, and more integration.”

The declaration caused immediate confusion among the other signatories of the agreement, and even within the Fox cabinet. Canadian officials stated to the Mexican press, “We don’t know what he’s referring to” and reported they have asked the Mexican government for clarification. The meeting scheduled for June actually addresses private-sector involvement in development, with Canada participating as an observer, and has no such grand plan on its agenda. Moreover, both the U.S. and Canada have reiterated their position not to renegotiate any part of NAFTA and neither has shown enthusiasm for Fox’s “NAFTA Plus” agenda.

Two days after Fox’s announcement, Secretary of Economy Fernando Canales unveiled intentions to seek “European Union-style” integration for North America, including a common currency, free transit, and immigration agreements. The NAFTA Plus agenda is being pushed by Mexico precisely when civil-society groups are pressuring to downscale NAFTA. The huge farmers’ movement of the past six months demanded renegotiation of the NAFTA chapter on agriculture and, despite signing an agreement that does not include reopening the trade agreement, many organizations continue to insist on major changes. What the farmers want above all is to exclude corn and beans, currently scheduled for zero tariffs by the year 2008. They argue that tariff reduction in these basic staples has led to massive imports to the detriment of small farmers and national food sovereignty. Mexican farmers aren’t the only ones pushing to reevaluate the agreement. Several major Canadian and U.S. agricultural organizations had hoped to take advantage of the Mexican demand to reopen the agreement because of the damaging effects it has had on small- to medium-sized farms in those countries.

In addition to trade liberalization, citizen organizations have pointed out that other clauses of NAFTA go too far, rather than not far enough. The breadth of Chapter 11 protection for foreign investors has come under fire, especially since Mexico was forced to pay over $15 million to the U.S. firm Metalclad after its toxic dump project was cancelled due to protests over environmental hazards. Although the firm never obtained a local permit nor cleaned up the site, a NAFTA panel ruled that it be compensated for its investment.

The experience of the broader social issues included in NAFTA also does not bode well for a NAFTA Plus. NAFTA’s labor and environment side agreements have proved to be a feeble forum for resolving serious issues stemming from increased economic integration, and both are structurally and practically subordinated to the trade and investment agenda of the agreement.

A basic misconception behind the NAFTA Plus proposal is that regional trade agreements are the best place to resolve non-trade issues between neighboring nations. Well-intentioned groups seeking to address the <U.S.-Mexico> migration crisis have suggested that by couching labor immigration in free-trade terms the U.S. might take it more seriously. But there is something chilling about reframing the human tragedy on the border in terms of “rationalizing labor flows.” Urgently needed U.S. immigration reform is fundamentally a matter of human decency between neighbors rather than a factor in economic integration.

Instead of a NAFTA Plus, what Mexico needs is a NAFTA Minus. Such a renegotiation would recognize the need for the country to establish policies oriented toward national development, even when those called for temporary protective measures. It would acknowledge asymmetries and dispense with the illusion that free trade will automatically close development gaps and elevate public welfare. It would remove decisions on crucial issues–such as migration and natural resource use–from macroeconomic models and place them in the context of building a strong and sovereign nation.

Increased economic integration has, predictably, expanded international trade but it has not led to improved standards of living in Mexico. Fox’s own Technical Committee on Poverty just released a study showing one in every five Mexican households does not receive enough income to cover the cost of the basic food basket–a minimal standard of family survival. In that context, a NAFTA Minus would be a gain not a loss.

Laura Carlson is director of the America’s Program-Mexico for the Interhemispheric Resource Center. She can be reached at: laura@irc-online.org


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Laura Carlsen is the director of the Americas Program in Mexico City and advisor to Just Associates (JASS) .

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