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MEXICO-US: NAFTA Renegotiation – Promise or Mirage?

Diego Cevallos

MEXICO CITY, Apr 9 2008 (IPS) - Trade unions and leftwing activists in Mexico are pleased that both U.S. presidential hopefuls for the Democratic Party have said they will withdraw their country from the North American Free Trade Agreement (NAFTA) unless the treaty is renegotiated.

The free trade agreement has been in force since 1994 between Canada, Mexico and the United States, whose governments reject this suggestion by Senators Hillary Rodham Clinton and Barack Obama, who are still battling it out for their party’s nomination for the U.S. elections in November.

Political analysts, however, say the threat to opt out of NAFTA is campaign rhetoric, intended to draw the votes of unionised workers and progressive voters, but unlikely to be put into practice if one of them becomes president.

In Mexico, organisations calling for a review of NAFTA say that it has damaged the country, especially the rural sector, while in the United States a number of unions and social organisations claim that it has resulted in domestic job losses.

U.S. arguments for overhauling the treaty focus on the weakness of its provisions on environmental issues and labour rights, which are lower than the standards applied in U.S. legislation.

So far, these groups have not managed to get the treaty changed, in spite of a number of protests, including a massive street march by campesinos (small farmers) in the Mexican capital on Jan. 31.

But from the point of view of opponents of free trade, the desired revision could happen in the near future on the initiative of the United States itself, the country that has staunchly supported NAFTA through both terms of Democratic President Bill Clinton (1993-2001) and both terms of serving Republican President George W. Bush, who steps down in January 2009.

“There is a high probability of a Democratic triumph in the U.S. presidential elections, and with it could come the hoped-for and necessary revision,” Alejandro Villamar, spokesman for the Mexican Action Network on Free Trade (RMALC), told IPS.

In February, Senator Clinton said “We will opt out of NAFTA unless we renegotiate it, and we renegotiate on terms that are favourable to all of America.”

Obama, for his part, said “I think we should use the hammer of a potential opt-out as leverage to ensure that we actually get labour and environmental standards that are enforced.”

By contrast, Republican Party candidate Senator John McCain proposes to strengthen the treaty and move ahead with free trade agreements with other countries.

NAFTA article 2205 provides for the withdrawal of a partner, with the sole requirement of giving six months’ notice in advance.

“The Democratic candidates’ position on the treaty is the most appropriate one, because it is a response to the demands of a large part of society in the United States, and also in Canada and Mexico,” Villamar said.

RMALC has a close relationship with the Quebec Network on Continental Integration (RQIC) in Canada and with the Alliance for Responsible Trade (ART) in the United States, both of which are fighting to get NAFTA revised.

But Alberto Reyes, a builder who imports solar heaters from Canada, told IPS that “the Democrats’ warnings should not be taken too seriously. Their statements were made in the context of their campaigns to attract voters.”

“I see no other real reason for what they said, and I don’t think it will actually happen,” he added.

Clinton and Obama began lashing out at NAFTA in February, shortly before the Democratic primary in Ohio, a state with one of the highest unemployment rates in the United States, for which unions blame the closure of factories and the transfer of their jobs to Mexico. Union members are traditionally Democratic voters.

The Ohio primary was a key test of whether Clinton could carry on in her neck-and-neck race with Obama, who in turn was seeking a decisive victory.

Former Mexican President Ernesto Zedillo (1994-2000), presently head of the Yale Centre for the Study of Globalisation, wrote that “it is hard to accept that politicians of the intellectual stature (of Clinton and Obama) truly believe what they have said about the effects of existing U.S. trade policies on the wellbeing of the American people.

“They and their respective advisers on economic issues must know very well that these statements are not warranted by any serious study. Cherry-picked anecdotal evidence is not enough to validate the protectionist oratory of the otherwise brilliant candidates,” he went on.

If NAFTA is renegotiated or abandoned, the partners will lose trade benefits and face a number of shocks and problems, because their economies are highly interconnected, officials in Mexico argue.

The Mexican left and activists against free trade in this country say that the main cause of the problems in the countryside, where the greatest proportion of poverty is concentrated, is NAFTA itself.

More than 20 million Mexicans live in the country’s rural areas, and 75 percent of them are poor. Barely one-third of rural workers have formal jobs with social benefits, and there is a constant exodus to cities in Mexico and the United States.

However, the government and the business community maintain that, far from impoverishing rural areas, NAFTA has saved them from total ruin. They point out that Mexican farm exports to the United States increased by more than 200 percent over the last 14 years, and that the productivity of maize has increased more than four-fold over the same period.

They also say that thanks to free trade, Mexico is the top exporter of several vegetables and fruits to the United States, and that it is now the fourth world producer of eggs and poultry.

Official statistics indicate that since NAFTA went into effect, trade between the partners has grown more than three-fold. Furthermore, while exports from the United States to Mexico have multiplied by a factor of 3.3, exports from Mexico to the United States have increased by a factor of 5.3.

According to a study by Braulio Serna, an expert with the Economic Commission for Latin America and the Caribbean (ECLAC), NAFTA has not had a significant quantitative impact on the rural sector in Mexico.

The problems facing farmers, he said, are more related to aspects like misguided public policies, global and national economic crises, climate factors and low levels of training.

Unions in the United States, on the other hand, claim that employment in their country has fallen because factory owners have preferred to move their industries to Mexico, where wages are lower and labour and environmental laws less stringent.

“The free trade agreement must be revised. Millions of people are clamouring for this,” said Villamar.

In early March, RMALC sponsored the creation of a working group of lawmakers from Canada, the United States and Mexico, to lobby for the renegotiation of NAFTA.