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Panelists Discuss NAFTA Benefits 10 Years Later
Left to right: panelists Joseph Stiglitz, Pamela Wallin and John MacArthur

Since the North American Free Trade Agreement (NAFTA) was signed in January 1994, its member countries, which include Mexico , the United States and Canada , have suffered economic peaks and pitfalls. But according to panelists at "NAFTA at 10: Performance, Prospects and Social Impacts," NAFTA, for all its accolades and criticisms, is at most a mere free-trade agreement.

During the student-sponsored event on Nov. 10, Joseph Stiglitz, University Professor, Nobel laureate and former senior vice president of the World Bank, explained that when the Council on Economic Advisors (CEA) to the Clinton administration (he was a member and later chair) looked at the prospect of NAFTA, they saw an opportunity to address disparities between wages and immigration policy. Ten years later, however, it is difficult to see any widespread benefits.

Stiglitz said that overall, NAFTA was more symbolic than anything else. Although tariffs between countries may have been dropped, there remain loopholes through which businesses can protect their interests. An example of this is the U.S. government's subsidization of American agricultural goods, such as corn. Trade, in and of itself, does not benefit everyone in society, and indeed many of the positive outcomes of NAFTA have not been equally shared, Stiglitz said. "Free trade," he continued, "does not necessarily mean growth." For instance, real wages for the average worker in Mexico have dropped 12 percent since the agreement's inception. One of the reasons Stiglitz gave for Mexico's lull in production was the growing competition for low-wage export goods with countries like China . Another was Mexico retaining only one major domestic bank after a U.S. takeover in reaction to the collapse of the country's economy during the so-called "tequila crisis" of 1994 and 1995.

If nothing else, NAFTA has contributed to the rationalization of Canada's industry sectors and a modernization of its economy, said Pamela Wallin, one of Canada's most respected journalists and the current consul general to New York City . She said that although $1.5 billion of goods and services cross the Canadian border every minute of every day, events like 9/11, which heightened border security, present a major economic crisis for both countries. The bottom line, Wallin said, is that security trumps trade. Canada , she said, must convince the U.S. that keeping open trade as it is won't be a threat to security.

John MacArthur, president and publisher of Harper's magazine, described the corrupt relationship between unions and corporations in Mexico , where union officials receive kickbacks from corporations to keep workers' wages low. MacArthur said corrupt police preside over union elections to intimidate workers into re-electing corrupt officials. Less obvious tactics to dissuade unions in the U.S. remain, he said, explaining that if workers choose to unionize, a company will often threaten to move the factory. MacArthur said the potential benefits of the agreement have been made irrelevant by Congress' bill granting Permanent Normal Trade Relations (PNTR) with China . NAFTA, however, does have a much more strict intellectual property section, which protects some trade, since China has been such a force in the illegal production of copyrighted products.

Liliana Rojas-Suarez, international consultant, senior fellow at the Center for Global Development and chair of the Latin American Shadow Financial Regulatory Committee, said too many reforms and outside phenomena had occurred to assess NAFTA's effectiveness. "NAFTA is one piece of a puzzle," she said. "We can play a lot with the economics of it, but it only gets us so far."

The event was organized by SIPA student Ama Marston and her colleagues at Forum on Globalization.

Published: Nov 30, 2004
Last modified: Jan 10, 2005

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