Academic journal article
By Diep, Kelly
Harvard International Review , Vol. 30, No. 1
Fox, Vicente--Political activity
Martin, Paul (Canadian government official)--Political activity
Trade Agreements--Political Aspects
Trade Agreements--Economic Aspects
Presidents (Government)--Political Activity
President of the United States--Political Activity
Prime Ministers--Political Activity
When the "Three Amigos"--more formally known as US President George Bush, Mexican President Vicente Fox, and Canadian Prime Minister Paul Martin--met in Waco, Texas in 2005, they aimed to expand integration beyond 1994's landmark NAFTA. But such optimism met with hostility from constituents, many of whom increasingly view economic liberalization as a raw deal. Indeed, in recent months Democratic presidential candidates Barack Obama and Hillary Clinton have pledged to renegotiate NAFTA or opt out, Texans have marched against an alleged "NAFTA superhighway," and Mexican farmers have protested tariff cuts that flooded the market with subsidized US corn. The agreement's economic benefits remain controversial, and economists continue to deliberate over the merits of NAFTA and its successors. The issue at hand, however, lies in the intersection between policy and politics--not merely in the economic gains or losses that trade brings, but in the perceptions and fears of workers and producers from Chiapas to Calgary.
Free-trade idealists and protectionists alike can find economic support for their positions on NAFTA, which has hardly been the unqualified disaster some critics allege. Overall trade in goods between the three countries has increased 198 percent in the past 15 years, with US intra-NAFTA exports rising 157 percent and imports 231 percent. Analyses have shown, however, that as much as 85 percent of this growth may have been independent of NAFTA's impact. The agreement's impact on economic growth has been similarly minimal, with GDP increases of just .04 percent in the United States and .8 percent in Mexico. The effect of NAFTA on employment is unclear: it appears to have resulted in small employment increases in both Mexico and the United States, but the overall statistics conceal potentially meaningful shifts in the manufacturing and agricultural sectors. Finally, NAFTA has helped to exacerbate, if only slightly, the wage gap between skilled and unskilled workers in both countries. In short, the wide-spread criticism and praise received by NAFTA is rather disproportional to its actual impact, which has been relatively moderate at best.
Despite these mixed results, the three leaders are continuing to look for ways to expand and standardize trade in the Americas. Beginning in 2001 with the Quebec City summit, trade officials began planning the Free Trade Area of the Americas (FTAA), which would have linked 34 countries in the largest postwar plan for free trade. But the proposal, which was to be signed in 2005, was defeated by a massive upswell of populist opposition, particularly in Latin America. Meanwhile, North American officials pressed for so-called "deep integration" of the continent, which would include harmonization of regulatory, trade, and security policies. These discussions culminated in the Security and Prosperity Partnership of the Americas (SPP), an agreement signed at Waco that stressed incremental reforms and increased cooperation. The key to the SPP was security, in light of the US' new desire to strike a balance between free trade and the security of its borders. Thus the SPP, while attempting to eliminate barriers to capital flow across borders for transnational corporations, also privileges US national security interests over the strict economic orthodoxy of open borders. As North American governments move forward with bold integration plans, such delicate balancing acts between national sovereignty and regional integration will become more prominent. …