Thursday, March 06, 2008

Review NAFTA? Do We Hafta?

The three NAFTA partners, the United States, Canada, and Mexico, have now lived under the North American Free Trade Agreement for 15 years. It would seem to be a good time to review our experience under it, and possibly make some changes.

What is so shocking about that? The Wall Street Journal’s editorial board makes it seem as though the North American sky is falling

What is frightening to some is that more than NAFTA is at stake. A review of NAFTA would almost certainly open up a review of the entire U.S. trade policy, and that would upset vested interests that need upsetting.

NAFTA is the U.S. government-devised model for dozens of trade and investment agreements in the past 15 years and also for agreements the Bush administration is still pursuing. That model, vigorously defended by the trade elite who wrote it, has many flaws. The most fundamental among them can be boiled down to this indictment: it creates and enforces a large set of cross-border rights and privileges for multinational corporations and investors without any corresponding duties.

You will seldom hear a criticism of NAFTA put that way. Instead, critics usually fault it for a lack of enforceable labor and environmental standards. The solution offered is to tack on those standards. But that won’t suffice, because NAFTA as a whole is unbalanced, so much so that it should be called the North American property rights and investment rights agreement.

Calling it a free trade agreement is a misnomer, because it actually restricts free trade in crucial areas. It favors intellectual property owners over intellectual property users, pharmaceutical companies over pharmaceutical users, Wall Street over Main Street, foreign investors over everyone else. Its tilt, spread ovcr most of the continent, skews income and increases the power of the superpowerful.

In a 1993 syndicated column, Henry Kissinger, a vigorous advocate of NAFTA, hailed it as “not a conventional trade agreement, but the architecture of a new international system…a first step toward the New World Order.” Though no longer expressed in such lofty terms, that vision seems to survive among NAFTA defenders who deem it sacrosanct and so beyond review.

For a dose of reality, read a book written by a noted economist who was a party to NAFTA’s adoption 15 years ago: “Fair Trade for All,” by Joseph E. Stiglitz. It makes a strong case for why all current trade and development policy, including NAFTA, urgently needs a review.

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