Was NAFTA a Disaster?

Recently, Donald Trump made a strong claim about the North American Free Trade Agreement (NAFTA) in an interview on CBS 60 Minutes:

"It's a disaster. ... We will either renegotiate it, or we will break it. Because, you know, every agreement has an end. ... Every agreement has to be fair. Every agreement has a defraud clause. We're being defrauded by all these countries."

Is he right? Was NAFTA a disaster? The answer to that question depends on how we measure the results. For the U.S. -- where the Bill Clinton administration sold the agreement as a job-creating policy because U.S. exports would grow by more than its imports -- the agreement has not lived up to its promise.

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Amusing he completely neglects Canada.  :)

Should North America Integrate More?

NEVER have Latin American leaders talked so much about regional integration as in the past decade. They have cooked up an alphabet soup of organisations, whose chefs hold non-stop summits even as trade among them grows only slowly. But three countries in the Americas have practised integration while eschewing much of the fanfare.

Under the North American Free-Trade Agreement (NAFTA), which came into effect in January 1994, the economies of Mexico and Canada have become ever more closely entwined with that of the United States. Trade between the three has more than tripled, to $1.1 trillion in 2013, and cross-border investment has risen fourfold. Many companies now operate on a North American basis.

Yet this economic entanglement has no match in politics and policy. The Security and Prosperity Partnership of North America, set up by George W. Bush in 2005 to deepen NAFTA, was quietly downgraded four years later to a regular meeting of the three countries’ leaders. An accompanying private-sector “competitiveness council” was disbanded.

Because NAFTA is falsely blamed in the United States for a net loss of manufacturing jobs, it is a subject that Barack Obama prefers not to mention. Stephen Harper, Canada’s Conservative prime minister, hews to his country’s close bilateral relationship with the United States. Mexico’s problems with organised crime, its reputation as a source of migrants (though few now cross the border) and the fear that it might provide an access route for terrorists (though it hasn’t) make closer trilateral ties politically toxic in the other two countries.

This neglect is a missed opportunity, according to a new report* by the Council on Foreign Relations, a New York think-tank. Drawn up by a group led by Robert Zoellick, a Republican former cabinet member, and General David Petraeus, a former commander of American forces in Iraq and Afghanistan, the report makes a passionate case for North America to switch from “an afterthought” to “a central priority for US policy”.

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Canada and Mexico Relations in NAFTA

CANADA and Mexico share the fortune, or misfortune, of a border with the world’s most powerful country, which looks down on both of them. For 20 years, as privileged trading partners of the United States, they have had the opportunity to influence it by creating a shared vision for North America. Instead the two have bickered like rivals in a tawdry ménage a trois.

Canada plays the part of the wronged partner. It has jealously sought to protect the relationship with its neighbour, fearing that Mexico may steal its thunder. “Canada is quick to give offence and Mexico is quick to take it,” says Laura Dawson, author of a report on the bilateral relations for the Canadian Council of Chief Executives, a business group. That could be shrugged off as irrelevant in a region where the only bond that matters is with the United States. But there are economic costs for North America as a whole, including the United States, because more could be done to link supply chains and energy markets trilaterally rather than just bilaterally.

Canada was a reluctant participant in the negotiations for the North American Free Trade Agreement (NAFTA), which was launched in 1994. It agreed to join largely to safeguard the advantages it had won from a prior free-trade deal with the United States. After the terrorist attacks on September 11th 2001, efforts to strengthen NAFTA through trilateral negotiations lost momentum. Instead, the United States, Canada and Mexico have sought to tackle border and security issues bilaterally.

Relations between Canada and Mexico have become more brittle this year; the leaders of both countries have pointedly snubbed each other.

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