NAFTA leaders forge path forward to deepen North American integration
By Terri Hall
November 16, 2012
Jobs, jobs, jobs, that’s the worry when it comes to the political reality of international trade agreements like the North American Free Trade Agreement (NAFTA), and that put proponents of NAFTA attending the NAFTA-20 Conference on defense with the public, especially in times of economic stress and sustained high unemployment.
The speakers and business leaders that converged at NAFTA-20, held in San Antonio where NAFTA was actually signed in 1992, struggled to find a path forward to deepen the integration of the three countries -- Canada, Mexico, and the United States -- amidst the political opposition and the lackluster defense of NAFTA by political leaders of each government.
“If I stopped people on the street and asked them if NAFTA has sent American jobs to Mexico, eighty-percent would answer, ‘yes,’” noted Barry Lawrence, Director of Texas A&M Supply Chain Lab.
Jaime Serra Puche, Head NAFTA Negotiator on behalf of Mexico, made the case that Canada, Mexico, and the United States are truly economically integrated 20 years after the signing of NAFTA. It’s hard to disagree when you look at the data. U.S. and Mexico’s chief economic indicators virtually track an identical pattern since NAFTA was implemented. Each country now depends on the others.
But father of the ‘big idea’ of the North American Union (NAU), which was carefully referred to as the North American ‘community’ or ‘framework,’ Robert Pastor, painted a bleak picture of NAFTA’s future citing data that NAFTA trade peaked in 2001 and in a post 9-11 world, North America hasn’t restored the gains NAFTA made in its first 7 years. Pastor encouraged NAFTA proponents to forget NAFTA, saying it achieved the dismantling of trade barriers it set out to do, and move beyond it to a North American community and trans-national thinking.
While treading softly around the obvious concerns about national sovereignty, and overtly denying that his vision is equivalent to a North American Union patterned after the European Union (which is visibly crumbling before our eyes), Pastor went on to lay out a vision that’s identical to a NAU.
Pastor proposes this North American framework:
1) Creating a common security perimeter (erase our borders)
2) A single ‘common’ or ‘seamless’ market (versus each nation’s individual commerce, market, & currency)
3) Reduction in the development gap between Mexico and its North American counterparts (prioritizing Mexican education and workforce development vs each nation educating its own citizens)
4) Intercontinental infrastructure (NAFTA trade corridors like the Trans Texas Corridor) 5) Labor mobility between the three countries (open borders)
6) Tribunal on investment disputes (erase U.S. law, replace with international law)
With sovereignty-eroding words like ‘harmonization,’ ‘regionalization,’ ‘common,’ ‘trans-national,’ ‘continental,’ ‘cross border,’ and ‘trilateral’ repeatedly used to describe the relationship between the NAFTA countries, there can be no mistake that erasing borders and national identities in favor of a North American ‘community’ is the goal of NAFTA -- and without the consent of the citizens from each nation. National priorities would give way to regional ones, and taking resources and wealth from one nation and giving it another for the sake of the ‘whole,’ is nothing more than wealth redistribution and socialism.
Speakers framed progress in terms of ‘continental’ gross product and analyzed trade as a North American ‘region.’ Canada and Mexico could identify substantive economic gains in terms of employment, a boost to various industries, and a net gain in trade, but one elephant in the room no one discussed was the very real damage done to U.S. wages (stagnant since 2000), American jobs (at least 1 million jobs lost due directly to NAFTA), the trade deficit, and the complete vanishing of certain sectors (U.S. manufacturing has been supplanted by China, India, and Mexico with the U.S. dropping to #12) due to NAFTA and global trade.
And it’s not just low-wage, low-skilled jobs. Even higher paying tech jobs have been outsourced to other countries, equally hurting the highly skilled and well-educated in America, leaving many with mounds of student loan debt they can’t repay. So it’s a win-win for two of the NAFTA nations and the big multi-national corporations, but certainly not for the average American.
Achievement or destruction?
Luis de la Calle, Managing Director of De la Calle, Madrazo y Mancera S.C., pointed out ‘You can’t manufacture a car in Michigan without parts from Mexico.” Eduardo Solis, Chairman of the Mexican Automobile Association, noted U.S. marketshare for auto manufacturing went from 82% down to 63%, with the majority of it going directly to Mexico due to NAFTA.
Touting interdependence like it’s a Boy Scout badge, it’s hard to imagine how America’s inability to manufacture a single car on its own is progress. It cost American workers jobs and weakens our ability to be self-sustaining and act independently -- by design. If a nation is dependent upon other countries for its food, goods, and weapons, it can be held hostage by foreign nations. It’s why U.S. politicians show growing concern over China’s dominance and how it can easily bring the most powerful nation on earth to its knees, since it holds the majority of America’s debt and produces the majority of its goods.
Competing with China Some of the impetus behind the push for greater integration stems from the growing ‘threat’ from China. “We’ve been run over by China,” Pastor quipped.
Serra Puche, Head NAFTA Negotiator for Mexico, went into detail about how the NAFTA partners, particularly the U.S. and Mexico, are not only competitive with China, but have significant advantages over China. The top advantage is proximity. Importing goods from Mexico is far cheaper to transport into the United States than from across the Pacific.
He explained 100% of China’s relationship with the United States is outsourcing, versus the U.S. and Mexico partner with one another in actual production sharing. China also no longer has the wage advantage. The most stunning comparison was age. China’s population is aging at a much faster rate than Mexico due its one-child policy. So over the next 10-20 years, Mexico’s workforce will grow while the Chinese workforce will decline. Serra Puche notes that not only does the peso have a stronger exchange rate than the yuan, but also, Mexico has the advantage of labor mobility and migration (boy, that one opens a can of worms).
“The only way to weather the showdown (with China) is to integrate more, cooperate more, and gain more marketshare,” de la Calle implored.
But who benefits most from integration with the United States? When the U.S. Gross Domestic Product (GDP) is $14 trillion compared to Canada and Mexico, who sit below $1 trillion, it’s not rocket science to see which nation has the coattails and which ones are hangin’ onto them. America doesn’t need further integration with North America to bolster our economy and sustain long-term prosperity for everyone. It needs to cut NAFTA loose and start making decisions on what’s best for America, not North America. Americans didn’t ask to be integrated into a North American ‘’community’ or to be global citizens. They wince at international law usurping the U.S. Constitution, and they’d actually like to kick out the United Nations, and see less foreign entanglements.
Panelists weren’t shy about discussing the challenges of NAFTA or the further harmonization of the three nations into one region. Lawrence was unequivocal, “The number one problem moving forward is human resources and the lack of a skilled workforce. We have a ‘labor’ gap.”
Mexico’s biggest liability or impediment to growth isn’t human resources and the need to privatize Mexico’s oil & gas industry, as big as those may be. Rather its single biggest impediment is cartel violence and systemic corruption within its own government.
“Political risk, corruption and drug-related violence is a big concern for the Mexican economy and the stock market,” notes Moe Ansari of Compak Asset Management.
Courting policy makers In the midst of the pros and cons, there’s one group, the Border Trade Alliance (BTA), that’s getting things done in Washington. Jesse Hereford retold BTA’s history of legislative successes, including getting NAFTA passed in Congress in 1993. Now its advocacy is centered around transportation and infrastructure, security, and trade agreements.
More recently, with the help of Texas Senators Kay Bailey Hutchison and John Cornyn, BTA got the Government Accountability Office to study wait times along the U.S.-Mexican border. They’re also in the process of introducing language to engage in public private partnerships “to beef up our infrastructure and add lanes.” That means toll roads in the hands of private, even foreign, corporations, despite the Texas-sized backlash to such threats to state sovereignty, the right to travel, and personal prosperity.
Moving forward or backward?
John Weekes, Chief NAFTA Negotiator for Canada, said, “You’re either moving forward or you’re falling behind.” While it’s clear the intention of NAFTA proponents is to push ahead with deeper integration, beyond just trade, Pastor pointed to three key areas of low hanging fruit: climate change, food safety, and global health. He along with Weekes and Mexican Ambassador Arturo Sarukhan, advocated that NAFTA nations join the Trans Pacific Partnership (TPP) and use it as a ‘back door’ way to re-negotiate NAFTA. They speak of the TPP in terms of when not if it’ll be signed.
Pastor also strongly pleaded for the Canadian and Mexican governments to bring their ideas for a more integrated North American ‘community,’ via the TPP, to the United States and that the Obama Administration would welcome it. “We need to move forward with transnational plans and adjust our national interests to do it,” which is double talk for subordinating U.S. interests to those of other countries.
All of this is being done outside the public purview, Congress, and the Constitutional process for signing and ratifying treaties. Leaders at the NAFTA-20 conference clearly recognize their agenda is opposed by ordinary citizens (they were chasing the criticism of NAFTA all day), and that political pressure from the public has made any effort to erode national sovereignty or threaten American independence, economic or otherwise, has made politicians reticent to publicly move forward. So it’s incumbent upon the American people to stand firm for national sovereignty and not wilt in the face of those who would lob labels like ‘protectionism’ their direction. America’s national identity, sovereignty, freedom of mobility, private property rights, and prosperity depend on it.