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NAFTA Policy Brief

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Tracy Garcia

on 1 May 2013

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Transcript of NAFTA Policy Brief

The North American Free Trade Agreement (NAFTA): Insights and Recommendations Introduction Background What is NAFTA? What is it?

Major Provisions?

Purpose / Aims?

Conditions Upon Ratification? The North American Free Trade Agreement (NAFTA) is a multilateral agreement that creates an inter-American trade bloc between the United States, Canada, and Mexico.

Signed January 1, 1994
William J. Clinton, President (USA)
Carlos Salinas de Gortari, President (MEX)
Brian Mulroney, Prime Minister (CAN) NAFTA's Major Provisions What's the treaty's purpose? What's happening in Mexico, the United States, and Canada upon ratification of NAFTA? U.S. Stakeholders Labor Unions
Environmental Groups
State Governments
Gulf Coast states
Federal Government Implications on U.S. Labor History of U.S.-Mexico Border Crossing
Early Proponents vs. Opponents
Job Creation vs. Job Loss and Wage Deterioration
NAFTA-Transitional Adjustment Assistance (NAFTA-TAA) Program
1994 to 2002: 525,000 workers (58,000 per year) adversely affected by NAFTA
Inconsistencies in labor studies
Immigrant labor Tracy García, Caitlin Ruppel, Josh Wodka “In the mainstream press, these reports on life at the border are dominated by visions of a Wild West of drug runners and shootouts. Much of the reporting is manipulated by the boosterism of the maquiladora industry and its adulation of new plants and jobs. And not coincidentally, now that the bottom has fallen out of both countries’ economies, another form of tunnel vision has become prevalent- accounts of jobless workers as economic victims, powerless to alter the terms of their own exploitation. The border has been treated as an area bereft of its own social history, especially any history of social struggle...The voices of the people who understand the consequences of globalization most directly, and who can speak with the authority of their own experience, are unheard. And the absence of this history in the public debate poses a critical question: How can people take control of the economic forces that determine the parameters of their lives if their responses are invisible and their experience unavailable to others in the same situation?” —David Bacon, The Children of NAFTA Tariff Reduction
Tariff duties phased out over 15-year period (1994-2009)
Non-Tariff Trade Barriers
Prohibitions and quantitative restrictions on imports/exports between NAFTA parties are removed
Financial Investment
Financial investment must be treated in a "nondiscriminatory" manner.
Dispute Settlement
Trilateral Trade Commission (TTC)
Indirect, but does require an intent to implement environmental standards at par with other countries. NAFTA was “aimed at reducing and ultimately eliminating most of the remaining barriers to trade and investment among the United States, Canada, and Mexico” (Bosworth et al. 1).
Reduce Mexican tariffs and restrictions that limited American economic access.
Extend CFTA provisions regionally in a multilateral way. Canada-US Free Trade Agreement (FTA)
Agreed upon December 1987
Effective January 1, 1989
Eliminated general tariffs on all commodities except those explicitly stated and loosened trade restrictions.
By 1994, 70% of goods transported between borders were duty free.
Recessionary period
Accumulated debt, high inflation.
Where to turn?
A new economic model? United States Response to NAFTA Environmental Implications The North American Agreement on Environmental Cooperation (NAAEC)
Historical Significance
Side Agreement Complaints
Environmental Impact Assessments and Trade Agreements Social and Political Implications “the point isn’t simply to understand the fact that jobs move, but to understand the impact this movement has had on the thinking of the people who are affected by it on both sides of the border. It is consciousness, and the action and organizations based on it, that creates social change.” – David Bacon, The Children of NAFTA Demographic shift
Revitalization of labor movements
Changing electoral politics http://wiki.dickinson.edu/images/7/72/000a4ff0.jpg Public Opinion Public Opinion on Participation in NAFTA
Proponents vs. Opponents
Government Opinion
Democrats vs. Republicans
Public Knowledge of the Free Trade Area of the Americas (FTAA) http://photos.mycapture.com/PASO/1388467/39552370E.jpg Mexico's Response to NAFTA: Labor Implications Social and Political Implications Environmental Implications Mexicans farm workers began using more fertilizers/chemicals costing Mexico $36 billion a year in pollution
This amount is greater than the profit from the trade and economy growth Mexico experienced
In an attempt to replace their lost income, farm workers began farming marginal lands
Deforestation reached 1557 acres per year Rural poor most affected group
Have been forced to adapt without the Mexican government's support.
Zapatista Army of National Liberation
Revolutionary organization based in Chiapas
Went public January 1st, 1994—the day NAFTA went into effect
Protest NAFTA and the gap between the rich and poor it caused
Leader Subcomandante Marcos NAFTA works economically for the U.S. because it has led to an increase in labor force and the easy importation of goods produced at lower costs. However, it is not working in the sense that environmental impact is not being paid the attention it deserves nor are cases taken against the U.S. for violation of the labor and environmental side agreements followed through.

(1) Raising public awareness of the labor and environmental implications NAFTA has had on all sides (US, Canada and Mexico)
(3) Greater transparency in the litigation process around labor and environmental cases
(4) Develop and implement programs that protect labor rights and the environment under NAFTA
(5) Have more of a gradual process of integrating NAFTA for developing countries
(6) Increased education around FTAA and calling for the FTAA to serve as a model which incorporates changes called for in NAFTA U.S. manufacturers moved companies to Mexico
500,000 jobs in manufacturing were created from 1994 to 2002
30 percent of the jobs that were created in maquiladoras in the 1990s have since disappeared
Many Mexican farm workers were put out of business
1.3 million farm jobs have been lost since 1994
Many were pushed into maquiladora plants
Originated in the 1960s along the U.S.—Mexican border
Working conditions are poor
Hours are long, pay is little
90% of products are shipped to the U.S.
Low wages for Mexican workers and NAFTA'S low tariffs provide cheap products for U.S. consumers
Immigration has not decreased since the implementation of NAFTA
Full transcript