The North American Free Trade Agreement (NAFTA) between Canada, the United States and Mexico is pretty much in the news nowadays. NAFTA has been recently demonized as the source of all the economic ailments beleaguering the United States and has been mentioned by unlikely bedfellows left-wing socialist Bernie Sanders and ultra-right winger Donald Trump.
Needless to say, whatever rumbles in the United States regarding NAFTA, makes big waves in Mexico. Since it went into effect on January 1, 1994, it has created a combined trade grand total of approximately $1.3 billion among the three nations.
Looking back to the 2008 presidential election when Barack Obama won his first term, one of his campaign promises was to renegotiate NAFTA, but by 2009 he gave up the idea of renegotiation and buried it deep under the mattress of unkempt promises.
“Now is a time where we’ve got to be very careful about any signals of protectionism,” President Obama said then on the subject. His one reason for not renegotiating NAFTA was “Because, as the economy of the world contracts, I think there’s going to be a strong impulse on the part of constituencies in all countries to see if we — they can engage in beggar-thy-neighbor policies.”
But as the subject arises again there is echo in Mexico towards a potential renegotiation. Just last weekend Foreign Relations Secretary Claudia Ruiz Massieu said during a speech at the Iberian-American Conference in Mexico City that the President Peña Nieto administration is willing to “modernize and update” the 22 year-old treaty, if it is so desired by the Canada and U.S. governments.
Strangely enough, during his Republican Party presidential nomination acceptance Donald Trump somewhat toned down on getting rid of NAFTA and mentioned that as president he would renegotiate parts of the trade deal. That was a noteworthy change of stance but it came to prove that getting rid of NAFTA will not come that easily.
Taking a trip down memory lane, I recall that another presidential candidate who saw the possibility of getting out of NAFTA “in six months” was Al Gore during his 2002 presidential attempt.
The 22 different NAFTA trade chapters are a direct legacy of President George Bush who negotiated them with then Mexico President Carlos Salinas de Gortari.
I personally attended the first face-to-face meeting between president-elect Bill Clinton and Salinas de Gortari in Austin, Texas, on January 7, 2004, in which, strangely enough, Clinton showed his sympathy for NAFTA and promised to uphold the treaty approved by majority in the U.S. Congress on November 2003, just a few days after Clinton defeated incumbent George Bush.
At the time NAFTA, instead of being demonized, was seen as a solution to the economic distress reigning in Mexico at the time. Also a means to stop what Obama called “beggar thy neighbor policies,” as Mexican politicians relied on the policy of exporting unemployment north of the border.
“We want trade, not aid” President Salinas told Bill Clinton at that Austin press conference.
In the eight years that ensued during the Clinton administration, NAFTA started garnering enemies and Clinton played dumb on the transportation chapter opposed by the Teamsters who feared Mexican trucker competition. This chapter is still in limbo after facing countless challenges in the dispute settlement trade panels.
George Bush II attempted renegotiating the transportation agreement and it got somewhat patched up but never — even today — implemented in its original form.
Democratic candidate Hillary Clinton also shows willingness to “renegotiate the core labor and environmental standards — not side agreements, but core agreements,” and “take out the ability of foreign companies to sue us.”
That is, take out the Investor-State Dispute Settlement clause that reads “corporations can sue sovereign nations.”
In short, it is foreseeable that NAFTA will be revamped in the near future as trade standards have revolutionized radically in the past 22 years, but what seems not to be feasible is dumping it as a whole as Sanders and Trump have called for.
NAFTA is here to stay because of one reason: it’s been good for the three participating nations.
