Is There a NAFTA Plus?

Abstract

INTRODUCTIONWhen some newspapers, on 6 February 1991, printed a small story on the possibility of a major trade agreement between Mexico, Canada and the United States, very few people took the news seriously. On 1 January 2004, the North American Free Trade Agreement (NAFTA)--l'Accord de libre-echange nord-americain (ALENA) or Tratado de Libre Comercio de America del Norte (TLCAN), as it is known in the North American region and throughout the world--will reach its 10th anniversary. It will be a time for celebration and let me give you 10 good reasons why:1) According to Statistics Canada, in the nine years since NAFTA entered into force, total bilateral trade in goods and services between Canada and Mexico has tripled, from US$3.2 billion by the end of 1993, to US$9.5 billion in 2002;2) Over the same period, bilateral trade between Mexico and the United States grew 183 per cent, from US$81.5 billion, to $231 billion in 2002, according to the US Department of Commerce;3) In 2002, 66 cents out of every dollar that Mexico paid for foreign goods and services were spent on Canadian and US products and services;4) Of all Canadian imports, 66 per cent come from Mexico and the US, while only 3.6 per cent come from Mexico;5) In the United States, 30 per cent of all imports come from North America, while 11.6 per cent come from Mexico;6) Canada has invested US$3.9 billion in Mexico from January 1994 to December 2002, which represents 3.5 per cent of the total foreign direct investment that Mexico received in that period;7) NAFTA has played a key role in the transformation of Mexico's exporting sector. In 1993, 14.3 per cent of total exports were oil related, while, in 2002, this figure was 9 per cent;8) Companies and consumers have benefited from having access to the latest technologies at reasonable prices, as tariffs have been practically eliminated in the region;9) NAFTA has helped Mexico stabilize its macroeconomic variables. Interest and inflation rates are starting to converge among the three countries of the region; and10) Consumers have benefited greatly from having access to a wider selection of high-quality goods and services at lower prices, benefiting even those with smaller incomes. The relative prices of cars have come down, as well as those of domestic appliances, garments, shoes, and food. It is now also easier and cheaper to access a PC or laptop.THE IMPACT OF NAFTATo assess the impact of NAFTA, we can no longer rely only on trade and investment statistics like the ones I have just mentioned.Blueprint for international trade negotiationsSince NAFTA was signed (on 7 October 1992) by then-Canadian trade minister Michael Wilson, former US trade representative Carla Hills, and former Mexican trade minister Jaime Serra, it has been a source of influence on countless other agreements: providing new chapters on trade of services, intellectual property rights, investment, competition policy, government procurement, environmental protection, and labour rights; improving dispute settlement mechanisms and customs procedures; dealing in-depth with non-trade barriers; and providing new ways to approach other well-known problems in agriculture, textiles, and other difficult areas.Participation of societyThe agreement also opened spaces for the participation of the business sector, technical experts, and scholars in its many committees and working groups, and developed clauses that make proceedings much more transparent to society in general.Growth with respect to the sovereignty of each PartyAs a result of NAFTA, North America has developed institutions that allow for managing billions of dollars in trade and investment every day, while respecting the independence and sovereignty of each of the three countries. Canada, Mexico and the United States are learning to grow closer together while respecting key areas like the Canadian cultural industries. …