Transcript THE NEW ECONOMIC AGENDA - University of California, San Diego

NAFTA AND
THE GOSPEL OF FREE TRADE
 The Lost Decade (1980s) and Its Legacies
 Dynamics
 The
of the debt crisis
Washington Consensus
 The
Role of the State
 Liberalization of Trade
 Privatization, the private sector, and foreign investment
North American Free Trade (NAFTA)? Why? Why Then?
 Global Scenario:
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Economic multipolarity and rivalry (Japan, EU)
Geopolitical uncertainty
Emphasis on “geoeconomics”
 U.S. Perspectives:
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Supplement to FTA with Canada
Support for neoliberal reforms in Mexico
Growing Mexican-American population within U.S.
 Mexican Perspectives:
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Exhaustion of alternatives
Need to stimulate growth
Perpetuation of Salinista policies
NAFTA: What Is It?
 A “free trade” area:
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Not a customs union

Nor a common market
 Characteristics:
• Uneven levels of development
• Cultural and political variation
• Hub-and-spoke arrangements (with U.S. at center)
• Absence of supranational authority (preservation of sovereignty)
Assessing Results: The Problem of Cause-and-Effect
 NAFTA in comparison with:
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Initial expectations (and political rhetoric)
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Liberalization (mid-1980s)
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Global and/or U.S. economic conditions
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Long-term economic and social trends
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Short-term shocks (e.g., Mexican peso crisis of 1994-95)
Economic Performance: Expansion of Trade
 General effects:
• More efficiency (in production and consumption)
• Greater market size (thus higher returns)
• Tougher competition
 Questions:
1. Who takes part in the trade? (55 % large firms, 40%
maquiladoras, > 5% small firms (~ 2.1 million firms)
2. What about trade diversion?
Oil exports
Non oil exports
1985 = 27 bn, 1994 = 61 bn, 2005 = 214 bn
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
Mexican Exports, 1985-2005
(billions USD $$)
Expansion of Trade, 1993-2005 (millions USD $$)
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
772,369
568,736
626,456
475,803
375,778
Mexico-U.S.
Mexico-Canada
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
19
94
288,530
93
19
615,226
Trilateral trade
U.S. Trade with Mexico and Latin America, 1993-2005
(millions USD $$)
180000.0
170108.6
160000.0
138060.0
140000.0
122873.0
109720.5
131337.9
120000.0
85937.6
100000.0
80000.0
67370.0
62100.4
78829.1
53697.0
60000.0 39917.5
58464.7
40000.0
42472.5
34455.5
20000.0
0.0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Mexico
Latin America
U.S. Imports: Key Trading Partners, 1993-2005
(millions USD $$)
21730.3
Great Britain
25101.5
Taiwan
51032.6
34825.8
17118.1
South Korea
43781.4
31539.9
China
243470.1
39917.5
Mexico
0.0
50000.0
170108.6
100000.0 150000.0
2005
200000.0 250000.0 300000.0
1993
U.S. EXPORTS TO MEXICO
 Quoting from Carla Hills, former USTR:
 “Last year [2013], roughly 14 percent of U.S. exports
went to Mexico—more than went to Brazil, Russia,
India, and China combined. Indeed, Mexico buys
more U.S. goods than the rest of Latin America
combined, and more than France, Germany, the
Netherlands, and the United Kingdom combined.”
Foreign Direct Investment in Mexico, 1980-2004
GDP Growth in Mexico
1945-1980 ~ 6.5%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-7.0 %
5.1
6.8
4.9
3.8
6.6
-0.2
0.7
1.5
4.6
2.8
5.0
3.2
1.3
-6.8
5.5
Note: Growth does not necessarily reduce poverty, and often increases inequality.
Unforeseen Shocks:
Mexican peso crisis of 1994-95
September 11, 2001
Drug-related violence, 2008-present
Global financial crisis, 2008-present (?)
Current Challenges:
Expansion of the development gap
Infrastructure (including roads)
Migration
Energy
Security problems
Key Points of Disputation:
•Environmental protection
•Labor rights
•Overall development strategy
•Dependence on United States
•Development gap
•Consolidation of U.S. hegemony
Recent Research
 “NAFTA has basically failed to fulfill the promise of closing the Mexico-U.S.
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development gap…”
Zero economic convergence (GDP per capita), no reduction in incentives for
Mexicans to migrate… except for U.S. unemployment rate
Modest impact on employment (500,000 in both countries)
Lag 2000-08:
 Emergence of China
 Increased value of peso
Reasons for lack of convergence:
 Badly implemented reforms
 Reform paralysis
 Lack of a domestic engine
Future prospects:
 U.S.-Mexico trade a two-way street
 Convergence could reduce migration
 Health and elder care
POLITICAL EFFECTS
 The Public Assertion: Free Trade = Democracy
 The Silent Bargain: International Dimensions
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Political stability and social peace
•
Access to petroleum
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Leverage vis-à-vis economic rivals
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Compliance on foreign policy
Hemispheric Integration? Or Division?
1.
Expansion of NAFTA (through new memberships)
2.
FTAA negotiating process (RIP)
3.
Bilaterals and minilaterals:
U.S.-Chile
U.S.-Central America (+ Dominican Republic)
U.S.-Peru
U.S.-Colombia
U.S.-Panama
Alianza del Pacífico (Chile, Colombia, Mexico, Peru + others?)
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