Lessons from NAFTA

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The Future of North American Trade Policy: Lessons From NAFTA
Report published by Boston University’s Pardee Center Task Force*  

Seventeen years after NAFTA was enacted, there is widespread agreement that the trade treaty among the United States, Canada and Mexico has fallen short of its stated goals. While proponents credit the agreement with stimulating the flow of goods, services, and investment among the North American countries, critics in all three countries argue that this has not brought improvements in the standards of living of most people. Rather than triggering a convergence across the three nations, NAFTA has accentuated the economic and regulatory asymmetries that had existed prior to the agreement.

Obama retreats from promises

In 2008, candidate Barack Obama stated, “I voted against CAFTA, never supported NAFTA, and will not support NAFTA-style trade agreements in the future.” President Barack Obama has retreated from that promise, and the administration now backs Bush-era trade agreements with Colombia, Panama, and South Korea. The administration is also negotiating the largest U.S. trade agreement since NAFTA, the so-called TransPacific Partnership (TPP) with a wide range of Pacific nations.

Lessons from NAFTA

What lessons does NAFTA offer for these new agreements? To answer that question, GDAE teamed with Boston University’s Pardee Center to convene a task force on North American trade policy. The eight members, all from North American countries, are experts in their fields. Each offered a detailed critique of NAFTA’s provisions in his or her area of expertise, suggesting the kinds of reforms that would be needed to make such an agreement one that promotes long-term, inclusive, sustainable development for all parties.

The publication is intended to contribute to the discussion and decisions related to future trade agreements. It offers detailed proposals on topics including services, manufacturing, agriculture, investment, intellectual property, labor, environment, and migration.

Recommendations

The Task Force recommendations detailed in the report include:

— NAFTA and the other trade agreements based on the NAFTA template need deep reform. These changes must go beyond the important but limited 2007 bipartisan agreement in the U.S. Congress on modest reforms to labor, environment, and intellectual property provisions, which have been incorporated into recent agreements.

— Trade agreements need to address the asymmetries among trading partners with well-funded institutions. NAFTA established some important institutions, but they have been given neither the mandate nor the funding to allow them to help make Mexico a more equal economic partner.

— NAFTA’s services chapter may deter local, state, and national governments from implementing new laws to address climate change. NAFTA currently lacks assurances that good faith regulations to protect public welfare will not be challenged by private interests.

— Investment chapters allow foreign investors to sue governments for actions that impede profits, even if they are taken in the public interest. Reforms must limit the use of such measures, improve accountability, and remove the threat to governments.

— Reforms on the environment need to go beyond those in the US-Peru agreement, including key provisions on intellectual property, investment, services, and agriculture to raise environmental standards and improve enforcement.

— A trade agreement is no substitute for a coherent national development strategy. Developing countries should learn from Mexico’s experience under NAFTA that increasing trade and foreign investment will not alone generate dynamic economic development.

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*The Pardee Center Task Force on North American Trade Policy convened at Boston University in March 2009 and included participants from Canada, Mexico and the United States who work in various disciplines, contributing many perspectives and a range of policy options for the longer-range future of trade in North America.

 

The Task Force Members, each of whom contributed a chapter to the report, include:

Kevin P. Gallagher, Associate Professor in the International Relations Department at Boston University and a Pardee Center Faculty Fellow (Co-convener)

Timothy A. Wise, Director of the Research and Policy Program at the Global Development and Environment Institute (GDAE) at Tufts University (Co-convener)

Enrique Dussel Peters, Professor in the Graduate School of Economics at Universidad Nacional Autónoma de México (Co-convener)

Rodolfo García Zamora, Professor of Development Studies at the University of Zacatecas, Mexico

Kenneth C. Shadlen, Development Studies Institute, London School of Economics

Robert K. Stumberg, Professor of Law at Georgetown University Law Center

Gus Van Harten, Associate Professor at Osgoode Hall Law School at York University

Christian E. Weller, Associate Professor of Public Policy at the University of Massachusetts, Boston.

 

 

Report Chapters

NAFTA Services and Climate Change, by Robert K. Stumberg, Chapter 1, Pardee Center Task Force Report, Boston University, November 2009. 

Manufacturing Competitiveness: Toward a Regional Development Agenda, by Enrique Dussel Peters, Chapter 2, Pardee Center Task Force Report, Boston University, November 2009. 

Reforming NAFTA’s Agricultural Provisions, by Timothy A. Wise, Chapter 3, Pardee Center Task Force Report, Boston University, November 2009. 

Reforming the NAFTA Investment Regime, by Gus Van Harten, Chapter 4, Pardee Center Task Force Report, Boston University, November 2009. 

Intellectual Property for Development in Mexico, by Kenneth C. Shadlen, Chapter 5, Pardee Center Task Force Report, Boston University, November 2009. 

NAFTA and the Environment: Lessons from Mexico and Beyond, by Kevin P. Gallagher, Chapter 6, Pardee Center Task Force Report, Boston University, November 2009. 

Rethinking Labor Rights, by Christian E. Weller, Chapter 7, Pardee Center Task Force Report, Boston University, November 2009. 

Migration Under NAFTA: Exporting Goods and People, by Rodolfo García Zamora, Chapter 8, Pardee Center Task Force Report, Boston University, November 2009.

 

The full report can be downloaded here.