January 16, 2009

Obama Reaffirms Promise to Renegotiate NAFTA

By Laura Carlsen

The courtesy call between President-elect Barack Obama and Mexican President Felipe Calderon turned out to be a little more revealing than anticipated. The statement from incoming White House Press Secretary Robert Gibbs gave a pretty clear, if vague, picture of where Obama plans to take the bilateral relationship. On renegotiating NAFTA, he stood his ground as Calderon lobbied heavily not to re-open the North American Free Trade Agreement.

“On trade and the economy, President-elect Obama said that with both countries facing very difficult economic times, it’s important to work together to maintain a constructive and comprehensive dialogue. He expressed his continued commitment to upgrading NAFTA to strengthen labor and environmental provisions to reflect the values that are widely shared in both of our countries, and proposed the creation of a consultative group to work on a host of issues important to the United States and Mexico, including NAFTA, energy, and infrastructure.”

This consultative group could be the germ of a renegotiation. Prior to the meeting, a war of words has raged over whether President-elect Barack Obama will hold to his campaign promise of opening up the North American Free Trade Agreement for renegotiation.

Campaign attacks on NAFTA and promises to renegotiate proved that demands for revision of the free-trade model have reached critical mass in the United States. A post-election report from Public Citizen heralded a net gain of 28 fair-trade members in the House and seven senators. Most of these politicians, it notes, didn’t just happen to be critical of the free-trade model. They actively ran on a fair-trade platform and won partly as a result of that position.

The economic crisis only strengthens those demands. If international trade and investment policy is the pillar of the current economic model, its revision must be a foundation of global restructuring plans.

Why Renegotiate NAFTA?

The mainstream press is wrong when it says the United States can’t “unilaterally” call for renegotiation. Not only is renegotiation permitted legally—in fact, any country can unilaterally withdraw with six months notice—but there have been many calls for renegotiation in Canada and Mexico.

Canadians have built a strong grassroots movement to protect natural resources from predatory NAFTA clauses. Broad-based citizen groups like the Council of Canadians oppose NAFTA because of the energy proportionality clause that requires Canada to export oil to the United States even in times of scarcity, the investor-state clauses that give investors the right to sue governments contained in Chapter 11, and the clause that permits bulk-water exports. Polls in the general population show that 61% favor renegotiation.

In Mexico, 100,000 people marched in the streets on two separate occasions under the banner of renegotiation to revise NAFTA’s agricultural provisions. They demanded protection of basic food production by removing corn and beans from the agreement. In 2003, former President Vicente Fox requested opening up the agreement only to be rebuffed by the U.S. government.

For the United States, the main issue is jobs. Senator Sherrod Brown, an Ohio Democrat, cites a loss of 200,000 manufacturing jobs due to NAFTA for his state alone. The nation has lost 3.1 million manufacturing jobs since 1994, and its trade deficit with Mexico and Canada has risen to $138.5 billion in 2007 from $9.1 billion in 1993. The opposition to NAFTA within the United States goes well beyond organized labor. While job loss and insecurity under globalization were major constituency-builders in blue-collar states during the elections, polls taken before the election revealed that a national majority opposes free trade and particularly NAFTA, and that opinion increased during the campaign.

Will He or Won’t He?

Obama’s campaign promise was explicit: “NAFTA’s shortcomings were evident when signed and we must now amend the agreement to fix them.” The president-elect called for enforceable labor and environmental standards in the text, an end to the ability of corporations to sue governments, and emphasizing the needs of “Main Street” over “Wall Street.”

But some Obama-watchers claim he’s waffling on his trade commitments. Although these contentions in the pro-free-trade press are mostly wishful thinking, experts and activists are following the appointments closely. So far it has been a mixed message. The initial nomination of Bill Richardson, point-person for the passage of NAFTA under the Clinton administration, didn’t sit well with fair-trade groups and elicited a sigh of relief among free-trade promoters, who instantly chalked up the president-elect’s anti-NAFTA statements to electoral propaganda. Obama’s economic advisers, led by Larry Summers, and appointee for Treasury, Timothy Geithner, at face value would also indicate a commitment to the status quo on trade. And when Ron Kirk, a former mayor of Dallas who proclaimed his city the “capital of NAFTA,” accepted the nomination for U.S. Trade representative, it reversed satisfaction among fair-traders at the initial nomination of Xavier Becerra, who turned down the job.

Pending the new Commerce designate, that leaves Hilda Solis, Obama’s nominee for secretary of Labor, as the only real bright spot for fair-traders. A NAFTA critic, she would wield real clout since jobs will be the pivotal issue for the United States in renegotiation. As a Latina, she also has an acute understanding of the need to make NAFTA fair for all partners.

Pessimistically, it’s possible to imagine that the Obama presidency could end up merely adopting the Democratic platform on trade, which would stick side agreements in the text, add International Labor Organization core labor standards, and create an expanded U.S. jobs displacement program. Obama voted for the U.S.-Peru Free Trade Agreement, which was modified along these lines. But the economic crisis has changed everything. Even as the Bush administration frantically—and incredibly—insists that free trade isn’t the problem but the solution, most other countries are taking a second look at the model. As the crisis sets in, Europe wants more regulation and developing countries want more policy space. And Americans want more protection from the disaster that’s currently befalling them.

With every appointment, Obama has insisted he’ll be the one calling the shots. For the next few weeks, then, all we really have to go on for predicting trade policy is Washing-ton’s current favorite game—the psychic exploration of Obama’s inner mind. A more productive activity for fair-traders is to pull out all the stops in the tri-national campaigns to renegotiate NAFTA and impose a moratorium on new free trade agreements. This is an historic opportunity to change course in crisis.

The Obama statement from Jan. 12 indicates the president-elect will stand firm on renegotiating NAFTA. It may no longer be a question of “will he or won’t he.” To confront the crisis and establish mutual well-being in the region, the debate must move quickly now to “how and when.”

Laura Carlsen (lcarlsen@ciponline.org) is director of the Americas Program (www.americaspolicy.org) in Mexico City, where she has been an analyst and writer for two decades. This is an edited version of the original text. The complete anaylsis can be found at: http://americas.irc-online.org/am/5784

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