4 minute read
Andréa Ford

The North American Free Trade Agreement (NAFTA) has never been without its critics or its champions. Since its inception in 1994, the deal still provides some of America’s most reliable debate fodder, from campaign trails to the break rooms of Midwestern factories. NAFTA’s fifteenth anniversary this week comes at a tumultuous time: with U.S. unemployment at a 26-year high and many American companies facing grave operational challenges, the controversy over the free-trade pact is not likely to subside anytime soon.

The concept behind NAFTA — promoting economic growth by easing the movement of goods and services between the U.S., Mexico and Canada — had existed for years before it was born. President Ronald Reagan spoke of a North American agreement in his campaign in 1979, and the Canada-U.S. Free Trade Agreement had existed since 1989. NAFTA, which was launched January 1, 1994 and finally saw the last of its policies implemented on January 1, 2008, stipulates the removal of most tariffs and restrictions on trade between the three nations and codifies a wide range of agreements on agricultural, textile and auto trade, as well as telecommunications, intellectual property, mobility of workers and environmental policies. (Read about TIME’s Person of the Year 2008.)

Many of the pact’s effects have been celebrated. Intra-North American trade has more than tripled since NAFTA’s inception, and the value of U.S. agricultural exports worldwide has climbed by 65 percent. Agricultural trade in both directions between Mexico and the U.S. increased from $7.3 billion in 1994 to $20.1 billion in 2006. Trade between the three parties currently accounts for about 80 percent of Canadian and Mexican trade and more than a third of U.S. trade.

But critics say these results may not be directly linked to NAFTA, and that the pact has been a disappointment on other fronts. The bloc has been seen by some as a symbol of insidious globalization, cordially invited into the U.S. only to eat away at the domestic job market. In 1992, before the treaty was ratified, independent U.S. Presidential candidate Ross Perot famously warned voters to prepare for the “giant sucking sound” of jobs moving across the border to Mexico, where NAFTA would enable companies to take advantage of cheap labor. Mexico’s average hourly manufacturing wage is still only about 13 percent of that of the U.S., but even with that persistent disparity, most jobs these days aren’t being shipped to America’s southern neighbor. Instead, they’re going to China, whose explosive economic growth in recent years has posed a far more serious threat to all North American employment.

Not surprisingly, as economic conditions worsened in 2008, NAFTA became a hot issue during the U.S. Presidential campaign again. Democratic candidates Senators Hillary Clinton — whose husband signed the treaty in 1993 — and Barack Obama both blamed NAFTA for lost American manufacturing jobs and suggested that terms might be renegotiated to include higher labor and environmental standards. The idea would be to stem the “race to the bottom” among companies seeking the cheapest costs of doing business, ultimately encouraging them to keep jobs in place in the U.S.

But if the terms were indeed to be revisited, Mexico and Canada would likely have their own wish lists to bring to the table. Mexico would undoubtedly want to discuss the U.S.’s new, restrictive migration policies and high corn subsidies for U.S. farmers, which hurt Mexican farmers. Canada may want to pursue new energy trade policies. Mexico’s current conservative government has opposed reopening the terms of NAFTA, but recent political fractures in Canadanot to mention an increasingly complex global economic situation will likely keep the debate lively well past NAFTA’s next anniversary.

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