Dan Shoom, Kingston IS Five Part Series on NAFTA

Part 1
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The passage of the North American Free Trade Agreement (NAFTA) by
the US House of Representatives on November 17 showed how little
NAFTA has to do with actually freeing trade.

Christmas came early in Washington this year. Representatives
cashed in as President Bill Clinton effectively bought votes by
promising protectionist perks. American cucumbers, tomatoes, peanut
butter and frozen orange juice got protection against Canadian and
Mexican competition. Members were promised bridges and factories in
their districts if they would vote for NAFTA. Clinton won over 12
of Florida's 23 representatives in the final week before the vote
by signing a side agreement with Mexico protecting Florida's citrus
fruit, fresh vegetables, and sugar from cheaper Mexican
competition. After the vote the Doonesbury comic strip showed
legislators swarming the White House to collect on promises such as
a trip to Paris and a new TV.

In addition to vote-buying, the US' legislation implementing NAFTA
conceded to protectionism. The legislation specifically states that
the United States retains the right to use all its unilateral trade
laws, including its notorious 301 law, which lets the US take
retaliatory action outside NAFTA against any practice of another
country it deems to be "unfair, unreasonable or discriminatory."
(Maude Barlow & Tony Clarke, Globe& Mail Nov 25, 1993)

The US implementing legislation continues a practice of the
Canada-U.S. Free Trade Agreement (FTA). The FTA only erased customs
duties between Canada and the US. It left national trade laws in
place. NAFTA will do the same. The panels set up under the FTA to
resolve disputes come into play only after US agencies rule against
Canadian exports or vice versa. While the panel's view will usually
prevail in the end the process can last years. (A dispute over
softwood limber has been going on since 1982.)

Many recent trade disputes have involved accusations of dumping.
Dumping is a convoluted way of saying that someone else is selling
their steel, or pork, at an 'unfairly' low price. If Canadian steel
companies, for instance, think that American steel companies are
selling their steel in Canada for less than it costs to produce,
the Canadian government can slap a duty on it to raise its price.

Actually, dumping is a way of selling excess stock, or winning
market share. It is basically the same as when, say, the US gives
grain for free to, say, Somalia in the early 1980s, even though
Somalis grow sufficient food for their own needs. The US grain
undercuts the price of the Somali grain, putting local farmers out
of business, empowering the bandits who control the docks where the
grain is imported, and ultimately creating, not only a market for
American grain, but the conditions for a famine.

Dumping, rather than being a violation of fair trade is an integral
part of free trade.

NAFTA also includes blatantly protectionist measures. These are
called rules-of-origin. They specify that a certain proportion of
something has to be produced in North America. For cars and light
trucks 62.5% of their parts must be North American made. Textiles
and apparel must be made from North American yarn.

These rules for autos and textiles are stricter than existed under
the FTA. Goods than don't meet these rules-of-origin criteria will
be charged duties when crossing borders between Canada the US and
Mexico. Rules-of-origin will mean that yarn from India or cars from
Japan will be at at disadvantage. They show that what is being
created is not free trade but a protectionist trade bloc.

NAFTA also includes something called 'intellectual property
rights'. These were behind the Tories' drug patent legislation.
This legislation allows pharmaceutical companies to maintain
patents on drugs for 20 years, and is expected to lead to much
higher costs for, sometimes life-saving, medication.

Another piece of Tory legislation of intellectual property rights
was the plant breeders rights bill of the late '80s. The PBR allows
multinational corporations to patent seeds leading to greater
corporate control of the world's food supply, and forcing farmers
to buy expensive seeds and fertilizers.

Intellectual property rights have nothing to do with freeing trade.
Rather they increase the control that big business has over the
basic necessities of life.

Finally, in addition to NAFTA, the Clinton administration has one
other major trade policy. This is 'managed-trade' with Japan.

Japan has a huge trade surplus with the US. This year Japan will
sell well over $100 billion more to the US that the US sells to
Japan. This surplus is blamed on Japanese protectionism. However it
is has little to do with trade policies. Japanese goods, like cars
& audio equipment sell well in the US, while American goods are
less popular in Japan. Moreover, the current deep recession in
Japan has meant that the Japanese are buying fewer imported goods.

The solution being pushed by the US is for Japan to set goals for
how much of certain goods they'll buy from the U.S. This 'managed
trade' has nothing to do with freeing trade. Rather it is part of
an attempt to blame problems with the U.S. economy on the Japanese.

Clearly NAFTA is not part of some inexorable march toward global
free trade. However, to the extent that NAFTA is about liberalized
trade and investment among Canada, the U.S. and Mexico it is mainly
a recognition of past integration. Nevertheless, NAFTA, as with the
FTA, will make it easier in the future for businesses to move so as
to avoid a unionized workforce, environmental or safety
regulations, and so on. Possibly more significant is that with
NAFTA the threat of relocation of a factory or office will be used
as a stick to club workers into accepting concessions and cutbacks.
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