Globalization and Deglobalization

NAFTA: A U.S. PERSPECTIVE Robert C. Fisher O,? June 12, 1991, Ambassador Carla A. Hills, the U.S. Trade Representative , met in Toronto with Dr. Jaime Serra Puche, Mexico's Secretary ofCommerce and Industrial Development, and Michael Wilson, Canada's Minister for International Trade and Industry, Science and Technology, to formally launch negotiations for the North American Free Trade Agreement (NAFTA). Their meeting came almost a year after President George Bush and President Carlos Salinas de Gortari of Mexico first endorsed the goal of a comprehensive free trade agreement between the United States and Mexico, and four months after the two presidents and Prime Minister Brian Mulroney of Canada agreed to expand the U.S.Mexico talks into trilateral negotiations aimed at freeing trade and investment flows within North America. Even before the initial presidential endorsement of a bilateral U.S.Mexico Free Trade Agreement (FTA), the NAFTA was on its way to becoming one ofthe most hotly debated trade policy issues in recent memory. For its proponents, the NAFTA's logic is simple: the agreement will set up a continental market of360 milüon consumers and $6 trillion in total output, create jobs, promote growth, and strengthen the ability of North American producers to compete both within North America and in the world markets. It represents the first major step toward hemispheric free trade, as envisioned in the President's Enterprise for the Americas Initiative. Robert C. Fisher is Director, Mexican Affairs, at the Office of the United States Trade Representative. The views expressed in this article are his own and do not necessarily represent those of USTR or the U.S. government. 43 44 SAISREVIEW The NAFTA's opponents in the United States see it as another threat to U.S. jobs, particularly in manufacturing. They fear both an onslaught of low-price imports from Mexico and the wholesale relocation of U.S. firms to take advantage of low Mexican wages or lax environmental standards. Others, both active opponents and those whose judgment is suspended pendingthe negotiation's final outcome, are concerned that the NAFTA will worsen environmental problems in Mexico and the United States or result in unsafe products threatening the health and safety of U.S. consumers. This article examines some of the factors affecting the U.S. decision to pursue the NAFTA, the benefits the NAFTA should present to the United States, the measures that the Administration is taking to limit the potential adjustment costs, and the relationship ofthe NAFTA to overall U.S. trade policy.1 Mexico's Trade and Economic Reforms In the mid-1980s, most trade policy experts would have predicted that a NAFTA or a bilateral U.S.-Mexico FTA would not occur until the 21st century. The United States and Mexico shared strong trade and economic bonds based on proximity, but they shared little in the way of common policies. The United States was a member of the General Agreement on Tariffs and Trade (GATT), and Mexico was not. In 1979 Mexico had taken preliminary steps to join the GATT, but backed away a year later. U.S. trade and economic policy was based on free market and free trade principles. In Mexico the state intervened in almost every aspect of economic decision making, with highly protectionist trade barriers, state ownership of major sectors of the economy, and an overly regulated business environment. The NAFTA was made possible by an economic revolution that took place in Mexico starting in the mid-1980s, under the leadership of President Miguel de la Madrid. Without it, the United States would not have been willing to pursue the NAFTA negotiations. In the aftermath of the debt crisis of the early 1980s, Mexico undertook a series of macroeconomic reforms, in addition to new trade initiatives . The reforms required substantial austerity, including reductions in government expenditures and the public deficit, privatization of many of 1. While the article discusses the NAFTA, much of the focus is on U.S.-Mexican issues, rather than U.S.-Canadian issues. The United States, Mexico and Canada are equal partners in the negotiation and all three are actively engaged in developing the NAFTA The focus of the article reflects...

Within the field of Canadian politics, intense debate over the constitution is a central and abiding concern. Given the failure of the Meech Lake and Charlottetown Accords, it is suitable to reflect on Canada--and especially Quebec--as a political entity in the greater setting of North America. The passage of the North American Free Trade Agreement (NAFTA), which creates economic alternatives for Quebec, (1) makes this an especially appropriate time to examine the prospects for significant (or macro) constitutional change. (2) Neither executive federalism nor popular referenda have succeeded in producing lasting agreement on basic principles of government between Quebec and the Rest of Canada (ROC). After the intense conflict over the Charlottetown referendum, while much of Canada retreated into constitutional hibernation, Quebeckers, possibly buoyed by anticipated passage of the NAFTA, boldly elected fifty-four members of the independantiste Bloc Quebecois (BQ) in the federal election of 1993, and a separatist Parti Quebecois (PQ) government in the provincial election of the following year. Given the passage of the NAFTA and the political uncertainty that still exists in post-referendum Quebec and Canada, constitutional issues promise to attain even greater centrality. Thus, the time is right for appraisal of constitutional problems and prospects within a new theoretical frame of reference. After all, one of the few apparent points of agreement about previous rounds of bargaining is that time pressure and lack of foresight are enemies of constructive change. (3) This research note introduces to the study of Canadian politics a new technique for predicting the outcome of bargaining over key issues. Although the paper's aim is modest--to describe the technique--it also outlines a more substantial research project that is currently underway and should provide insights into the outcomes of two fundamental issues facing Quebec-Canada relations in the aftermath of the 1995 referendum on sovereignty in Quebec. More specifically, the project seeks to predict the outcome of Quebec-Canada constitutional bargaining and the outcome of bargaining over a sovereign Quebec's attempt to join the NAFTA. The investigation unfolds in three stages. The first presents the Decisions Insights expected utility forecasting model. The second describes the current political and economic setting of the ROC and Quebec, and offers some predictions based upon the model as a means of presenting the outlines of a promising research program. The third and final stage encourages extension of the research project on both intellectual and practical grounds. Toward an Expected Utility Model Constitutional bargaining and negotiations among governments and interest groups can be studied in any number of ways. Conventional approaches combine (in varying degrees) empirical theory from political science and historical analysis. The result is a set of informative case studies that collectively trace the evolution of bargaining over distribution of power between the federal and provincial governments, most notably Quebec. (4) Models based on rational choice, or the application of microeconomic theory to the study of politics, are well suited to the analysis of the kind of bargaining that can be expected between Quebec, the ROC, and a range of others. These models begin with the assumption of self-interest and focus directly on how and why policies are made. The specific characteristics that link economic thought to political processes may be summarized as follows: first, methodological individualism as a point of departure; second, the assumption that individuals strive after their own interests in a rational way and try to maximize utility--this assumption may be called the fundamental behavioral hypothesis; and, third, use of methods and techniques of economic analysis. Thus, rational choice is a theoretical perspective with well-developed methods that can be applied to the integration of horizontal and vertical elite bargaining. …

IN RECENT YEARS, THE CANADIAN GOVERNMENT has emerged as a leading proponent of western hemispheric trade liberalization and transatlantic free trade. Its efforts to transform the North American Free Trade Agreement (NAFTA) into a Free Trade Area of the Americas (FTAA) and to promote free trade between NAFTA and the European Union (EU), however, have not been successful. Ottawa's ability to lead regional and inter- regional initiatives is constrained because Canada lacks the political and economic weight of the major powers, whose support is critical to bring such projects to completion. Ottawa should continue to promote free trade, but it should focus its efforts on broadening and strengthening its own relations within the hemisphere and with Europe.THE WESTERN HEMISPHEREWhen Brian Mulroney's Progressive Conservative government announced in 1989 that Canada would join the Organization of American States, Canada's role in the region was enhanced. But it was Ottawa's decision the following year to join Mexico and the United States in negotiating NAFTA that gave economic substance to Canadian policy.The NAFTA negotiation was the result of Mexico's decision to seek free trade with the United States. The administration of George Bush incorporated the Mexican initiative into its Enterprise for the Americas Initiative, the focus of which was to reinforce economic growth and political reform in Latin America through trade, debt relief, and investment. The key element of the programme was the willingness of the United States to begin to create a hemispheric free trade area 'stretching from the port of Anchorage to the Tierra del Fuego.'(f.1) Although the Canada-United States Free Trade Agreement negotiated three years earlier would become a model for NAFTA, Ottawa was not eager to join the talks. Canada's trade and investment ties with Mexico were limited and the government was not anxious to reopen the divisive domestic debate that had accompanied free trade with the United States. It decided to participate in order to avoid a 'hub and spoke' arrangement that would leave the United States as the only country with privileged access to the others' markets. After the negotiations began, Ottawa's main objective was to protect and improve upon the gains it had achieved in the Canada-United States pact.By the time the bruising United States debate over ratification of NAFTA, which pitted labour and environmental groups against free trade supporters, ended in 1993 American enthusiasm for hemispheric free trade had faded. Deepening divisions in Congress over the place of labour and environmental standards in trade pacts prevented President Bill Clinton's administration from securing renewal of 'fast track' authority to negotiate future agreements that would not be subject to legislative amendment. The result was that the United States was no longer able to play its crucial leadership role in trade matters.(f.2)As the United States commitment to hemispheric free trade weakened, Canada's commitment increased. Jean Chretien's Liberal government, which had been highly critical of NAFTA while in opposition, reversed itself when it came to power and became a leading supporter of the agreement's expansion as a stepping stone to free trade in the hemisphere. A hemispheric accord would allow Ottawa to diversify its trade and to broaden the basis of its interaction with the United States while extending support for the multilateral trade system.The Canadian government, which had been encouraging the Clinton administration to continue its trade liberalization course, was therefore pleased when, at the December 1994 Summit of the Americas, thirty-four countries endorsed the president's proposal to negotiate a Free Trade Area of the Americas by 2005. In the meantime, Canada, the United States, and Mexico would explore ways to bring other countries into NAFTA. Chretien, Clinton, and the Mexican president, Ernesto Zedillo, announced that negotiations would begin the following month to bring Chile, which was seen as a key link between North and South America, into the agreement by 1 January 1996. …

On January 1, 1994, the North American Free Trade Agreement (NAFTA) united the economies of Canada, the United States, and Mexico, creating what has become a $19 trillion regional market with around 470 million consumers by today's standards. The distinction of NAFTA from other international pacts and trade agreements centers on its uniqueness as the first comprehensive free trade agreement, joining the economies of two developed nations to a developing one, ultimately achieving broader and deeper market inroads than any other international trade agreement before. Over the past two decades, however, NAFTA has been equally lauded and criticized. This research performs a qualitative analysis of objective formal reports and publications, as well as informal writings, to produce a work that reviews the strengths and weaknesses of NAFTA at 20 with a strong emphasis on the geographical implications of the free trade agreement, such as NAFTA's impact on the U.S. border regions with Mexico and Canada. The article concludes with an analysis of the future of NAFTA in light of new trade negotiations with the Trans-Pacific Partnership, as well as the Transatlantic Trade and Investment Partnership.

Today, the world has indeed become more sharply demarcated in regional terms. The tendency for regionalism is evident both in developed as well as developing countries. The three distinct dimensions of regional space for the tendency to regionalism are: area (commonly known as territory); contiguity (parts are proximate to other or remote); and size (the extent of its scope). After the end of the Cold War phase in international politics, some very important developments took place, that is, ‘regionalism’. Regionalism has become an inescapable international political reality and an acceptable alternative to understand unilateral action and undependable United Nations (UN) intervention. Europe was merely a starting point for a further set of comparable experiments in integration. And, on the heels of European experience, there duly came attempts to create common markets and free trade associations in the Middle East, Africa, the Pacific and the Americas: the world was indeed filled in the 1960s with proposals for North American Free Trade Agreement (NAFTA), Pacific Free Trade Area (PAFTA), Latin American Free Trade Association (LAFTA) and even more. The NAFTA is the single example of a free trade area representing a group of two developed and one developing country. The NAFTA involves the creation of the world’s largest free trade agreement (FTA), with combined gross national product (GNP) of $6.3 trillion and a population of 363 million. The NAFTA, unlike other trade agreements, is not concerned exclusively with trade but also deals with environmental and labour standards. It is the first case of a developing country’s accession to this type of agreement with developed states on a fully reciprocal basis.

This study provides a quantitative evaluation of how the termination of the North American Free Trade Agreement (NAFTA) proposed by the Trump administration will affect the US textile and apparel (T&A) industry. By adopting the Global Trade Analysis Project (GTAP) computable general equilibrium model based on the GTAP9 database, the study finds that: first, the termination of NAFTA will significantly reduce US apparel imports from NAFTA members but lead to an increase of US apparel imports from Asian countries; second, ending NAFTA will substantially reduce US textile exports to the NAFTA region, which currently is the single largest export market for the US textile industry; and third, rather than encouraging more ‘Made in the USA’, the termination of NAFTA will reduce further the output of T&A manufacturing in the United States. The findings of this study augment our understanding of the potential economic impact of ending a major free trade agreement, which has been studied little, and shed new lights on the debate regarding the T&A-specific sectoral impact of NAFTA. The findings of the study also provide valuable inputs for policymakers regarding what should or should not be done with NAFTA from the perspective of the US T&A industry. JEL Classification: F14, F15, F17

One of the main tools for the operation of the Free Trade Agreements (FTAs) are the Rules of Origin that allow exporters to be able to take advantage to the preferential tariffs. In the case of a Mexico, such rules were inserted in our legislation firstly, as a result of the North America Free Trade Agreement (NAFTA) and from there after by other trade agreements, and secondly as a tool for exempting the application of dumping duties, principally those applied to China. Mexico has undergo through a process of signing new FTA s as the Comprehensive and Progressive Trans-Pacific Partnership Treaty, as well as the modernization of NAFTA that resulted in the United States, Mexico and Canada Agreement (USMCA) and the FTA with the European Unión. The former has provided for a new rule of Origin in the automotive industry that were the core of the negotiations which turned free trade into a trade administration Trade Agreement. In this article I analyse briefly the rules of origin in such agreements. USMCA, NAFTA, Automotive, CPTPP, Chemicals; Focused Value Method, FTA EU

The chapter analyzes the provisions of Chapter 21 of the United States–Mexico–Canada Agreement (USMCA) regarding competition policy and of Chapter 22 on state-owned enterprises and designated monopolies, while comparing them with Chapter 15 of the North American Free Trade Agreement (NAFTA) dealing with competition policy, monopolies and state enterprises. It first looks at NAFTA (section 1) and then discusses the innovations under the USMCA (section 2). After highlighting key aspects of NAFTA and the USMCA, it concludes on the importance of competition chapters in trade agreements, their strategic dimension and their limits in relation to regional and global competition regulation (section 3). The USMCA builds on NAFTA and many institutional and normative innovations within other trade agreements, the Organization for Economic Cooperation and Development, the International Competition Network and other governance sites. If NAFTA’s effect on competition law and enforcement in North America was limited, the USMCA’s impact will depend on the three partners to intensify their cooperation.

The North American Free Trade Agreement (NAFTA) signed by Canada, the U.S.A. and Mexico and which came into effect on 1 January 1994, is a significant move towards further integration of the North American economies. This paper examines the likely impact of NAFTA on Canadian ports. Three channels of impact are identified. First, there are direct impacts on trade flows between Canada and its North American trading partners. In this regard we find that ports do not typically handle the types of products that are likely to be affected by NAFTA, and so the direct impacts may be minimal. Second, and more significantly, port catchment areas are likely to undergo substantial changes as they respond to a more competitive environment within the free trade area. Third, the transportation sector has itself been included in NAFTA, and Canadian ports will face increased competition from land based transportation modes. We conclude that ports in Canada must learn to work more consciously as agents of regional economic ...

OVERVIEW In the wake of the global economic turmoil of 1997–98, the Clinton administration aggressively pursued the use of international financial institutions as a means of stabilizing the turmoil and preventing its recurrence. By contrast, the Bush administration initially downplayed the use of international financial institutions as a means of effectively addressing global economic crises. Both administrations, however, maintained a firm commitment to the development of international trade law and its enforcement. With respect to bilateral trade, the United States sought to tear down foreign trade barriers through a combination of negotiating new bilateral trade agreements and the imposition of economic sanctions, and began the first steps of lifting certain longstanding sanctions against Cuba and Iran. At the same time, the United States pressed forward with the development of its bilateral investment treaty (BIT) program, signing—and in many instances ratifying—BITs with several countries during 1999–2001. With respect to regional trade, the North American Free Trade Agreement (NAFTA) remained a powerful source of rules governing trade and investment among the three NAFTA states. During 1999–2001, NAFTA survived constitutional challenges in U.S. courts and spawned various decisions clarifying NAFTA rules and standards, particularly as they related to investor–state disputes. In light of NAFTA's success, the United States promoted the idea of a “free trade area of the Americas” in the hope that an agreement could be reached by 2005.

This paper traces the evolution of natural gas trade among Canada, Mexico, and the United States in the 1967-1992 period. In addition, the provisions of the North American Free Trade Agreement (NAFTA) that relate to natural gas trade are examined in the light of the corresponding aspects of the Canada-United States Free Trade Agreement (FTA). One of the main conclusions to emerge is that exports from Canada to the United States would likely continue to dominate North American natural gas trade patterns under the NAFTA. Past experience suggests that regulatory policies play a crucial role in determining trade patterns. In the case of Canada and the United States, the policies of deregulation implemented by the two countries prior to 1989 have proven to be much more important than has the FTA in encouraging cross-border trade in natural gas. Since the NAFTA allows Mexico to maintain a highly interventionist approach to energy policy, an internally-driven process of policy change will be required to liberalize natural gas trade between Mexico and the other parties to the Agreement. A few specific developments relating to natural gas trade among the NAFTA parties are also examined in the light of the Agreement.

Although most analysis of the North American Free Trade Agreement (NAFTA) has focused on the bilateral relationship between Mexico and the United States this article concentrates on the larger trading and investment linkages of Canada and the United States. From a Canadian perspective the NAFTA is an extension of (and improvement upon) the Canada–U.S. Free Trade Agreement (FTA) of 1989. The FTA introduced new dispute settlement mechanisms that Canada views as essential to partially offset U.S. administered protection. The new rules‐based system of the FTA is also the basis for the NAFTA, and it has been extended from the trade law regime to cover foreign investment disputes. All three parties in NAFTA will benefit from a rules‐based system rather than the power‐based system that permits U.S. producer interests to exploit the size asymmetries between the large triad market of the United States and the smaller open trading economies of Mexico and Canada. © 1995 John Wiley & Sons, Inc.

The Moment of Truth has come for the North American Free Trade Agreement (NAFTA). The US Congress will have to stop talking and vote to accept or reject the agreement negotiated among Canada, Mexico, and the United States. The disagreement on NAFTA in the United States is about free trade with Mexico, not with Canada. A US-Canada free trade agreement (FTA) already exists.This controversy over NAFTA has been fierce in the United States, much more so than in Mexico. This comparison speaks volumes about changing attitudes. It was almost unthinkable a decade ago that Mexico would so drastically alter its traditional position of maintaining economic and political distance from the United States. This change would not have been possible but for la decena trágica, the years of the 1980s. Beyond that, Mexico has more at stake in a free trade agreement. It has the smaller economy (about 1/27th that of the United States) so that changes, for better or worse, are magnified.

The lack of a political or legal filter for investor claims makes it necessary for host States to look at new means to dismiss frivolous or illegitimate claims. No solution to this problem is readily offered by the law of treaties or the law of State responsibility. Nevertheless, public international law does frame the discussion on the limitation of host State responsibility. Attempts have been made to use the provisions on the field of application of North American Free Trade Agreement (NAFTA) to achieve this objective. First attempt was made to consider NAFTA chapters on investment and other issues as mutually exclusive. A second attempt, by using the concept of 'measures relating to foreign investors or their investments' in NAFTA Article 1110, has been more successful. The chapter examines these overlooked attempts to use provisions on the scope of treaties in the quest for legitimate claims in international investment law. Keywords:Host State; international investment law; North American Free Trade Agreement (NAFTA)

Prior to Mexico's entry to the North American Free Trade Agreement (NAFTA), predictions of the consequent impact on the environment in that country ranged from the dire to very optimistic. This article investigates NAFTA's outcomes in terms of energy use and the emission of atmospheric pollutants. Specifically, has entry into NAFTA led to a convergence or divergence in indicators of emissions, environmental efficiency, and emissions‐specific technology in Mexico, the United States, and Canada? A battery of tests is applied to these indicators for energy use and carbon, sulfur, and NOx emissions in the three countries. The results show that the extreme predictions of the outcomes of NAFTA have not materialized. Rather, trends that were already present before the introduction of NAFTA continue and, in some cases, improve post‐NAFTA, but not yet in a dramatic way. There is strong evidence of convergence across the three countries toward a lower intensity of energy use and emissions per unit of GDP. Although intensity is rising initially for some variables in Mexico, it eventually begins to fall post‐NAFTA. Per capita emissions of sulfur and NOx also show convergence, but this is not the case for energy and carbon, and the latter variables also drift moderately upwards. The state of technology in energy efficiency and sulfur abatement is improving in all countries, although there is little, if any, sign of convergence and NAFTA has no effect on the rate of technology diffusion. However, total energy use and carbon emissions increase both pre‐ and post‐NAFTA and total NOx emissions increase in Mexico. Only total sulfur emissions are stable and falling in all three NAFTA partners.