Over the next couple days Prime Minister Harper, President Obama, and President Calderon are meeting in Guadalajara [From Arabic, وادي الØجارة , “rocky riverbed”], Mexico for the North American Leaders’ Summit.
The meeting is part of the Security and Prosperity Partnership of North America, which seeks to address trade and security issues among the NAFTA partners.
From my vantage point in Guadalajara, the not-so-secret service with earpieces are overshadowed by the armed soldiers in camouflage (literally) hiding in the bushes outside my door. President Calderon is staying in my hotel (“No, yo no trabajo aquÃ. Soy una estadÃa aquÃ.”), just a few dozen meters from me.
There’s good reason for the security, with anti-NAFTA protesters greeting their arrival. Some organizations are even hosting parallel sessions highlighting the failures of NAFTA. The major grievances include corn and bean imports that have hurt Mexican farmers, and the ongoing trade-war over Mexican truck drivers.
For sure, NAFTA is not perfect. I’ve mentioned some areas where Canada has been adversely affected, and how foreign pressure can potentially override our own national interests.
But since Bretton Woods in 1945, the global community has been operating under the assumption that countries with more intertwined economies are less likely to resolve their differences through war.
More recently, both the American and Canadian governments were involved in bailing out General Motors. Both countries considered it imperative to maintain the just-in-time supply system that uses skilled Canadian labour that is cheaper due to our national healthcare monopoly (for now). Ironic as it may seem, the American healthcare system costs America jobs.
But there are some differences in the bailout. The American government can choose to sell their shares at a favourable time to turn a profit. Canada is stuck to a scheduled sell-off that will likely result in a considerable loss.
These imbalances in the tri-national agreements are emblematic of the critiques of the regional trade partnership.
It’s not easy for Obama to make further concessions though to either Canada or Mexico. He’s coming under enormous pressure at home, especially over labour issues, to “re-negotiate NAFTA” as promised on the campaign trail.
Freer trade has worked, somewhat. Mexico has seen an expansion in its economy, as have all of the partners. There has not been a “race to the bottom” as predicted, and NAFTA side agreement, the North American Agreement on Labour Cooperation (NAALC), have prevented working conditions in Mexico from deteriorating further. Analysts point out that more needs to be done, including a stronger enforcement mechanism and domestic labour legislation in Mexico.
Most citizens in all countries are complaining that the job creation is usually in a new sector, and the workforce is not adequately prepared for these new jobs.
When workers get injured in Canada we help them find comparable work, or get them retraining for a new position.
Part of the solution to NAFTA’s labour problems are more government-funded educational initiatives to help transition to workforce to adapt to a primarily service economy, focusing on careers that would also address environmental and human rights concerns. Jobs in healthcare will remain strong because of aging baby boomers, even as the overall unemployment rates will reach double digits.
The North American leaders are not necessarily against these types of measures, but it would likely require bigger government and a larger role in channeling the direction of the free market, something some lobbyists would strongly oppose.
Many of the problems that are attributable to NAFTA can also be solved by the partnership, if the right leaders are at the table together.
Let the trade flow like water, even as it bumps over a few rocks here and there. It is the better option – instead of resolving issues like drug cartels, illegal immigration, swine flu, the economic crisis, and climate change through violence.
And no, I am not just saying that because of the guy in the bush outside who is likely intercepting all communications.
By “Failures of NAFTA” you no doubt mean those entities that are hurt by the efficiencies of economics that hurt the less productive.
Sadly, that is what economics is all about. Less efficient users of resources fail, while the enterprising succeed. It’s far more effective in the long run, but more does need to be done to ease the pain of those who have not yet caught up.
In theory, free trade is the most efficient means of using resources, but subsidies and protectionist measures skew the process. This is what needs to be addressed.