CIEPAC: Chiapas al Día, No. 185

Summary: Part one of two. This article delves into the recent history of NAFTA plus, what forces are behind it and what awaits civil society if it is not halted by concerted, organized actions. As opposed to NAFTA, consisting of a single treaty, negotiated among the three signing parties, with at least cursory review of the legislatures, NAFTA plus is rather a series of measures being implemented by the signing of “regulation” that do not require legislative review. Therefore it is necessary to understand what ideas are behind NAFTA plus, what future elites in Mexico, Canada and the United States have in store for the rest of us, in order to identify and work to counter measures that will challenge national sovereignty and identity in an unprecedented way.

“I would like you [of the press] to understand the magnitude of what this means. It is transcendent, it’s something that goes well beyond the relationship we have had up to now”.—President Vicente Fox regarding NAFTA plus, onboard the presidential plane returning to Mexico from George W. Bush’s Crawford ranch, March 2005. [1]

Introduction

NAFTA (North American Free Trade Agreement) has been in effect almost 12 years and a new stage, NAFTA plus, is in the works, referred to as “deep integration”, particularly in Canada. The exact name might be a minor concern, given the speed with which the elites of the three NAFTA countries (Canada, the US and Mexico) have been aggressively moving forward to build a new political and economic entity. A type of “trinational merger” is underway that leaps beyond the single market that NAFTA envisioned and, in many ways, will constitute a single state, which we could call, simply, “North America”.

Contrary to NAFTA, whose tenets were laid out in a single negotiated treaty subjected to at least cursory review by the legislatures of the participating countries, NAFTA plus is rather more the elites’ shared vision of what a merged future will look like. Their ideas are being implemented through the signing of “regulations”, not subject to citizens’ review. This vision may initially have been labeled NAFTA plus, but the name does give a mistaken impression of what is at hand, since there will be no single treaty text, no unique label to facilitate keeping tabs. Perhaps for this reason some civil society groups are calling the phenomenon by another name, not without its own problems, the so-called NAASP, or North American Alliance for Security and Prosperity, an official sobriquet for the summits held by the three chief executives to agree on the future of “North America”.

When NAFTA was negotiated in the early 90s, civil society had little chance to provide input. In Mexico there was no public consultation. The Mexican congress at the time, still controlled by the PRI, held perfunctory debates. Today civil society in the three countries is better informed and mobilized. In Mexico the congress no longer rubber stamps bills sent by the president. This may explain why deeper integration is taking place without a treaty and by regulations, ersatz executive decrees, that avoid citizen watchdogs and legislative oversight. Activist civil society organizations will have to work overtime to keep up.

The initial steps for the creation of a new North American space have already been taken. Mexicans, in particular, will have to make the most far-reaching adjustments, and face difficult questions regarding national identity and the nation’s future. In Canada, although the issue is generally unknown, there is now lively discussion within academic settings and NGOs. [2] In the US, the issue is still off the screen.

Matters of identity and sovereignty for the US will likely be mute, given that it has the most to gain and the least to lose. Advantages for the US will include the right to decide on crucial matters such as “pushing out” its borders in response to regional security concerns, and access to strategic natural resources, particularly oil, gas and fresh water. For the trade, manufacturing and financial elites of Mexico and Canada, NAFTA plus will likely mean a “porous” border for its products and services, and virtually unrestricted access to the US, still the largest consumer market in the world.

The “trinational” elites of the private sector will accrue greater benefits in this new space, but the American government and private sector will reap the greatest gains. As in NAFTA, the three countries will not be equal partners. As in the early 90s when NAFTA was negotiated, no pretense will be made now of taking into account the huge asymmetries between the US and its smaller partners, likely leading to an erosion of sovereignty for Mexico and Canada.

In spite of the foreseeable advantages that will accrue to the United States from this new “North American” space, the idea does not seem to have originated with the US government. Rather it has been a “work in progress” for more than a decade by academics and entrepreneurs in Canada and the United States and, surprisingly, by President Fox after his election, or, more accurately, by his closest advisors.

After initially rejecting it, the idea of a “North American community” has come of age among US government strategists and a convinced George W. Bush is now vigorously pushing it forward.

The elites’ main premise behind deepened regional integration is the supposed “resounding success” of NAFTA. Even among academics it is surprising how NAFTA’s shortcomings are glossed over. Many studies fail to go beyond the undisputed rise in foreign investment and the volume of trade between the three countries since the start of NAFTA. [3] Much ado is also made of the degree of integration achieved, insofar as some products flow so easily from one country to the next that the border has in essence ceased to exist.

Much praise has been heard for the few “winners” that NAFTA has created, but little mention is made of the fact that the Mexican people are the deal’s big “losers”. Mexicans now face greater unemployment, poverty and inequality than before the agreement began in 1994. With NAFTA the economy has ceased to create jobs for the population and Mexicans have today basically three options to survive, migrate, mostly to the US, join the unproductive informal economy, or turn to crime. The Economist Intelligence Unit, affiliated to the British weekly The Economist has reported that in “the first four years of President Vicente Fox’s government the economy has failed to create even one formal job in net terms.” [4]

These are minor details for those sold on free trade. Such as World Bank analysts who find that evidence can be “construed” to show that “the benefits [for Mexico from NAFTA] are not as large as those promised by [...] supporters”, due to “certain remaining trade distortions that were not fully removed under NAFTA”. [5] Restated, NAFTA’s problems or limitations can be remedied by more of the same. With such prescriptions, it is only a small conceptual leap from NAFTA to NAFTA plus.

A bit of history

The idea of deeper trinational integration came from several sources. One of them was the American academic Robert Pastor, ex member of the US government’s National Security Council, and a close personal friend of Jorge G. Castañeda, secretary of Foreign Relations at the start of the Fox government.

In the early 1990s, when NAFTA negotiators were still wrangling over arcane language, Pastor was proposing ways to “improve” the treaty. According to Pastor, NAFTA was off to a bad start, since negotiators were mostly seeking to dismantle trade tariffs. For Pastor it was crucial to find ways of integrating the three countries, similarly (but not equal) to what the Europeans had done since the 50s. Years later, Pastor would bemoan that NAFTA’s promise had gone unfulfilled, since it lacked a “grand vision” for the three countries, i.e., a much richer perspective than the emphasis put on trade.

In his book Toward a North American Community [6] Pastor detailed his great vision. He called on the United States, Canada and Mexico to integrate by taking advantage of the positive aspects of the transatlantic experience, yet rejecting European values that were supposedly “inappropriate” for the New World. (Pastor refers to Europe’s unwillingness to let “market forces” resolve social concerns such as employment, education, health, housing, nutrition, etc., and thus its relatively heavy bureaucracy, compared to the US, for redistributing income).

Pastor’s book might have had greater circulation and impact had it not been for the unfortunate timing of its release—just days before September 11, 2001. After 9/11, the US closed its borders and xenophobia set in, in a degree unprecedented since at least before the start of World War II.

In the midst of patriotic fervor in the US, Pastor’s “grand vision” must have seemed preposterous. By proposing that the US integrate with foreign countries (specifically Canada and Mexico), Pastor’s book languished on bookshelves for years. Yet today many of its ideas have reemerged as NAFTA plus. For example the advantages of “deepening” trilateral integration as a step towards enacting the FTAA (Free Trade Area of the Americas); or the distinction Pastor makes between defending “borders” and the “periphery”; or the advantage of holding periodic summits among the three chief executives to speed the pace of integration. [7]

In Canada

The idea of deeper integration with the US begun circulating in Canada before 9/11. As with Mexico, NAFTA had strengthen trade between Canada and the US, but it had not eliminated the frequent and costly trade disputes between the two. Canada, in particular, complained that the US bent the rules and spirit of NAFTA to restrict imports of some of its products and services, all the while maintaining subsidies to important American producers with political weight to throw around in Washington. [8]

The discrimination against certain Canadian products contrasted with others (cars, steel, computers and electronic products) for which integration had been so seamless that the border had become irrelevant. The energy and capital markets also operated without border-related restrictions. [9] Canadian trade elites perceived that if the US border were permanently propped open as a result of a deeper integration, the barriers that the US imposed on some Canadian exports could, in essence, disappear. [10]

Things worsened dramatically for Canadian trade elites after September 11. While the US struggled to comprehend the dimensions of the spectacular blow on its soil, Bush decreed the immediate shuttering of all land, air and sea borders, and by so doing provoked millions of dollars in loses, per hour, to Canadian manufacturers and retailers, as well as the closure of 11 plants in Canada. [11] Canadians complained bitterly in Washington, to no avail given the prevailing climate. The US government coined the now oft-repeated adage “security trumps trade”. It was clear that the US security apparatus would spare no effort to protect the country from attacks on its territory, even if it meant billion-dollar trade losses. [12] The previous adage, “business is business”, was dethroned (but not forgotten).

The Canadian private sector was dumbstruck. Its stability, profits and even survival were threatened, given the almost total dependency on American markets for Canadian exports and imports. Not even the 1989 bilateral trade treaty with the US, nor the 1994 trilateral NAFTA, nor the ongoing integration of the two markets could avert, if US authorities so deemed, an abrupt and unilateral border closure that would detain or hinder passage of Canadian goods, services and capital. [13]

Given the new reality, several Canadian think tanks and academic centers focused on designing a response to a possible scenario of crisis and renewed American insularity. In April 2002, a conservative think tank, the C.D. Howe Institute of Toronto, outlined a strategy that was warmly greeted by Canadian trade and financial elites. The author of the study, Wendy Dobson, professor at the University of Toronto, called the proposal the “big idea” of “deep integration”. [14]

The idea is simple: to keep the US in the future from shutting its border with Canada, there should be no border. Canada would need to progressively take steps to “erase” or disappear the border by harmonizing its policies, laws, norms, procedures, techniques, methods, and, most importantly, intelligence and security measures to American standards. Above all, Canada would have to demonstrate to the US that it was as “secure” in the face of external threats as the United States itself, in order for the latter to agree to “disappear” the border for trade traffic.

Dobson’s proposal made the flip side of the coin equally explicit: with open borders, the United States, in close collaboration with its private sector, would have unrestricted access to Canada’s generous natural resources. In fact this process is now well advanced, as several Canadian organizations have shown. The Canadian Centre for Policy Alternatives of Ottawa, for example, says that its government, either pressured by the US or in willing compliance by Prime Minister Paul Martin’s “pragmatic” administration, has been studiously working to harmonize policies in six areas: military security, homeland security, energy security, social security, water security and global security. [15] In the key military front, it was announced in December 2002 that US and Canadian troops would operate indistinctly on both sides of the border should a threat to either be detected. [16]

The same menu in Mexico

In Mexico, another call for more porous borders was unfolding, which tended to converge with Canada’s. Within months of his inauguration in December 2000, President Vicente Fox launched the idea of going beyond NAFTA’s economic integration. Counseled by his foreign relations secretary Jorge G. Castañeda (in turn in constant dialogue with Pastor), Fox proposed Mexico’s version of NAFTA plus to the US, with a limited but important objective for Mexico. NAFTA had boosted the flow of goods, services and capital in the trinational area but, from Mexico’s perspective, it had omitted a key factor: its abundant, poorly-paid and unemployed labor force. Fox had come to propose great labor mobility for Mexicans within a greater “North America”, in exchange for certain concessions to the US.

During NAFTA negotiations in the early 90s, the US had flatly refused to consider the idea of greater integration of the labor markets which, with time, would have meant the unrestricted flow of Mexicans to the US. Such a scenario would have been violently rejected by certain influential (and racist) sectors of public opinion, and NAFTA would have been a nonstarter.

In 2001, seven years into NAFTA, Fox took bold proposals to his initial meetings with George W. Bush and laid them out with an aplomb that left Washington observers stunned. The New York Times commented, after one visit by Fox to Washington, “rarely has a foreign leader shown up on the South Lawn of the White House and declared that he and the president of the United States ‘must’ remake the fundamental rules that have governed his country’s uneasy relationship with the United States—and get it done in the next four months.” [17]

Theoretically, at least, Fox was right. In totally open markets, labor should enjoy the same freedom of movement that NAFTA had given capital. Mexico’s “competitive advantage” is precisely its abundant labor force, but it was facing increasingly formidable barriers to reaching job vacancies in the United States. Perhaps not by accident, NAFTA’s start in 1994 coincided with the first US Border Patrol militarized “operations” to seal the frontier with Mexico. [18] The blatant discrimination of Mexico’s “competitive advantage” had to be eliminated, Fox insisted. The New York Times article insinuates that Bush understood and accepted Fox’s daring proposals (“endorsing his principles”, the Times says), although dissenting with him over the timeframe and the political feasibility of pushing them forward.

Evidently there was no contradiction between “operations” on the US side to seal the border and an acceptance by Bush to review migratory policy options. On the one hand, the status quo was not working. [19] Border Patrol “operations” had not detained Mexican migration—in fact it had tripled during the NAFTA years. Still, border crossings had become more dangerous, leading to the tragic death of 4,000 migrants in 10 years. In addition, there were American companies that were begging for cheap, non-unionized workers to fill the “4-D” jobs (dangerous, dirty, dull, domestic) that Americans eschew. And finally both leaders, new to their posts at the time, could have been disposed to break with policies from previous administrations.

It is quite likely that Fox arrived in Washington ready for tradeoffs. In exchange for US acceptance of more Mexican workers, Mexico would “seal” its own southern border, to detain and deport migrants from other regions, especially Central Americans, whose presence in the US had skyrocketed since Hurricane Mitch devastated the region in 1998.

In fact, this measure was implemented in July 2001 by Plan Sur (South Plan), whereby Mexico militarized its border with Guatemala and Belize, and the narrow Isthmus of Tehuantepec through which all Central American migrants had to traverse. Fox had asked for a special and privileged treatment for Mexicans, in exchange for hunting down migrants from third countries before they could make their way to the US border. The measure had the effect of “displacing” the US southern border to southern Mexico. [20]

Fox’s government formalized the idea of creating an exclusive and excluding “North America space”, to which Mexico would gain entry, in essence by turning its back on Latin America. Mexico’s northward-looking bias became explicit with Fox, but it merely culminated a policy that began during the administration of Mexico’s first president of unquestionable neoliberal extraction, Miguel de la Madrid (1982-1988).

Fox likely called on Bush with more than Plan Sur to offer—possibly the privatization of PEMEX (the state oil company) or the Federal Electricity Commission. Although efforts to privatized these two state-run companies have stalled in the legislature, Fox has not flinched from putting Mexico’s oil at the service of American interests, notably by upping exports to the US in the weeks previous to the invasion of Iraq.

In any event, the Fox-Bush summit took place in a radically different historic moment. The presidents meet in Washington on September 5, 2001, six days before 9/11. Since then the Fox government has retreated to Mexico’s traditional role vis-à-vis its neighbor, i.e., with few exceptions, letting the US establish the agenda, conditions and timeframes.

In the new post 9/11 environment, Fox’s bold migratory and integrationist proposals were abruptly shelved by the Bush administration. The ensuing retreat towards a passive role for Mexican foreign policy, [21] particularly regarding the only important foreign interlocutor for Mexico, contributed to Castañeda’s resignation in January 2003. Disgruntled, Castañeda abandoned the Fox government to seek more proactive roles, with an eye on the presidential elections of 2006.

United States first rejects and then embraces NAFTA plus

Years had to pass after 9/11 before the US government would even glance at the strange notion of “integrating” with the neighbors. Arguably, it was unusual that neighbors should come calling offering good terms for a deal, and find a frosty reception in Washington. [22] But as years passed, their ideas began to make sense, and Washington warmed to them, especially in light of the new challenges and mission that the US laid out after September 2001.

In a word, security is the overwhelming concern of the new US domestic and international agenda. The first sentence of The National Defense Strategy of the United States of America, signed by secretary of Defense Donald H. Rumsfeld in March 2005, says it with frightening concision: “America is a nation at war.” Consequently, the first strategic objective establishes, “We will give top priority to dissuading, deterring and defeating those who seek to harm the United states directly, especially extremist enemies with weapons of mass destruction.” [23] Although “directly” should be loosely interpreted to mean any US interest in any part of the world, defense of the homeland itself gets top billing. “Our first priority,” the document states, “is the defeat of direct threats to the United States (...) Therefore, the United States must defeat the most dangerous challenges early and at a safe distance, before they are allowed to mature.” [24]

In April 2002, the US unilaterally created the North American Command and drew a defense perimeter around itself, Mexico, Canada, the Caribbean and adjacent seas. [25] This “land command” is one of five that the US has created throughout the world. Even the universe is considered, since there are also five “special commands”, one for outer space.

The concern for territorial security has already led to the outward expansion of American borders. Today the US’ borders are increasingly the extremes of its two neighboring countries. The American security perimeter extends from Canada’s far north, the Arctic Ocean, to Mexico’s extreme south, bordering with Guatemala and Belize. Crossing this expanded perimeter will increasing mean complying with the same security standards that the US has at its traditional borders.

The perimeter responds to the objective of maintaining “at a safe distance” American enemies, making it more difficult to gain access to US territory. In concrete terms, the idea is to make entry into Canada and Mexico equally rigorous as entrance into the US. By integrating Mexico and Canada into its security perimeter, the neighboring countries become an extra margin of safety sought by the Pentagon to thwart possible terrorists. [26]

Canada has for years allowed US immigration and customs authorities to operate directly on its territory, largely at airports, to check passengers destined for US cities. Now US agents will gain jurisdiction and authority to operate within Mexico. At the trilateral meeting between Fox, Bush and Martin on March 23, 2005 at Bush’s Crawford ranch—the so-called Waco Summit—Fox agreed to a “trial period” during which US immigration officials will check passengers headed to the US from airports in Cancún and Mexico City. A spokesperson form the US Customs Service told the Mexican weekly Proceso, “Our agents in Mexico could avoid some foreigner who is on a list of undesirable persons from getting on a plane”. [27] The borders have again in essence been pushed out in what one lawyer, Miguel Angel de Los Santos, calls a (legal) “non competence” of US agents that violates Mexican jurisdiction and sovereignty. Another lawyer, Juan Ignacio Domínguez, says the move “constitutes a crime subject to denouncement and penal action”. [28]

[2] In October 2003, the Center for Research on Latin America and the Caribbean (CERLAC) of the University of Toronto and the Canadian Centre for Alternative Policies held a public forum on “Canada, Free Trade and Deep Integration in North America: Revitalizing Democracy, Defending the Public Good”, at the University of York in Toronto. Contact Professor Ricardo Grinspun (ricardo@yorku.ca) to obtain papers presented therein. See also Kairos (Canadian Ecumenical Justice Initiatives), “Must We Keep the US Elephant Fed and Happy?”, Global Economic Justice Report, Vol. 4, No. 1, April 2005, www.kairoscanada.org, as well as the web sites of the Polaris Institute, www.polaris.org, the Council of Canadians, www.canadians.org, the Canadian Centre for Policy Alternatives, www.policyalternatives.ca, and Common Frontiers, http://www.commonfrontiers.ca.

[3] The essays of Mexican, Canadian and American academics compiled in Andreas, Peter and Thomas J. Biersteker, The Rebordering of North America, Routledge, New York and London, 2001, are a good example of the myopic vision regarding NAFTA’s social and environmental shortcomings.

[4] Quote taken from La Jornada’s coverage of the Economist Intelligence Unit’s report, May 21, 2005, cover story. The exact figures: “The average total [employment] figure in 2000 was 12,546,000 as registered in the IMSS [Mexican Social Security Institute] and in December 2004 the figure was 12,509,000, or 37 thousand less”. Taken from Delgado Selley, Orlando, “La economía mexicana a un año de las elecciones”, La Jornada, Masiosare supplement, July 10, 2005.

[5] Daniel Lederman, World Bank economist and principal author of Lessons from NAFTA for Latin America and the Caribbean Countries: A Summary of Research Findings, published in December 2003 by the WB. Lederman’s words appear in an interview, titled “NAFTA is Not Enough”, on the World Bank’s web site, www.worldbank.org. Lederman also states that the WB is “currently preparing another report on the topic of deepening NAFTA for economic convergence in North America which focuses on identifying a post-NAFTA agenda for Mexico.”

[6] Pastor, Robert, Toward a North American Community: Lessons from the Old World for the New, Institute for International Economics, Washington, DC, August, 2001.

[8] For an analysis of the 23-year dispute among the two countries regarding Canadian exports of softwood lumber, see Campbell, Bruce, “Everything You Need to Know about the Softwood Lumber Dispute (but will Never Find in the Mainstream Media)”, The CCPA Monitor, Ottawa, Volume 12, No. 1, May 2005.

[9] Dobson, Wendy, “Shaping the Future of the North American Economic Space”, C.D Howe Institute Commentary”, No. 162, April, 2002, www.cdhowe.org, p. 20.

[10] This is to be achieved through a customs union among the two countries, which would stipulate a common tariff for imports from third countries to any of the participants in the customs union. It would also establish a “free-trade area” within the union. See, for example, Jackson, Andrew, “Why the Big Idea is a Bad Idea: A Critical Perspective on Deeper Integration with the United States”, Canadian Centre for Policy Alternatives, Ottawa, June, 2003, p.6. Researcher Wendy Dobson notes, “In the past decade, as Canada’s living standards and economic performance have lagged behind those in the United States, more voices are heard calling for deeper integration.”, Op.cit., p.2. See also Pastor, Op. cit., p. 143.

[11] The 11 plant figure is given by R. Pastor in a colloquium “America and the World: Challenges Facing the Next Administration—The United States and the Americas”, held Oct. 13, 2004, by the Council on Foreign Relations. A transcript appears on its web page, www.cfr.org. See also Chairmen’s Statement, “Creating a North American Community: Independent Task Force on the Future of North America”, also available at the Council on Foreign Relations’ web site, www.cfr.org. For trade figures between the two countries see Andreas, p. 68, and for the automobile industry and border delays Andreas, p.10-11 and p. 60 y 133.

[12] Crossing the border became a nightmare. For various examples see Andreas, Op.cit., p. 60, 68. A cargo truck that used to take 1-2 minutes to cross the border took 10-15 hrs. after 9/11 (p.10-11). Nine months after 9/11, vehicle traffic from Canada still took seven times as long to cross into the US then what had been the case before (140 minutes versus 20) (p.60). Similar delays took place on the Mexican side, but it was not possible to locate figures that measured the impact similar to the Canadian case.

[13] 87% of Canadian exports go to the US (Hristoulas, Athanasios, “Trading Places: Canada, Mexico and North American Security”, in Andreas, Op.cit, p.34), and 71% of its imports come from the US (Clarkson, Stephen, “The View from the Attic: Toward a Gated Continental Community”, in Andreas, Op.cit., p. 69)

[15] Clarke Tony, et.al, “National Insecurity: Bowing to U.S. “Security” Demands Will Make Canadians Less Secure”, CCPA, Toronto, January, 2005, www.policyalternatives.ca.

[16] Schwanen, Daniel, “Let’s Not Cut Corners: Unbundling the Canada-US Relationship”, Policy Options, Institute for Research on Policy Options, Montreal, April 2003.

[18] See Pickard, Miguel, “In the Crossfire: Mesoamerican Migrants Journey North”, CIEPAC bulletin no. 454, available at www.ciepac.org/bulletins/ingles/ing454.htm.

[19] “The system has broken down” Bush would declare years later: Curl, Joseph, “Bush vows push on immigration”, The Washington Times, January 12, 2005.

[20] Flynn, Michael, “U.S. Anti-Migration Efforts Move South”, Americas Program, International Relations Center, New Mexico, July 8, 2002, p.4.

Available at http://americas.irc-online.org/articles/2002/0207migra_body.html.

[21] Symptomatic in this regard are the statements of Luis Ernesto Derbez, Castañeda’s replacement at the Secretary of Foreign Relations, regarding migratory topics. See Pickard, Op.cit.

[22] Jackson, Op.cit. (referenced in end note no. 10) writing at late as June 2003, points to a “distinct lack of interest in Washington”, in Canadian private sector flirtations to establish a customs union. p. 5.

[25] Serrano, Mónica, “Bordering on the Impossible: U.S.-Mexico Security Relations After 9-11”, in Andreas, Op.cit., p. 60-62

[26] In one of the first essays on NAFTA plus in Mexico, Alejandro Alvarez Béjar drew a connection between militarization and migration: “...Mexico’s inclusion in the North American Command demonstrates [...] not only the tendency of increased militarization, but also its tremendous potential for use against Mexican [migrant] workers: the “enemy within” in the US are the millions of impoverished, unemployed and frustrated workers, who struggle in Mexico and the US for their most basic rights.” See “México en el siglo XXI: ¿hacia una comunidad de Norteamérica?”, Memoria, Mexico, No. 162, August 2002, p.8.

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