MEXICO CITY — Senator Hillary Rodham Clinton promises to start renegotiating Nafta in her first 100 days if elected president. Senator Barack Obama would use the threat of opting out as a hammer to demand strong labor and environmental standards in Mexico. þþThe two Democratic candidates have heaped blame on the 14-year-old North American Free Trade Agreement for the plight of unemployed workers in declining Rust Belt towns where jobs have been lost to global competition. But what they are truly talking about when they criticize the agreement, which lifted trade and investment barriers among Canada, the United States and Mexico, is trade with Mexico. þþThe pledge to renegotiate parts of Nafta is much more complex than either candidate has publicly acknowledged. One question is how tighter labor and environmental standards would be enforced. Another is whether they would restore lost manufacturing jobs.þþThe attacks on Nafta, first in the Ohio primary and more recently before Tuesday’s vote in Pennsylvania, have surprised some experts and analysts. There is little doubt that the rise of Asia, particularly China, has accelerated job losses in the United States faster than Nafta did. þþStill, the argument carries a strong punch — particularly when famed American brands pack up and move to Mexico. One recent example is the Hershey Company, the chocolate maker. This month, the president of the Teamsters union, James P. Hoffa, traveled to Reading, Pa., to visit what the union called “Nafta victims,” 260 workers in a Hershey plant that is moving to Mexico by the end of the year. þþ“These so-called trade deals are killing American jobs,” Mr. Hoffa said. “They aren’t about trade, they’re about helping companies move their factories to countries with cheaper labor.” þþIn theory, stronger labor and environmental standards would raise the cost of doing business in Mexico and might make companies think twice about moving. But with the average hourly manufacturing wage in Mexico about 13 percent that of the United States average, according to the Bureau of Labor Statistics, Mexican labor is still cheap. þþThen there is the problem of enforcement. Under Nafta’s labor and environmental side agreements, there are no effective sanctions against companies that break the law or governments that do not enforce it. þþSome advocates argue that at the very least, those agreements should be subject to the same kind of arbitration and sanctions that disputes over trade or investment barriers now face. But even those might not have much effect. Nafta trade disputes drag on for years and rulings are not always enforced. þþAnother option might be fines for companies in violation, or even bans on their imports. But that could backfire. Under Nafta, industries like the auto industry have become highly integrated. Parts move back and forth across the border as subassemblies are put together and finally end up in auto plants in the United States. Halting that process, perhaps for a labor violation, would result in trouble for the American plant and its workers. þþ“Nafta is not going to go away,” said Jeff Faux, a fellow at the Economic Policy Institute, who opposed the agreement when it was being negotiated in the early 1990s. “You can’t put the toothpaste back in the tube.” þþMexico’s conservative government has rejected renegotiating Nafta. But if the agreement were opened up, Mexico would present its own demands, perhaps on easing legal migration or protecting corn farmers.þþ“If we are going to have a serious negotiation, it’s not going to be one-sided,” said Luis de la Calle, a former Nafta negotiator for Mexico who is now a political consultant. “Let’s put labor and the environment back in Nafta, but in exchange for what?”þþPresident Felipe Calderón of Mexico, meeting with President Bush and the Canadian prime minister, Stephen Harper, in New Orleans, strongly defended Nafta in remarks made on Monday. þþAmerican analysts question whether a new president would want to spend political capital on reopening Nafta in light of other, more pressing issues like health care and the war in Iraq. þþThe Democratic candidates are replaying the arguments made against Nafta in the early 1990s, when opponents like the Texas billionaire Ross Perot argued that it would create a “giant sucking sound” of jobs moving to Mexico.þþBut much has changed since then. (For a start, Perot Systems, which he helped found, has set up its own Mexico subsidiary.) þþIn the first years of Nafta, jobs did leave the United States for Mexico, although a fast-growing economy blunted the fallout. But in this decade, American jobs lost to China have dwarfed those going to Mexico. And Mexico’s own factories are leaving for countries with even lower wages, especially China, said Enrique Dussel Peters, an economist who heads the Center of China-Mexico Studies at the National Autonomous University of Mexico.þþManufacturing employment fell 10 percent from 2000 to 2007, according to Mexican government statistics, he said. The debate in the United States makes “it seem that the villain is Mexico that is taking the jobs,” Dr. Dussel said. “I wish that were the case.” þþAt the same time, China and other Asian countries are eroding the promised surge in American exports to Mexico. Ten years ago, Mexico bought almost 80 percent of its imports from the United States. Last year, that figure dropped to just less than 50 percent. “There’s a fourth uninvited guest at the Nafta party,” Dr. Dussel said, alluding to China. þþAnd the focus on the environment and labor rights ignores changes inside Mexico. A strong environmental movement has developed, putting multinational manufacturers on their guard and pushing the government to inspect industrial polluters. þþIndeed, American baby boomers, rather than American factories, are unwittingly at the center of Mexico’s fiercest environmental debate. Local activists have been fighting the rapid development of Mexico’s coastline — much of it driven by demand for retirement homes and time shares for retiring Americans. þþIn labor, the picture has changed less. Mexican plants that produce exports still mostly recognize compliant sham unions. But even if a reworked Nafta could strengthen labor rights, multinational corporations in Mexico now hold the same trump card they hold in the United States: the threat to move to a cheaper country. þþAnalysts on all sides contend that if anything concrete is to come out of the Nafta-bashing, it should be a broader approach to the United States’ relationship with Mexico and Canada.þþ“They have put so much attention on Nafta that the next president will have to do something,” said Jeffrey J. Schott, a senior fellow at the Peterson Institute for International Economics in Washington. He argues that energy, security and climate change are the crucial concerns for the next president in dealing with Mexico and Canada and that “second-order issues of labor and the environment” would follow. þþRobert A. Pastor, director of the Center for North American Studies at American University, proposes a fund to help Mexico build infrastructure to develop its poorer central and southern states. “If Mexico grows fast, our exports grow faster,” he said. Under his plan, all three Nafta nations would contribute to the fund. þþMr. Faux at the Economic Policy Institute agrees, although he would be more explicit about negotiating improved labor rights across the region.þþ“The real question is, What kind of North American economy are we talking about?” Mr. Faux said. “Now that we have this continental economy, how can we start managing it in a way that works for everybody?” þþ
Source: NY Times
