Folks, Here's the basic problem with NAFTA

[Armstead]

I'm putting this in the 2004 Promary forum because it has become an issue in the primary campaigns, and there's a lot of smoke and mirrors being tossed around here.

The bottom line is that NAFTA inherently reflects the whole basic problem with so-called "free trade."

It assumes that Mexico, the US and Canada are sufficiently similar that all three nations should be treated as one big economy.

They aren't. Our relationship with Canada is much different than Mexico. As a comparatively poor undeveloped nation, the trade partnership we should foster with Mexico is different than the type of relationship we should have with a country like Canada.

And despite our similarites, Canada and the US are not merely mirror images of each otehr. Canada is a soivergn nation, and they have to grapple with how they retain their own identity while relying on the much bigger nation that borders them.

But by lumping them all together as one economic nation, the US is neither able to come up with a trade relationship tailored to how we should relate with Mexico for mutual benefit, nor to Candada.

One Size Fits All has been a failure. We need to shake off those notions, and return to policies that both protect the interests of ourselves (and allow otehr nations to protect their interests) while ALSO encouraging the beneficial aspects of international trade.

[redqueen]

1. Don't forget Chapter 11!

That's the all-important clause which gives multinational corporations the right to sue governments for taxpayer money if their profits are infringed in any way!

These multinationals are subverting democracy all over the world. We must stop them now!

[cprise]

2. I agree w/redqueen

NAFTA is much worse than Armstead implies.

Its a way for big business to dictate the regulatory environment, meaning it is anti-democratic.

[redqueen]

5. Much better term - anti-democratic

Thanks for posting, spot on.

[revcarol]

11. Not only their profits, the profits they "would have made!!"

Remember MTBE and California? CA passed an environmental law that would have stopped MTBE from being added to gasoline, because MTBE was polluting their groundwater.They were sued by the INVESTORS of a Canadian company that made MTBE for $$millions of profits that WOULD HAVE BEEN MADE, HAD NOT CALIFORNIA PASSED THAT LAW.

The judgment was upheld by the WTO.So CA tries to have the feds pay the judgment. The feds reply: repeal the environmental law, so they don't have a case against you for FUTURE PROFITS.

Result: polluted groundwater.
NO nation or state can stand up against the WTO.

Bi-lateral trade agreements are the ONLY way to go.

[redqueen]

15. Oh excellent point, revcarol! POTENTIAL profits!

Thank you so much for pointing that out - very important distinction!

[WhoCountsTheVotes]

20. like Enron's "Hypothetical Value Accounting"

If we were allowed to pollute, we would have made more money, therefore we must recieve a subsidy/bailout/settlement from the taxpayers?

After all, that's free market capitalism!

:wtf:

[DrFunkenstein]

42. Kerry Has Already Written Legislation To End The Chapter 11 Issue

And much more in his amendment to NAFTA.

[democratreformed]

3. Thanks for that explanation

Although the other two posters on here said it doesn't go far enough, it was very helpful to me in being able to realize part of what the problems are.

[gula]

14. Canada had to pay $13 million to a US corporation

because we wanted to ban a noxious product.

The following article is a must read on Chapter 11 http://www.enn.com/news/enn-stories/2002/02/02222002/s_46465.asp

[nothingshocksmeanymore]

4. So how could you watch the debates last night and then claim that Kerry

did NOT address this.

There are MANY problems with NAFTA, one of which is that there are aspects of it NOT being enforced in terms of parity in the labor force.

However, I have traveled Mexico for decades and remember a time only a little over a decade ago when less than 1 tenth of 1% of the population even had a telephone and installation of the phone had a cost equivalent to $500 US. Even then, getting calls through was difficult when it wasn't impossible. While I HATE the manner in which NAFTA was enforced, there are a HELL of a lot more people now able to communicate.

Kerry is NOT Bill Clinton. Clinton was SO interested in filling the coffers of the Democratic party that he allowed trade to continue without some of the provisions enforced.

Kerry DID address this last night.

I DO worry about jobs going elsewhere but I also worry about LIBERALS who want WAR to end bandying about protectionist language that DOES NOTHING to help with the abject poverty in countries in our own hemisphere that then grow to resent us for pretending we care.

[redqueen]

7. Actually NSMA I haven't watched yet

I have it recorded and will later today or tomorrow, time allowing.

What consumer groups and citizen groups will tell you about NAFTA is that there is no way to enforce those aspects of it which infringe on corporate profits. All those appeals will be sent to the WTO where they will be reviewed by and disallowed by the men on the tribunals, who were handpicked for their positions by multinational corporations.

And I have to disagree with you about Mexico. Mexico was forced to sell peasant farmers' land to even be allowed to sign onto NAFTA, but that was just the first harmful action. Manufacturing wages in Mexico have gone down since NAFTA was implemented.

Also, due to the race to the bottom for cheap labor, the plants which moved there during Clinton's administration are now going to China or some other place with lower wages. Plenty of people in Mexico and all over the southern hemisphere see these agreements' failures more clearly than we do and fight the furtherance of these agreements (CAFTA, FTAA) tooth and nail.

[gula]

8. Most people would prefer food over phones

You might want to read the following. You will find many more by googling NAFTA + Mexican farmers. http://www.commondreams.org/headlines02/1228-07.htm

[nothingshocksmeanymore]

13. I am well aware of that, and AGAIN it was addressed

I also know that where I have been FOOD was available through people's own ingenuity and/or through charity and PROGRESS was not.

In the last 15 years, Tiajuana at least NOW can claim a major medical center.

MUCH of NAFTA is BAD and needs repair, but there WAS in infusion of cash that DID allow for some improvement in lifestyle. Communication is an important aspect of life...you're doing it on a computer now...imagine if those poor mexicans could even make a call!

And HE DID hit on the aspect of FAIR trade and the remedies without boring people with ALL the details as AL Gore was frequently accused of.

[redqueen]

17. Going out on a limb here

But I wonder if the things Mexico gained were akin to the cheap VCR's we get here in return for losing our manufacturing jobs? On balance, I wonder if the citizens of Mexico are as happy about their situation as some Americans apparently are about ours.

I know the (formerly) peasant farmers aren't happy, to say the least.

:shrug:

[nothingshocksmeanymore]

19. In part I agree

Not because the peasant farmers were doing a decent job with the land they had, but because they were RIPPED off.

I think it is a mixed bag based on areas I have been to since NAFTA was created.

To some degree, the efficiency of the land was increased in terms of production but they were SCREWED on fair value and of course the corporations took advantage of LAX enforcement of environmental standards which DID NOT HAVE to happen.....and on this point I DO blame Clinton.

[nothingshocksmeanymore]

22. BTW Redqueen..I want to say I respect your position

but much of what I have read on this board against trade has made some downright FREEPERISH statements about the issue of trade by people who are posting on MICROSOFT products and probably saving MARLBORO Miles.

NAFTA did send CASH down there..the distribution of it is the problem.

[redqueen]

25. Thanks, NSMA

I respect your contributions always. :)

And I agree that it could have been much better, but once again the foxes were put in charge of watching the hens. *sigh*

[denverbill]

27. I beg to differ NSMA.

Virtually every report I read about Mexico and NAFTA has indicated that things have gone downhill in Mexico since NAFTA. Early on, they got some factory jobs, but many of those jobs have since relocated to China, and the few jobs that haven't pay bare subsistance wages. In addition, many small farmers in Mexico have been driving out of business by the huge subsidized American factory farms.

[nothingshocksmeanymore]

29. I agree DB..what left were JOBS that did not exist in the first place

but what remains are the plants where the jobs were held that ALSO did not exist in the first place....

BTW on edit...some of what we are seeing is what I would LIKEN to the industrialization of coal in America when workers were also displaced..There DO need to be remedies but is BACKING up the remedy?

[denverbill]

32. Backing up from an abject failure is.

I've read stories about the maquiladora's. About a Ford(?) plant where the workers who worked there weren't even paid enough to afford housing. Most lived in squalid ramshackle lean-tos.

I would have considerably less objection to NAFTA if I really felt it was helping ordinary Mexicans. If I found that a Mexican was making even 1/2 as much as a Detroit autoworker, that would be one thing, but for the most part, they were making about 1/10th as much. But the fact is that without comparable wages and benefits American workers can't compete, and Mexican workers, with little or no rights to unionize, have no way to seek better compensation.

Jobs are fleeing this country faster than anytime in our history, and these are jobs that are not coming back without a fundamental change in our laws. The US was doing perfectly fine economically before NAFTA.

[nothingshocksmeanymore]

34. And AGAIN Kerry pointed out where enforcing EXISTING law in NAFTA

would have made a difference..there ARE some labor rights provisions and there ARE ways to BRING FORD around without taking away the progress that could help Mexico.

There are also ways to LEAN on government leadership in these nations.

BTW..I can live Ocean front in Mexico with a maid every day for less than 500 a month...making half as much is probably not necessary given THEIR cost of living.

[Armstead]

16. Isolationism was not my point

Trade is good. We should be engaged with countries like Mexico to help them improve their economies through trade and helping to stimulate economic development there.

The problem I have with the Kerry approach is that he believe the basic model of a single global trading system based on one economic and political model is a good thing....T%he fact that basic concerns are considered "side agreements" rather than a central part of the focus says it all.

Kucinich is challenging that basic model.

The problem is that when a big "super agreement" that tosses the US, Mexico and Canada into one big sack, rather than more individual bi-lateral agreements as Kucinich advocates.

Labor aspects, for example, are much different in the equations that must be worked out between the US and Canada than they are to Mexico because the dynamics are different. Canada is not trying to dramatically raise their existing standard of living. Reather it is trying to protect their econopmy and allow it to grow further. Mexico, on the otehr hand is trying to make a large leap.

If we were to negotiate treaties that balance our interest with Mexico to maximize the benefit for both, and do the same thing seperately with Canada, it would be more effective IMO.

[nothingshocksmeanymore]

18. However in the past when we did that we elevated Canada and Mexico

was left to flounder...at least VIA NAFTA, Mexico rose to the level of partner...again..I KNOW there are HUGE issues with the manner in which corporations have manipulated the rules, but I also know what trade looked like and the results PRIOR to NAFTA.

[Armstead]

21. Improve the old without throwing out the baby with the bathwater

You are correct. We neglected and/or abused Mexico (and many otehr nations) in the past. That should have been addressed.

But NAFTA was the wrong way to address it. If we were really seroious about it, we could have negotiated -- in an open way -- a treaty individually with Mexico that focused on how to develop the healthiest and most mutually beneficial trade agreement.

But when it is based primarily on the cirporate imperitave, and when the same agreement is supposed to address our trade relationship with Canada, we end up with something that is neither fish nor fowl. All it does is grease the wheels for corporate interests while ignoring the social and political aspects.

Okay, call that a mistake made in good faith. But we can't correct that mistake by cosmetic makeovers. It is not, as kerry implied, merely a matter of lax enforement.

We need to fundamentally re-examine what's wrong with the current Corporate Globalization model, and be willing to admit where we were wrong. But we can't do that if the subject is put off-limits in the poilitical dialogue.

[nothingshocksmeanymore]

23. Enforcing what there IS to enforce is at least a start that does not

harm the people it intends to help. In a perfect world, the multinationals rigging the game would end up breaking up and at least NOW plants are built FOR jobs and infrastructure is there that did not exist before.

I would ALSO point out that MUCH of the manner in which indiginous are given short shrift has been due to the cozying up and even FOSTERING of corruption in the governments of these countries and Kerry is WELL aware of that and again addressed it last night via what the Bushies did in Haiti.....

[Armstead]

30. I hope Kerry will do the right thing

I'm ABB so if Kerry gets the nod, I'll support him. And I hope you are correct about his level of awareness and committment to real reform.

But that doesn't mean I believe we should fall in line and defend further hardening of the arteries by not questioning or bringing these things up.

What I fear almost as much as a Bush victory is for a campaign in which nothing is ever addressed, and we win and slip into a coma of compalcency.

That's why it's important to keep these issues alive.

And besides, DU is just discussion on a message board. If it becomes an "Amen chorus" for the next seven months, it'll be a mighty boring place.

[nothingshocksmeanymore]

33. I've never demanded hardening of the arteries

I have requested that Kerry be given a fair shake..at LEAST as fair of a shake as other candidates whose plans may or may not be workable with a hostile senate and congress...btw..I posted a LONG post in another thread on why I believe his healthcare plan stands MORE of a chance to pass, eliminate SOME insurance fraud and provide MORE healthcare to more people than plans that will be summarily dismissed by a divided house and congress...I will PM it to you if you wish.

[sangh0]

6. All true "One Size Fits All Trade"

(which BTW is a great name. Trademark it!) is aka Laissez-Faire Trade. Laissez-Faire doesn't work with the economy, and it doesnt work with trade.

[IrateCitizen]

9. My God, the sky must be falling! Did you just agree w/Armstead?

Dogs and cats are living together, it's Bizarro World!!!

[sangh0]

12. NO

sangh0 did

:-)

[jhfenton]

10. Basic economics

It assumes that Mexico, the US and Canada are sufficiently similar that all three nations should be treated as one big economy.

Actually, it assumes that the nature of the economies is irrelevant, which is true.

Actually, basic economics dictates that we should unilaterally drop all tariffs, quotas, and trade barriers of any kind, regardless of those imposed by other nations.

So, my only problem with multi-lateral trade agreements is that they don't go far enough.

[WhoCountsTheVotes]

28. no, basic economics does NOT dictate any such thing

"Actually, basic economics dictates that we should unilaterally drop all tariffs, quotas, and trade barriers of any kind, regardless of those imposed by other nations."

Obviously not. Some ideologes and market fundamentalists may call for it, by the science/art of economics certainly does NOT call for any such thing. In fact, economics isn't in the business of making normative statements anyway.

[absyntheNsugar]

24. It also doesnt have any of the safety nets the EU has

One of the reasons the EU is so sucessful is that it has the safety nets (healthcare, unemployment protection, etc) built into it. The idea behind the safety nets is that they would bring up the standard of living in less developed EU memeber nations.

NAFTA has none of this.

[redqueen]

26. Doesn't the EU require that trading partners live up to their standards?

Please correct me if I'm wrong, but I understood this to be the case.

[many a good man]

31. That's right about the EU

The US would have a hard time matching up to the worker protections they have in Canada!

[ulysses]

35. hey, Armstead, have you read

John Ralston Saul's article on the collapse of globalization in the new Harper's? It's an interesting piece, if not.

[Armstead]

36. I saw it in the bookstore

But I was feeling too cheap to buy it.

I'll probanbl;y spring for it though, as it looked interesting.

[rhite5]

37. What about national sovereignty vis-a-vis enforcement of standards?

I am not sure this issue has been fleshed out enough here for people to "get it."

We can talk about the need to enforce our labor and environmental standards, and Kerry appears to be making promises along that line in the campaign, BUT the fact is that under the umbrella of the World Trade Organization (WTO) we cannot do it. Nor can we make adjustments to the WTO standards.

We are not allowed to change the rules even if we want to. Congress tried to do so and the WTO said, NO. And that was that. In effect, the WTO rules; its corporate members trump all branches of our government -- administrative, legislative, judicial. What it does is that, on trade issues, our government just becomes a toothless administrative shell. No sovereignty as a nation to pass a law or rescind a law or decide anything.

To the extent we still have democracy in other areas (getting doubtful) there is no democracy and little sovereignty in the international trade arrangement.

Dennis Kucinich advocates that the United States withdraw from membership in the WTO just in order to retain our sovereignty as a nation. This argument has great appeal to many Republicans that are not connected to the big multi-nationals. The sovereignty of our own nation is very important, to say the least!

But Dennis is not an isolationist. He would replace the WTO with bi-lateral trade agreements mutually worked out with individual nations. That would be the democratic model.

Much of Dennis's appeal to intellectuals is wrapped up in his positions on international trade. People out of a job because of plant closures or out-sourcing support him too as soon as they learn what his position is. And of course that is starting to include a lot of "white-collar" workers as well as "blue-collar."

And you know, I do not think a country like ours can survive very long when it is rapidly losing its industrial base. Which it is.

[many a good man]

38. Cold Reality about NAFTA and WTO

The World Trade Organization is the successor to GATT (General Agreement on Tariffs and Trade). It is world-wide whereas NAFTA is a multi-lateral negotiated agreement between US, Canada, and Mexico. Since NAFTA is an agreement between three nations, details can be negotiated and changed at any time.

The WTO on the other hand is all-or-nothing. Nations join it and agree to submit to its rulings. Any national law that restricts trade can be challenged and decided by the judges on the WTO council. The offending nation must obey the decision. The only other alternative is to pull out of the WTO, which means you will lose all the benefits that membership entails. In other words, it will be harder for you to sell to or invest in the other countries that are still members.

It is a truism that trade between nations is beneficial. In the past nations protected domestic industries and jobs by placing tariffs (taxes) on imported goods targeted to specific industries they wanted to protect. Periods in history where protectionism increased result in global recessions or depressions. That is the primary motivation behind the effort to promote greater global trade. Increasing trade is also seen in moral or ethical terms as helping desperately poor third world nations rise out of poverty. The results here have been mixed.

Throughout history, weaker countries have called for "fair" trade whereas the stronger countries insisted on "free" trade. In reality trade is neither free nor fair. In the current system, trade agreements are designed to enrich multinational corporations and completely ignore environmental and labor interests. The real issue is how do we promote trade in such a way that will benefit workers in all nations while protecting the environment.

One last word: it is highly likely that immediate and unilateral withdrawal from NAFTA and WTO will lead to trade wars and economic disaster. In my opinion, those who stridently advocate the immediate withdrawal from these trade agreements are exposing their lack of sophistication and knowledge of economic realities. It may make great political rhetoric, but it does not inspire confidence.

[idlisambar]

39. The cold reality -- free trade is bad economics

"It is a truism that trade between nations is beneficial. In the past nations protected domestic industries and jobs by placing tariffs (taxes) on imported goods targeted to specific industries they wanted to protect. Periods in history where protectionism increased result in global recessions or depressions. That is the primary motivation behind the effort to promote greater global trade. Increasing trade is also seen in moral or ethical terms as helping desperately poor third world nations rise out of poverty. The results here have been mixed."

This is not true. Almost without exception the wealthy nations of the world became wealthy behind a wall of tariffs and other trade regulations. Take a look here...

http://www.fpif.org/papers/03trade /

An excerpt...

A closer look at the history of capitalism, however, reveals a very different story (Chang, 2002). As we shall establish in some detail in this paper, when they were developing countries themselves, virtually all of today's developed countries did not practice free trade (and laissez-faire industrial policy as its domestic counterpart). Rather, they promoted their national industries through tariffs, subsidies, and other measures. Particularly notable is the fact that the gap between “real” and “imagined” histories of trade policy is the greatest in relation to Britain and the United States , which are conventionally believed to have reached the top of the world's economic hierarchy by adopting free trade when other countries were stuck with outdated mercantilist policies. These two countries were, in fact, often the pioneers and frequently the most ardent users of interventionist trade and industrial policy measures in their early stages of development.

[many a good man]

40. What kind of trade?

"This is not true. Almost without exception the wealthy nations of the world became wealthy behind a wall of tariffs and other trade regulations. "

It most certainly is true that trade generally increases prosperity, which is my point. And its certainly true that the abrupt cessation of trade causes sever economic dislocation. You are making the same mistake that I've seen many here make: you are simplifying the issue to one of trade versus no trade. You are confusing the concept of trade in general with free trade. Furthermore, many people do not seem to be able to distinguish between NAFTA and the WTO.

I totally agree that during their development phases, now-prosperous nations depended on protectionism to grow their industries and infrastructures. Even today, the developing countries that have had the most success have attained it only by ignoring free trade principles for the most part.

What happens is that once a nation develops and gains the advantage over its competitors, its starts demanding "free" trade, which means the lowering of protective barriers. For example, in the early part of the last century, the United States was clamoring against free trade and for "fair" trade in Latin America because the British had the upper hand. Now that we have the advantage we are the ones promoting "free" trade.

In the past, developed nations only wanted the raw materials from the undeveloped countries. It would be brought back to this country where our people would be put to work creating and selling the finished product. The big difference nowadays is that due to technology and transportation, capitalists are utilizing the cheap labor from undeveloped countries. This is displacing jobs in our country. Labor in this country (or any other developed country) will never ever be able to compete against the abysmally low wages paid in the developing world. This is the central issue in the trade debate.

I'm only trying to get people here better informed on the basics of the trade issue. Many people sound like they don't understand the difference between the trade agreements in question and the basic concept of international trade. If we are to be able to intelligently discuss and argue this topic we have be grounded.

I strongly oppose the WTO and NAFTA as they currently stand. But we have to recognize that abruptly pulling out of the agreements will lead to the loss of thousands of American jobs that are dependent on exports. It will also lead to consumer price inflation as the other nations retaliate. This issue is one that has to be firmly but cautiously addressed.

We must continue to trade but move back to bi-lateral agreements that will allow nations to tailor policies to benefit and protect their own populations. Right now all the benefits are flowing to multinational corporations. Even the third world countries can see how they are being abused when a factory moves after a few years to another country with lower labor costs.

Free trade (and deregulation) are the most important issues confronting our nation. Because of them our economic woes have become systemic, not transitory. We can't just "hope" that new jobs and new industries will miraculously appear. We desperately need a president and congress that will make jobs the top issue.

[rhite5]

41. I completely agree.

International Trade is a huge issue and needs to be understood. When I look at what has happened and continues to happen to our country's industrial base, I could cry. I want to hear candidates discuss this with enough depth to the discussion to be able to see whether they really understand it or not.

It sounds as if NAFTA could be reworked if it could be divorced from the WTO.

But accomplishing anything positive is going to have to start with curbing corporate power. I am not sure we are capable of doing that.

[idlisambar]

43. I'm not arguing against trade...

I'm arguing that a nation should be able able to regulate it's own trade, and that nation's in the past that have done so in a way that favors domestic producers have been more successful.

Japan is a great modern case in point of a nation that through smart trade regulation, promoting domestic manufacturing, has been able to overcome resource constraints to become one of the richest nations in the world.

Perhaps we don't have much disagreement actually from what you are saying, but I am not sure why you say that "trade generally increases prosperity", that concedes too much I think. I would put it differently -- that trade has potential benefits depending on the conditions of that trade. In other words, I begin from a more skeptical stance (at least in rhetoric). As far as I know there is no theoretical basis for saying something like "trade is good", the theory of comparative advantage and its variants are often put forth but are deeply flawed and so have no relevence. In absence of a general theory or notion about trade, we are left with case by case analysis, as unclean as that is.

I agree that abruptly pulling out of trade agreements is a bad idea. Over time economic relationships have been built, and to quickly withdraw would be too much of a shock. The same can be said for abruptly entering trade agreements in the first place. Generally I would argue for slow withdrawal, coupled with support for damaged industries to get them back on their feet, and then resuming bi-lateral trade as you say.

[scarletwoman]

44. "We must continue to trade but move back to bi-lateral agreements..."

Which is precisely what Dennis Kucinich is advocating, btw.

Good post, clear and informative.

Thanks,
sw

[KoKo]

45. Bill Moyers & "Frontline" said it's "Chapter 13 of Nafta" that's big

problem. I think the whole thing is garbage, but I will give a pass to those whom I agree with much of the time, to have sorted it out for me, to point out the "real" problem with NAFTA.

I was against the whole thing, and watched the hearings about it. But, I could compromise, if I thought it was a REAL compromise. :shrug: