Thread: NAFTA is probably election-proof

March 2, 2008, 12:06AM
NAFTA is probably election-proof
Next president likely will seek to upgrade pact, not gut it, analysts say


By DUDLEY ALTHAUS
Copyright 2008 Houston Chronicle


MEXICO CITY — With both Democratic presidential candidates ripping into the North American Free Trade Agreement, the 14-year-old pact faces doom if one of them moves into the White House next January, right?

Probably not.

"Any new president would shoot himself or herself in the foot by doing that," said Jeffrey Schott, an expert on the accord at the Peterson Institute for International Economics in Washington. "Withdrawal (from the trade pact) isn't a viable option for the United States."

The agreement, called NAFTA, has fostered the more than tripling of trade between the United States, Mexico and Canada, to more than $900 billion annually. That trade has helped enrich many parts of northern Mexico. And it's sparked a boom along the border of Texas, the U.S. state that has benefited most from the agreement.

But there have been losers as well — millions of poorer farmers in Mexico, many thousands of factory workers in the U.S. industrial heartland — creating political pressures in both countries.

Both Barack Obama and Hillary Rodham Clinton said at Tuesday's Ohio debate that they would pull out of the agreement if Mexico didn't agree to toughen its environmental and labor regulations.

U.S. critics argue that Mexico's more lax environment enforcement, poor working conditions and drastically lower wages unfairly entice U.S. companies to move their manufacturing operations here, draining jobs from Ohio and other industrial states.

"They've really opened a Pandora's box," said Robert Scott, senior international analyst at the Economic Policy Institute (a Washington think tank critical of NAFTA and other free trade agreements) of Obama and Clinton. "I don't think they realized what they were getting into."

A broad rewrite of NAFTA is unlikely to get through the U.S. and Mexican congresses.

The treaty was negotiated while Mexico was still governed by a single party that faced little real opposition in the Mexican Congress. Now, with that Congress controlled by President Felipe Calderon's opponents, a similar treaty would likely never have a chance.

The United States might push for Mexico's petroleum industry to be included in the agreement, something Mexico's Congress would never allow. Mexico might push for the free flow of Mexican workers into the United States, something that would never fly with American voters or politicians.

"Try to do that and that's the end of it," said Sidney Weintraub, who became a leading expert on NAFTA while heading the LBJ School at the University of Texas at Austin. "The way these things are going to be seen in the other countries is as the destruction of NAFTA."

Indeed, while the Democratic candidates' saber-rattling makes for good politics, it promotes lousy economic policy, pro-free trade analysts argue.

But it might be possible to address some of the concerns on both sides of the border, Schott and other analysts say.

They point out that the labor and environmental codes could be "upgraded" without cracking NAFTA open for a sweeping renegotiation.

Such tinkering takes place all the time already. For example, officials from all three NAFTA partners met last week in Baja California to talk about changes.

"There is great incentive to make NAFTA even stronger than it has been," U.S. Commerce Secretary Carlos Gutierrez said at last week's meetings in Los Cabos. "The whole idea is to increase the competitiveness of North America through practical actions, recognizing that we are three sovereign, independent nations."

NAFTA's labor and environmental provisions were shunted into "side agreements" when the treaty was negotiated in the early 1990s and have never been effectively enforced.

But those conditions have been written into subsequent trade agreements in recent years. And Mexico has signed other international agreements that require them to comply with most of NAFTA's labor provisions.

The side agreements can be reworked and toughened under a new Democratic president, without gutting the general pact, Schott and other analyst argue.

NAFTA would survive and the president will have kept a campaign promise.

"This can be done in a no-big-deal way," Scott said. "We have to think about what kind of changes can be made that will be good for all three countries."

http://www.chron.com/disp/story.mpl/pol ... 85149.html

U.S. critics argue that Mexico's more lax environment enforcement, poor working conditions and drastically lower wages unfairly entice U.S. companies to move their manufacturing operations here, draining jobs from Ohio and other industrial states.

It wasn't cheap enough to keep manufacturing from going to China. It's so cheap there they ship it half way around the world and still make more profit than manufacturing things in Mexico. The only thing they want now is for Mexicans to unload the ships and Mexican truckers to truck it up here. And they're all doing it so you the consumer can save money. :P