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In the wake of the Second World War, the governments of Belgium, the Netherlands, and Luxembourg united
in a limited economic alliance. Reasoning that war would be impossible if each nation’s industries were
interdependent, the countries first formed a coal and steel union. The economic advantages of such arrangements
soon became evident to other European nations, and other nations joined in what has become the European
Economic Community. The EEC now includes all the countries of Western Europe, and eastern European nations
are waiting to join. The EEC forms the largest single market in the world, and through cooperation has
not only managed to protect itself from outside competition but also to improve its position substantially
in world markets. Although American attention has been fixed largely upon the manner in which the Japanese
have been able to penetrate domestic markets, Dutch and British holdings in the U.S. are larger than Japanese
holdings and are continuing to grow.
Many have considered that the only way for the United States to compete against such a conglomerate is
to form its own economic union. The economic characteristics of Canada, Mexico, and the United States
formed what businesspeople considered an alignment very favorable for integration. Canada possesses vast
reserves of natural resources and a relatively small, well-educated population. The United States has
underutilized capital and manufacturing capacity, large surpluses of agricultural production, excellent
technogical development, and a large number of skilled workers. Mexico has extensive undeveloped resources,
a large and growing population of low-skilled laborers, and limited agricultural potential. The reasoning
was quite simple. Canada would have an assured market for its resources and ample scope for the investment
of profits gained from this trade. U.S. manufacturing companies had been relocating for some time to countries
with plentiful and cheap labor; if they were to relocate in Mexico, the capital invested in the Mexican
economy would help to develop that nation’s capacity to buy goods from the other partners in the alliance.
Together, the three nations could supply one another with needed goods, thus decreasing outside imports,
and would provide one another with increased markets through the expansion of their respective economies.
Other advantages were expected to flow from such an arrangement. Jobs in Mexico would stem the flow of
illegal immigration from that country into the United States and reunite a substantial Hispanic-American
population with their kinsmen to the south. A new transportation network would vitalize underdeveloped
areas of all three countries, and life would be generally enriched by wider horizons and the exchange
of cultural traditions.
Many saw a flaw in this arrangement, however. When U.S. companies relocated in Mexico, taking advantage
of cheap labor and the lack of government regulation to protect workers and the environment, American
jobs would vanish. Ross Perot, who gained a remarkable number of votes as an independent candidate in
the presidential election of 1991, warned that shortly after the passage of NAFTA, Americans would "hear
a great sucking noise. It’ll be all those jobs being drained into Mexico." It was argued that such
a dislocation would be only temporary and that American employment would rise again as new manufacturers
arose to meet the needs of a growing Mexican market. The debate became one between management and labor,
Republican and Democrat, and the measure passed Congress by the thinnest of margins even with the strenuous
support of Bill Clinton, the new Democratic president.
What are the stated aims of NAFTA, and how are they to be accomplished? Most treaties and alliances are
ruled by narrowly defined agreements, with key sections that dominate the treaties. What do clauses 1
and 2 of Article 301 mean? What is the effect of Article 309? What is the purpose of Annex 314?
Whether NAFTA, the largest venture in economic planning in U.S. history, will succeed as its framers promised
is uncertain. Since passage Canada has joined the hemispheric trading bloc. So far, both proponents and
opponents can claim their predictions were right. Exports have increased, and some jobs have been created
in the United States because of the increased trade. However, many more jobs have been lost, shipped south
of the border into Mexico as companies slice American workers with their higher pay and benefits from
the corporate payrolls. Replacing them are sweatshop workers in Mexico who have low paying jobs and no
benefits. Each of you probably knows someone affected by the passage of NAFTA. Will this all balance out
if given enough time, as NAFTA supporters claim? We shall see.
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