NAFTA's Fatal Flaws

The American public is confused about NAFTA. People are overwhelmed by the deluge of seemingly contradictory facts (and opinions disguised as facts) about the North American Free Trade Agreement.

There are a number of reasons for the confusion. NAFTA is a complicated, politically charged treaty, and its results are unpredictable--despite the certitudes bandied about by both sides. Will the agreement create new jobs in the United States? Or move them south? Will it help Mexican workers? Will it facilitate a cleaning up of the environment, or further the mess that now exists?

The political landscape around NAFTA hasn't helped cut through the confusion. After all, if Pat Buchanan and Ross Perot oppose the treaty, isn't that enough reason for progressives to support it? (On the other hand, much of its support comes from corporate CEOs and "free-market" conservatives, which is enough to make many suspicious.)

Proponents of NAFTA have sought to build their case by appealing both to self-interest and to altruism. American jobs, they argue, will be increased in the long run. Unfortunately, as Keynes said, in the long run we'll all be dead--and in the short run it seems clear that more jobs will be headed south as corporations seek cheaper labor and relief from those pesky U.S. environmental and safety regulations.

The Clinton administration has asserted that "free trade" will increase exports to Mexico and thereby boost the U.S. economy. But what kind of products will most people be able to buy in a country where the average factory worker makes $2.35 an hour? K-Mart and Kentucky Fried Chicken may increase their sales, but the manufacturers of big-ticket items shouldn't get their hopes up. U.S. exports to Mexico have increased in recent years. But much of the increase has been from selling off chunks of the U.S. industrial and manufacturing base as factories relocate, leaving their former American employees high and dry.

The case in support of NAFTA is also made in more altruistic terms, and that's been a source of confusion for many good-hearted and thoughtful people. The agreement, it is said, will raise Mexican living standards without costing the U.S. federal government a single penny, simply by allowing Mexicans to compete more freely in the American market. How can anyone oppose such a win-win plan?

UNFORTUNATELY, the agreement's effect on the poor in Mexico is not likely to be quite so beneficial. NAFTA's approach to liberalization is much like the course Porfirio Diaz took in the 19th century, allowing British and American capitalists to plunder Mexico in a way that enriched a small core of Mexican elite, but brought destitution to the majority of the Mexican people--who responded with one of the most bloody and destructive revolutions ever. The 1910 revolution succeeded in deposing Diaz, restricting foreign investment, and establishing the right of labor to organize.

But the Institutional Revolutionary Party, or PRI--the corrupt, reactionary party that has controlled Mexico since the revolution--has long since reversed most of those gains. For example, while organized labor is officially legal in Mexico, the only unions allowed are those controlled by the PRI.

For common people in Mexico to benefit from a NAFTA-like agreement, political reform--including free elections and independent unions--is as essential as economic restructuring. If NAFTA helps to strengthen PRI's stranglehold on power, as it appears it will, the effect will be more exploitation of the poor, not less. It's not surprising that the Mexican ruling party has spent more than $30 million lobbying the U.S. Congress to approve the accord.

Mexican politicians have been laying the groundwork for NAFTA for years. For instance, two years ago the Mexican government abolished protections for small communal farms (known as ejidos). Passage of NAFTA will allow U.S. and Canadian agribusiness interests to buy up Mexican farmland for export cropping, displacing Mexican farmers and creating a land crisis for Mexican peasants, likely increasing emigration and undercutting U.S. small farmers at the same time.

The side agreements negotiated in September did little to help the treaty's fatal flaws. As a candidate last fall, Bill Clinton said there were 11 "critical issues which remain unaddressed" in the Bush administration's NAFTA treaty. Only one of those "critical issues," concerning environmental and labor standards, even reached the negotiating table. Even with the side agreements, environmentalists have called the treaty a "polluters' pact" because it will open the door to U.S. corporations' further despoiling the Mexican countryside in search of greater profitability, just as they have contaminated the already existing free-trade zone along the 2,000-mile U.S.-Mexican border.

Many NAFTA opponents stress that they are not opposed to trade, and that they are by no means isolationist. What they seek, though, is fair trade, and as constituted, NAFTA isn't it.

"We have to remember that NAFTA is a Bush agreement that gives legal framework to market-driven, laissez faire, 'trickle-down' economic principles," Maria Riley, a research associate at the Washington, D.C.-based Center of Concern, told Sojourners. "A better trade agreement could be written, more at the service of the well being of the community, instead of simply guaranteeing corporate mobility and corporate profit."

The world is moving toward greater economic integration, and the North American Free Trade Agreement is an attempt to codify that movement for our hemisphere. But what is needed is less a global village run for the benefit of the wealthy and powerful, but a globe of villages based on human rights, participatory democracy, and economic justice. Trade must be judged not as an end to itself, but based on how it serves the common good. By that standard, NAFTA is a step in the wrong direction.

Jim Rice is editor of Sojourners.