Whatever the fears, NAFTA's here to stay

PSP - Partenariat pour la Sécurité et la Prospérité

Groups within each country gripe about the North American free-trade agreement, but Canada, Mexico and the United States are not going to tear up the treaty.
But would they "renegotiate" it? A lot of loose talk, driven by Democratic Party primaries, is spilling from Barack Obama and Hillary Clinton. Both insist that, as president, they would "renegotiate" NAFTA.
What would that mean? A clause within NAFTA allows any partner to withdraw after giving notice. That's not what the Democratic candidates are saying, either directly or indirectly. They don't propose withdrawing, nor do they threaten the U.S. would depart if the "renegotiation" failed.
The candidates don't tell Democratic voters that a "renegotiation" has to be agreed to by all parties to the deal. If those parties did agree to "renegotiate," presumably they, too, could bring up items that displease them about NAFTA, including certain provisions the Americans like or have largely ignored.
None of these realities and subtleties, of course, figure in the Democratic discourse, within which bashing NAFTA is only part of a wider pitch for more protectionism, or "fair trade," as defined by Americans. The U.S. has had a chronic trade deficit for years, and has had to borrow money to cover. It has been importing far more than it has been exporting for a long time, but the trade deficits with Mexico and Canada are not the major cause of the U.S. problem.
True, Mexico has much lower wages than the U.S. or Canada, and so particular kinds of jobs sometimes relocate there. This causes understandable anguish in the areas that lose jobs, but hidden politically are the jobs created by selling into the Mexican market.
When Bill Clinton was campaigning for president, he insisted that certain revisions were needed in the NAFTA treaty that had not yet been approved by Congress. He suggested including environmental and labour standards as part of the deal. The political cover he needed was provided by side deals that created largely ineffective offices monitoring these developments in Montreal and Dallas. He got NAFTA ratified largely with Republican votes; a majority of Democrats voted against their president.
Now Ms. Clinton and Mr. Obama want NAFTA "renegotiated" to put these side agreements into the treaty. It looked for a while as if their declarations were mostly politics. Back-channel messages to the Canadian government suggested as much.
But the more a candidate promises something, no matter how foolish, the more that groups that agree with the promise will try to hold the candidate to it if elected. So we might have a problem foisted on North America by the Democratic candidates, who have misdiagnosed their country's trade problem as somebody's else's fault.
Great fears and expectations attended the creation of NAFTA, especially in the U.S. and Mexico. For Canada, NAFTA was a defensive strategy to avoid the Americans having two bilateral deals. The Mexican market was never that important for Canada. Bilateral trade has progressed but not spectacularly since NAFTA.
With protectionism rising in the U.S., along with worries about illegal immigration and loss of control of the Mexican border, further North American integration is on hold.
Today, the three NAFTA leaders will conclude their two-day meeting in New Orleans. There will be the obligatory fine words, but little of substance. The same ritual occurred last year in Montebello. George W. Bush is a lame duck. He could do various administrative things that the Canadian and U.S. business communities want to remove border irritants, but there's little political will to act.
The lack of will was predicted some years ago in Canada by those who never liked NAFTA. They rightly predicted that Mexico was at such a less developed economic level and had so many contentious bilateral issues with the U.S. that NAFTA would become prisoner to the problems of Mexican-U.S. relations. Canada, they said, had its deal with the U.S.; the Mexican market wasn't that important.
The skeptics had a point, but NAFTA is here to stay. It's the bubble within which resides the original Canada-U.S. free-trade agreement. No political party in Canada 20 years after the tumultuous free-trade election proposes jeopardizing that by tearing up NAFTA.

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