The season of Nafta assessments is upon us, now that the North American partnership is about to celebrate its 10th anniversary, and the conclusions will be studied carefully by those embarking upon the decisive final phase of the FTAA talks.
A study by the Washington-based Carnegie Endowment for International Peace (CEIP) has come up with a largely negative (the authors prefer `muddled') balance sheet, underlining that Nafta had failed to create enough jobs in Mexico (and hence to curb illegal immigration into the US), had harmed Mexico's small farmers, and had had only small effects on employment in the US. It notes that `unprecedented growth in trade, increasing productivity and a surge in both portfolio and foreign direct investment have led to an increase of 500,000 jobs in manufacturing from 1994 to 2002' — but that this has been offset by the loss of 1.3m jobs in farming.
The one thing nobody is denying is that Nafta boosted US-Mexican trade beyond all expectations. Much of the increase on the Mexican side, however, came from the maquiladora (assembly) plants strung out next to the US border, and these have proven highly susceptible to downturns in the US economy. In 2001, just before recession struck, 1.3m jobs had been created in the maquiladoras; in the subsequent downturn, more than 400,000 of them disappeared. CEIP's Sandra Polaski, who headed the economic research unit at Nafta's labour secretariat in the late 1990s, says that `a magnifying glass' is needed to detect job increases.
The CEIP study clashes with another conducted last year by the World Bank, which concludes that Nafta has brought `significant economic and social benefits to the Mexican economy' — particularly in helping it overcome the Tequila crisis of 1994-95. The main drift of the World Bank study is that Mexico would have been worse off without Nafta. The CEIP study does not quite contradict this, but comes close. Polaski prefers to say, `Mexico would have been better off with a better Nafta.'
Lessons for FTA negotiators
The CEIP study draws some lessons from Mexico's experience for the other countries about to strike free-trade agreements with the US. They are told to seek:
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