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NAFTA Is History … Underway


Former Mexican President Carlos Salinas de Gortari was on the the key architects of NAFTA. Photo: quien.net

By RICARDO CASTILLO    

Back on Jan. 7, 1994, I attended the press conference in Austin, Texas, in which then-Mexican President Carlos Salinas de Gortari told the new U.S. president-elect, Bill Clinton, a phrase in English that is still at the very heart of the North American Free Trade Agreement (NAFTA) and its core raison d’être.

“We want trade, not aid,” Salinas said, emphatically correcting an interpreter who had mistakenly translated his words in Spanish as “we want commerce, not help.”

“That’s not how I want to say it,” said the Harvard-educated economist Salinas. Then, he looked Clinton – who had run on an anti-NAFTA and pro-union platform – square in the eye and repeated the phrase in perfect English: “We want trade, not aid.”

Mind you, at that time to hear a Mexican president speaking English in public came as a shock. No Mexican president before him had ever done it, not only because they did not speak the language, but because diplomatic protocol mandated that every president speak only Spanish in public.

Clinton smiled. Salinas’ rhyme had hit home with him, signaling that times had changed. Prior to that moment, previous U.S. Presidents Ronald Reagan and George H. W. Bush had essentially sought a master plan to help Mexico graduate from its membership in the Third World.

Even though Clinton did not support NAFTA, the deal was eventually approved by the Canadian Parliament and both the U.S. and Mexican Congress.

Up until then, the Mexican government had been trapped in a quagmire of bureaucracy that circumvented any real change in its lopsided bilateral relation with the United States.

Salinas’ phrase represented a turning point because, traditionally, Mexico had been surviving on U.S. handouts to stay afloat in the midst of the rampant and galloping wave of inflation the government had generated during the 1980s, along with the vicious cycle of the theft of oil dollars by the corrupt officials in charge of the country’s so-called crown jewel, Petróleos Mexicanos (Pemex).

Another reason that the NAFTA negotiations came about was Mexico’s precarious  protectionist economic policies. Before NAFTA, monopoly was the name of the game in Mexican business, and most major industries were in the hands of a few powerful families. At the time, the government had a monopoly over a number of state-controlled businesses, such as telecommunications and mining.

Keeping in mind how Mexico’s entry into NAFTA originated is of utmost importance today as the three countries begin to hammer out a new version of the deal, not just because U.S. President Donald Trump has declared himself a staunch enemy of the trilateral accord (and of free trade in general), but also because, after 24 years in operation, it is clear that, weighing the pros and cons of the agreement, despite the former reality star’s proclamation that it constituted “the worst negotiated deal in history,” most commercial evidence bears out the exact opposite.

The original NAFTA was indeed uncharted territory for the three “amigo” nations. Nevertheless, the corresponding business, agribusiness and commerce chambers across the region took up the wheeling and dealing process of bringing it to fruition during 1992 and 1993, until, finally, the U.S. Congress unanimously approved the “worst-ever negotiated deal” to go into effect on Jan. 1, 1994.

The point is that over the last 24 years, trade – not aid – between Mexico and the United States grew from $66 billion  to over $600 billion and is still going strong. NAFTA has been very good for all of North America, despite the negative views expressed by the current U.S. president and his supporters.

In case you’re wondering why I am trekking down memory lane,  it is because this past Monday, Jan. 29, the sixth round of NAFTA renegotiations came to a conclusion without any positive resolutions or closed chapters. These unresolved issues have been left for the seventh round of talks, slated to be held in February in Mexico City, as well as a potential eighth round in the near offing in Washington D.C.

Renegotiations have not been easy, given the often “intransigent” position of the U.S. negotiators, for whom a slice is not enough; they want the whole cake. Then again, NAFTA has grown from 22 to 28 chapters, and what’s important, not so much because of the agreement itself, but because the United States is still negotiating.

Mexico’s next-door business organizations representative Moisés Kalach says that the date for the next trilateral talks has, as of now, not been confirmed, but “all indications are that we will have two additional meetings, separated by a period of about three weeks.”

This is, of course, an indicator of continuity, which is a good sign. Also, recently, even Trump has toned down his bellicose anti-NAFTA discourse, perhaps yielding to pressure exerted by many U.S. business sectors and states to not stamp out NAFTA completely.

One indicator of this shift in the U.S. approach to the renegotiations that particularly hit close to home was a memo sent to the U.S. president a week ago by Texas Gov. Greg Abbott extolling the trade agreement’s importance for Texas. Abbott, a staunch Republican, expressed his support for a NAFTA upgrade, but urged restraint in imposing any significant changes to the treaty. The reason is simple: Texas now has a $178 billion trade exchange with Mexico. And that is only the tip of the iceberg.

Definitely, NAFTA renegotiations will go on, whether they are finished before or after the Mexican July 1 presidential elections. For Mexicans, NAFTA really has very little to do with politics and a lot to do with gross domestic product growth, which, in the long run, is what matters most.

NAFTA is now a part of Mexico’s economic history, and our thanks should go out to Ronald Reagan, George H.W. Bush and Carlos Salinas for having conceived it and bringing Mexico into a competitive world economy.

Yes, at this point, NAFTA may only be history, but it was the main element in helping Mexico to get what Salinas asked for back in 1994: trade, not aid.

 

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Categories: Finance, Intenational Relations, International Trade, Mexican politics, Mexico, Mexico-U.S. relations, OpinionTags: , , , , , , , , ,

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