NAFTA in Transition: The United States and Mexico

Canadun Review of American Sn1dies/Revueca11ad1enne d'etu&s amh1cames Volume 2.7,Number 3, 1997, pp. 1-18 NAFTA in Transition: The United States and Mexico Stephen.f. Randall Smee the idea of a North American Free Trade Agreement (NAFTA) first entered the broader public consciousness in the early 1990s, there has been a remarkable reorientation within business, academic, and political circles in an effort to consider and better understand the nature of the North American relationship. The 1988 free trade agreement between Ca1rnda and the United States evoked intense debate and soul searching within Canada and comparatively little interest among Americans; but that situation changed as the horizons broadened to include Mexico and likely extension into other countries of Latin America, beginning with Chile. By the early 1990s, Americans , along with Mcxic,ms and Canadians, had fully entered into the dialogue . Remarkably, although perhaps not surprisingly, the nature of the issues raised, anxieties expressed, and ambitions to be realized through a closer trilateral relationship articulated within one country have resonated in the others. Although the alliances of foes and advocates have varied in the three countries, there have also been remarkable similarities. Canadi,rns and MexiL·,ms have tended to be more directly engagcJ in .1 debate over models 2 Cmad1an Review of American Sn1dies Revue n11111d1en11e d'etudes amh1cai11es of development and strategies of dealing with their common neighbour than have Americans. Yet, as U.S. economist Paul Krugman ([1993] 1995) has argued, the debate in the United States over NAFTA has taken on the kind of tone and significance that characterized some truly historical debates in the American past: the Populist critique of urban industrialism and the gold standard, that cross of gold that William Jennings Bryan claimed was being pressed down on the brow of labour in the 1896 campaign; rural, small town, and agricultural America against the eastern urban industrial establishment. Some of those arguments OL~Casionally rang out during the New Deal ,md Great Depression as well, as for instance, when Franklin D. Roosevelt spoke of economic royalists. Such arguments were premised on assumptions of regional, class, and broad occupational differences, and they-i.e. the arguments-took on a tone that stressed that such differences were a fundamental conflict over b,ls1cAmerican values. I sense some of the same quality in the U.S., Mexican, and Canadian dimensions of the NAFTA dialogue. As Krugman suggests, modern populism wants to defend industrial America against the forces that are transforming us into a service economy" (156). This paper deals with U.S. policies and politics and the U. S.-Mex1can relationship, rather than with Canadian issues. The objectives are modest ones: to outline briefly the evolution of the Mexican-U. S. economic rel.1tionship and the nature of U.S. ,md Mexican policies; to trace the arguments advanced for and against NAFTA and to examine the extent to which either the ambitions or fears have been realized. The agreement must, after all, be measured in terms of the arguments advanced by both its proponents and critics. There is one major caveat, however; our capacity to make direct causal links between NAFTA and many of the economic, environmental, labour, and politiL~alissues that warn.mt discussion is extremely limited. For one thing, it is simply too early-only two years-into ,l sweeping agreement of this nature to evaluate the actual impact on trade and investment of the agreement itself. In addition, the normal difficulties of evaluating a trade and investment liberalization agreement have in the Mexican case been significantly exaL~erbatedby the economic crisis at the end of the Salinas presidency involving a major devaluation of the peso and the subsequent, serious Stephm f. Rmuu1llI 3 economic dislocations. Hence my observations are to be considered no more than suggestive. U.S. Policies Toward Mexico Historically, U.S. policy toward Mexico has been shaped by a variety of geopolitical, strategic, cultural, and economiL~considerations. These have included ongoing concern about the pressures of Mexican migration to the United States; secure access to strategic raw materials in Mexico, particularly petroleum; environmental degradation along the Mexican-US. border; narcotics traffic; a desire for political stability in Mexico; and a...