20 years of NAFTA (North American Free Trade Agreement) – Free trade agreements under scrutiny

20 years of NAFTA (North American Free Trade Agreement) – Free trade agreements under scrutiny

Investors and corporations benefit – the majority of populations suffers losses

by Henriette Hanke Güttinger, PhD

A number of free trade agreements are currently being negotiated: CETA between the EU and Canada, TTIP/TAFTA between the US and the EU, and TiSA, the Agreement on Trade in Services, to which fifty states – including Switzerland – are party. Negotiations are taking place behind closed doors, and no participation or voice is provided for the citizens in the countries concerned. According to what has leaked out up to date, the contents of the proposed free trade agreements are based on the NAFTA Free Trade Agreement of 1994, which was signed by the US, Canada and Mexico. Twenty years of practical experience with NAFTA show perfectly clearly where such free trade agreements lead to. Investors and major corporations benefit while the majority of the populations in the contracting states – even in the US – slide over onto the loser’s side.
With the implementation of the North American Free Trade Agreement NAFTA in 1994, the then largest single market worldwide emerged, in which all tariffs and trade restrictions were practically abolished and have remained so until today. To begin with, the NAFTA embraced the US, Canada and the emerging country Mexico, and thus 250 million Americans, 90 million Mexicans and 27 million Canadians, with a gross national product of more than seven billion dollars annually. The US accounted for 85% of this sum, Canada for 10% and Mexico for 5%. This shows that the United States dominated their contractual partners Canada and Mexico from the beginning, or, to put it straight: “NAFTA put an elephant to bed with two mice”1. In the US, the agreement met with serious misgivings and stubborn resistance on the part of Democrats, trade unions and the environmental movement. Nonetheless, Clinton managed to push through the deal. In this process, the central argument was: “NAFTA means jobs – American jobs and well-paying American jobs.”2 Twenty years later, it is becoming apparent that the objections to NAFTA were more than justified.

Tools of American foreign policy after 1989 – free trade agreements

There is an intimate correlation between NAFTA and the realignment of American foreign policy after the collapse of the Soviet Union. During the Cold War, the emphasis had been on a strategy of military containment, the “global containment” to challenge the socialist states. After 1989, the United States sought to assert itself as the leading power of a unipolar world order. The reorientation of its foreign policy, which was developed under Clinton in 1993 as a “Strategy of Enlargement” served this purpose. In essence, this was meant to enforce global free trade, free markets and democratisation as understood by the US. States which did not submit to these ideas and insisted on their right of self-determination were to be forced into line with a carrot and a stick. The newly established WTO as well as a global network of trade agreements was to serve the enforcement of the “Strategy of Enlargement”. The aim was a globalisation tailor-made for US economic interests. NAFTA fits this framework.3 The currently pending free trade agreements ranging from CETA to TiSA have to be seen in this context as well.

20 years of NAFTA – the consequences

NAFTA has now been in force for twenty years. Its consequences are clearly visible in the countries involved.

Corporations and investors are suing states

Since 1994, the volume of trade has tripled. Corporations and investors have been the main beneficiaries of NAFTA. The contract protects corporations and investors from expropriation and government action which could affect their returns. In the twenty years of the NAFTA’s being in operation, numerous legal actions were initiated by corporations and investors, such as against the State of Canada, which had prohibited the import of gasoline containing the poisonous MMT as an additive. Because of this, the US Ethyl Corporation brought an action against Canada in 1997. A settlement was reached. Canada revoked the interdiction and paid a high indemnity sum.4

Jobs are lost

In the US, jobs have been lost most notably in the industrial sector. According to the “taz”, the NAFTA is directly to blame for the loss of about 700,000 jobs. The US Bureau of Labor Statistics noted in 2014 that due to the neoliberal global economy five million jobs have disappeared in American industry. “Wages are stagnating in all three countries, and families are struggling to pay the costs of health insurance, education, housing and pension insurance,” says the president of the American Federation of trade unions AFL-CIO.5

Sellout of Mexican agriculture

Since in the negotiations Canada carried through the exclusion of its agriculture from the agreement, NAFTA includes the agricultural sector only of the US and Mexico. Between agriculture in the US and in Mexico there was originally a fundamental difference. While the US had a modern industrialised agriculture, a large part of the labour-intensive Mexican agriculture was operated in cooperatives, the “ejidos”. Since the Mexican Revolution of 1920, the “ejidos” had been protected by the Mexican Constitution and could not be sold. During the NAFTA negotiations, the negotiators of the United States called for access to Mexican land. President Carlos Salina gave in to this pressure and enacted the Agricultural Act of 1992, which annulled the protection of the “ejidos”. The consequences ensued accordingly. The Mexican agriculture, which was the basis of existence for a third of the population, lost out in the competition with the industrialised US agriculture. With NAFTA American subsidised maize came onto the Mexican market, and this was cheaper than the maize produced by Mexican peasant farmers. The situation was similar in respect to other agricultural products. Many “ejidos” and peasant farmers had to abandon their farms and sell their land. Transnational investors were the gainers.6 Other smallholders abandoned food production and began cultivating opium and marijuana. Accordingly, drug trafficking and the crimes of violence associated with it increased.7 The Mexican labour market was not able to provide jobs for the former farmers. Accordingly, poverty and illegal emigration to the United States increased massively.

Outlook

Negative consequences of globalisation as have become apparent also after twenty years’ experience with the NAFTA induce a deeper reflection on how it is all to go on. Conclusions can be drawn from historical experience. This debate is being conducted widely, and criticism of a free trade which undermines economies, is becoming louder and clearer. The population must be allowed to take part in the discussion about “What kind of economy do we want?” in all the countries. That is the foundation for the exercise of the right to self-determination, as it is required by international law.    •

1     “NAFTA put an elephant in bed with two mice” Martin Walker: Clinton, The President They Deserve, London 1997, p. 292, quoted in Patrick Keller: Von der Eindämmung zur Erweiterung – Bill Clinton und die Neuorientierung der amerikanischen Aussenpolitik, Bonn 2008, p. 131 (From Containment to Enlargement: Bill Clinton and the Re-Orientation of American Foreign Policy, Bonn: Bouvier 2008).
2     “NAFTA means jobs – American jobs, and good paying American jobs”. Clinton in: Keller: Von der Eindämmung zur Erweiterung, p.135
3     cf. Keller: Von der Eindämmung zur Erweiterung, pp. 9-25
4     Source: taz.de from 1 January 2014, 20 years free trade. Fewer jobs, fewer peasant farmers.
5     Richard L. Trumka quoted in Barbara Eisenmann: NAFTA Free Trade Agreement or blueprint of the neo-liberal investment regime, Deutschlandfunk (Germany World Service) of 21 November 2014
6     Jens Winter: Transnationale Arbeitskonflikte. Das Beispiel der hegemonialen Konstellation im NAFTA-Raum (Transnational labour disputes. The example of the hegemonic constellation in the NAFTA region), Münster 2007, pp. 135-137
7     This connection is attested by the following study, which is available on the internet: Oeindrila Dube, Omar Garcia-Ponce, Kevin Thom: From Maize to Haze: Agricultural Shocks and the Growth of the Mexican Drug Sector.

2,000,000 Mexican farmers lost their subsistence because of NAFTA until 2007

“The UNCTAD Trade and Development Report for 2007 notes that two million farmers in Mexico have lost their work since the US, Canada and Mexico signed the North American Free Trade Agreement NAFTA in 1994. In the context of this new free trade zone imports of North American crop and, in particular, those of maize sharply rose, since they were heavily subsidised and could therefore be sold on the Mexican markets below production costs. Not least for that reason the often illegal Mexican immigration into the United States continues unabatedly. Every year, about 700,000 Mexicans leave their country and cross the border with the USA partly risking their lives.”

Jean Feyder: Mordshunger. Wer profitiert vom Elend der armen Länder? (Murderous hunger. Who benefits from the misery of the poor countries?)
Frankfurt am Main 2010, p. 97

(Translation Current Concerns)

From maize to haze

Our study suggests that as these countries pursue broader development strategies, policies influencing the income opportunities of the rural poor may shape the narcotics trade. Policymakers should therefore consider the implications of measures such as trade agreements and agricultural reforms on the rural narco-economy. For example, in the case of Mexico it was hoped that NAFTA would deliver economic gains by more efficiently allocating resources.
Relative price changes (e.g., a fall in the price of commodities such as maize) were expected to initially reduce agricultural incomes but ultimately encourage workers to join more productive, export-oriented sectors. While Mexican manufacturing has expanded, the reduction in maize prices following the Agreement may have also contributed to the growth of the illicit drug sector. More generally, policies that alter agricultural supports or increase the exposure of rural households to international prices may have similar implications.

From: Oeindrila Dube, Omar Garcia-Ponce, Kevin Thom. From Maze to Haze. Agricultural Shocks and the Growth of the Mexican Drug Sector. Center for Global Development. Working Paper 355. February 2014 p.27 (http://www.isn.ethz.ch/Digital-Library/Publications/Detail/?lang=en&id=177334)

Defend self-determination of peoples

Stop the planned CETA/TTIP–TAFTA/TiSA dictatorship of the big companies and investors

hhg. On 19 December 1966, the self-determination of peoples was enshrined in the “International Covenant on Civil and Political Rights” of the United Nations as follows:
“Article 1 (1) All peoples have the right of self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development.
(2) All peoples may, for their own ends, freely dispose of their natural wealth and resources without prejudice to any obligations arising out of international economic co-operation, based upon the principle of mutual benefit, and international law. In no case may a people be deprived of its own means of subsistence.”
Primarily the former colonial countries, supported by the socialist countries, took a stand for the right to self-determination. First plundered and bled to death during centuries and by the first and later by the second world, the self-determination of the third world was to allow future development in dignity. Both the former colonial powers and the US then tried to prevent the codification of the right to self-determination – fortunately without success.

Attacks on the peoples’ right to self-determination

Since 1966, countless attempts can be observed to restrict the right to self-determination of peoples or even to eliminate it. Submissive governments (often under pressure from the IMF and World Bank) have signed and are still signing – however, without being mandated by their peoples to do so! – contracts that declare whole countries with their populations free for looting. The latest example for that are the planned enslavement contracts CETA, TTIP/TAFTA and TiSA with which the power of large companies and investors shall be expanded.

Literature on the subject:
Michel Chossudovsky: Globalization of Poverty and the New World Order, 2003.
Naomi Klein: The Shock Doctrine: The Rise of Disaster Capitalism, 2008.
Jean Ziegler: We Let Them Starve: Mass Extermination in the Third World, 2012.
Maria Mies: Krieg ohne Grenzen (War without borders), Frankfurt 2009.
Jean Feyder: Mordshunger. Wer profitiert vom Elend der armen Völker? (Murderous hunger. Who benefits from the misery of the poor countries?), Frankfurt 2010.

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