By: Governments of the United States, Canada, and Mexico
Source: Preamble to the North American Free Trade Agreement between U.S., Canada, and Mexico. Available online at http://www-tech.mit.edu/Bulletins/Nafta/00.preamble; website home page: http://www-tech.mit.edu (accessed June 5, 2003).
Since the late nineteenth century, the United States had emerged as an economic world power. By 1914, the nation was the largest, most productive industrial power in the world. Most of America's economic growth in the first half of the twentieth century came from domestic production and consumption. Yet after the 1950s, trade with other nations became increasingly more important. Between 1960 and 1980, many of America's trading partners modernized their economies while the United States relied on an aging set of plants and industries. By the late 1980s, key political and economic leaders began making the case for the importance of creating a large free trade zone in North America that would include Canada, the United States, and Mexico. Economic projections suggested that this zone would have to compete with other large trade zones in Western Europe and Asia for investment dollars, new technologies, new products, new plants, and customers. Organizing in powerful interest groups, they pressured the U.S. government to negotiate a complex trade treaty with Canada and Mexico that would give U.S. businesses access to large markets and inexpensive labor.
Much of the negotiation took place under the administration of President George H.W. Bush (served 1989–1993), while it was formally signed by members of the administration of President Bill Clinton (served 1993–2001) in 1994. Labor union leaders, community activists, environmentalists, and some business leaders opposed the North American Free Trade Agreement (NAFTA). Implementing the NAFTA treaty, they argued, would destroy jobs, disrupt whole communities, shift environmental costs from the relatively wealthy United States and Canada to a relatively poorer Mexico, and force many businesses to move to new locations or go out of business. The language of the NAFTA treaty below provides a good example of how its supporters envisioned the potential impact of this important international trade alliance.
After ratification of the General Agreement on Tariffs and Trade (GATT) in the 1930s, American business leaders had argued for expanding the nation's trade relations with other countries. NAFTA negotiations proved the successor of these earlier efforts, which had resulted in numerous treaties with America's trading partners. As the world economy emerged from cold war limitations in the 1990s, many economists, policy analysts, and government officials joined with business leaders to envision a global economy based on large free trade zones that would dominate the economy of the twenty-first century. Advocates and supporters saw NAFTA as the first step in building the North American zone with the United States as the dominant member. During the 1990s, a number of U.S. firms moved plants and factories to the border regions between Texas and Mexico to establish maquiladoras (foreign-owned factories in Mexico where parts are assembled by cheap labor into products to be exported back to the United States) through a Mexican government agency. American workers saw their jobs and livelihood move away from their communities, leaving them to shift for new jobs at lower wages.
The debate over NAFTA appeared in many places in American life in the 1990s, including the presidential election of 1992, when independent candidate Ross Perot argued that NAFTA would create a "giant sucking sound" as it drained jobs away from Americans. New Democrats Bill Clinton and Al Gore supported ratification of NAFTA with minor modifications from the draft treaty inherited from the Bush administration. Organized labor, which had supported the Clinton–Gore ticket in 1992, were angry at what they saw as government support for exporting American jobs and income in the name of free trade. Economists debated the impact of NAFTA. While the treaty neither destroyed nor created large numbers of American jobs, it did seem to create a small, positive net growth in numbers of new jobs. Yet many of these jobs paid lower wages and were less secure than American workers had come to expect in the postwar years. Mexican workers obtained jobs and higher incomes than they were used to, but working conditions were harsh, while environmental damage followed in the wake of some of the maquiladoras.
Primary Source: Preamble to the North American Free Trade Agreement (NAFTA)
SYNOPSIS: The introductory section of the North American Free Trade Agreement of 1994 revealed the hopes of supporters of a free trade alliance among Canada, the United States, and Mexico.
The Government of Canada, the Government of the United Mexican States and the Government of the United States of America, resolved to:
STRENGTHEN the special bonds of friendship and cooperation among their nations;
CONTRIBUTE to the harmonious development and expansion of world trade and provide a catalyst to broader international cooperation;
CREATE an expanded and secure market for the goods and services produced in their territories;
REDUCE distortions to trade;
ESTABLISH clear and mutually advantageous rules governing their trade;
ENSURE a predictable commercial framework for business planning and investment;
BUILD on their respective rights and obligations under the General Agreement on Tariffs and Trade and other multilateral and bilateral instruments of cooperation;
ENHANCE the competitiveness of their firms in global markets;
FOSTER creativity and innovation, and promote trade in goods and services that are the subject of intellectual property rights;
CREATE new employment opportunities and improve working conditions and living standards in their respective territories;
UNDERTAKE each of the preceding in a manner consistent with environmental protection and conservation;
PRESERVE their flexibility to safeguard the public welfare;
PROMOTE sustainable development;
STRENGTHEN the development and enforcement of environmental laws and regulations; and
PROTECT, enhance and enforce basic workers' rights.
Bertrab, Hermann von. Negotiating NAFTA: A Mexican Envoy's Account. Westport, Conn.: Praeger, 1997.
Buchanan, Patrick J. The Great Betrayal: How American Sovereignty and Social Justice are Sacrificed to the Gods of the Global Economy. Boston: Little, Brown, 1998.
Metz, Alan, ed. A NAFTA Bibliography. Westport, Conn.: Greenwood Press, 1996.
Rosenberg, Jerry M., ed. Encyclopedia of the North American Free Trade Agreement, the New American Community, and Latin American Trade. Westport, Conn.: Greenwood, 1995.
Becker, Thomas H. "Eyes South: The U.S. and Mexico Get Down to Business." Management Review 80, June 1991, 10–16.
Schlefer, Jonathan. "What Price Economic Growth?" Atlantic Monthly, December 1992, 113–118.
Office of NAFTA and Inter-American Affairs, Government of Mexico. Available online at ; website home page: http://www.mac.doc.gov (accessed June 5, 2003).
United States International Trade Commission website. Available online at http://www.usitc.gov (accessed June 5, 2003).
AUDIO AND VISUAL MEDIA
Challenge to America: Competing in the New Global Economy. Produced by Hedrick Smith (PBS). Films for the Humanities. Videocassette, 1994.
New Rules of the Game. WGBH Boston Video. Videocassette, 2002.