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THE
question whether NAFTA was a step to rival
the creation of NATO, or a mortal blow to
US jobs from cheap Mexican labour was the
big talking point when they forged the North
American Free-Trade Agreement (NAFTA) back
in the early '90s.
Looking back, London's Economist concludes
NAFTA's backers have won the argument. America's
trade with Mexico increased by 506 per cent
between 1993 and 2012, compared with 279
per cent with non-NAFTA countries. A thoroughly
good thing as the Economist sees it.
But with illegal aliens streaming across
the border arousing much suspicion that
the Economist's sunny conclusions about
greater cultural integration are not as
sanguine as that newspaper suggests. There
are strong countervailing fears of these
developments are not good and they crowd
the issue lists of presidential politics.
The Economist also points out that the
biggest gains in trade were early in NAFTA's
life. Momentum has slowed in recent years.
"If the agreement is to progress, three
things need to be done. First, the business
of shipping goods across borders needs an
overhaul," it said.
Crossing from Mexico to the United States,
waiting times are far too long; much of
the infrastructure is antiquated; railway
and haulage crews still change over at the
border.
Measures to allow the pre-clearance of
goods before they reach the border are held
up by America's "needless insistence"
that its customs agents should be allowed
to carry guns, against Mexican laws, when
they operate south of the border, the Economist
said.
One can forgive the Excited States of
America for sticking to its principles here,
as Economist appears to forget that most
every uniformed official in Mexico is armed
and smugglers caught with contraband are
more likely to pull guns than say: "It's
a good nick, Bill" and go quietly.
Mexico is not England.
One had little quarrel with the Economist
when it says NAFTA could also do more to
avert the negative effects of regional trade
deals. Such deals risk diverting trade from
countries outside the club to those inside
it.
NAFTA should also show how regional deals
could be bridges to wider liberalisation,
it says. The United States, Canada and Mexico
have each pursued free-trade agreements
with the European Union separately, for
example; instead, they should act in concert.
NAFTA itself should also map out a way
to invite in new members from Central America,
the Caribbean and Latin America, to spread
free trade across all the Americas.
But when it says, the bloc should embrace
the freer movement of people, the point
is highly debateable - especially now. NAFTA
had virtually nothing to say about labour
mobility at its launch, beyond creating
a visa category for "professionals".
Today, such ideas invite disagreement of
not violent controversy given the present
situation.
"The United States is not about
to embrace European-style open borders,
but more generous dispensations for frequent
travellers from Mexico would be a start,"
the Economist said. A start to what, many
will ask - and rightfully so.
In 2011 America traded as much with Canada
and Mexico as it did with the BRIC countries
(Brazil, Russia, India, China), Japan and
South Korea combined. The "giant sucking
sound" that presidential candidate
Ross Perot predicted would be heard as Mexico
vacuumed up American jobs never materialised;
if jobs have moved anywhere in the past
two decades, they have gone to China, not
Mexico.
Industries from aerospace to cars have
woven supply chains back and forth across
North America's borders. Some 40 per cent
of the content of imports from Mexico into
the United States, and 25 per cent of the
content of imports from Canada, originated
in the United States itself. Helped by rising
energy production in all three countries,
Factory North America is being created,
the Economist contends.
Of the three countries, Canada's per
capita GDP per person has grown fastest,
but Mexico - an emerging market hitched
to two larger, rich ones - has been the
big winner, it said.
Import competition has improved Mexican
manufacturing productivity; foreign direct
investment has surged. NAFTA shored up Mexico's
domestic political commitment to open markets,
and provided a template for the country's
other free-trade agreements (14 and counting).
The deal has not closed the vast income
gap with Canada and the US, but it has helped
make Mexico more stable and prosperous.
Despite the cheery British outlook, it
must be stressed that the Economist ignores
problems that scream out from today's headlines.
The problems described threaten to change
America's demographics profoundly in ways
most Americans would clearly don't want.
The Economist's testimony is undoubtedly
the truth, and nothing but the truth - but
not necessarily the whole truth. There is
much the Economist will not see because
to see it, is to acknowledge it, which would
require painful descriptions of problems
that it is not prepared to provide.
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