While actually “preceded by the Canada-U.S. Free Trade Agreement (CUFTA) on January 1, 1989” (Hartman, 2013, 7), the North American Free Trade Agreement (NAFTA) was “negotiated during the late 1980s and early 1990s under George H. W. Bush and became operational in the mid-1990s under the Clinton administration” (Papp, Johnson, & Endicott, 2005, 420). NAFTA established a so-called free trade area between the states of the United States, Canada, and Mexico by “eliminating tariffs and other economic and noneconomic barriers” (Papp, Johnson, & Endicott, 2005, 420) in order to promote regional trade. Supporters of the agreement suggested that the agreement was healthy for expanding trade and could improve living conditions in all three states, but critics warned that private sector “capital would move to Mexico to take advantage of lower labor costs and lower environmental standards” (Papp, Johnson, & Endicott, 2005, 421).
Free trade zones such as NAFTA are established to strongly benefit the international private sector under globalization and allow the regeneration of private sector capital profits under vastly reduced or completely eliminated tariffs that would normally be due to the states in which these capitalist entities operate from and/or profit in through importing and exporting. Under these so-called free trade zones, a private sector capitalist entity can extract natural resources from one developing state, manufacture those natural resources into product in another state with lower wage requirements, and finally move the finished product into a consumer state for consumption and capital profit without ever paying tariffs to any of the states involved. The statistics resulting from free trade can be very tricky, so one must look closely.
Since NAFTA began, “total U.S. employment has increased by 23 million jobs from 1994 to 2008” (Hartman, 2013, 16). While U.S. population growth and non-NAFTA trade agreements by the U.S. certainly influenced this trend in U.S. job increase, NAFTA and other U.S. trade agreements that have removed state import/export tariffs have also allowed manufacturing jobs to leave the United States for states such as Mexico with lower wage requirements and be replaced in the United States by customer service jobs such as shipping, retail, and jobs supported by consumerism. This argument can be supported by the fact that Foreign Direct Investment (FDI) “into the United States has increased far more rapidly than FDI into Mexico, implying that the jobs created by investment flows into the United States far exceed the jobs lost due to capital flows into Mexico” (Hartman, 2010, 16). These jobs may “far exceed the jobs lost”, but they are not the same category of jobs and will evaporate under an economic crisis or with the end of ignorant consumerism.
Mexico may have inherited an increase in manufacturing job during the early phases of NAFTA, but “there has been an actual decline in Mexican manufacturing employment” (Hartman, 2010, 17) and “about 30% of the jobs that were created in maquiladoras (export assembly plants) in the 1990s have since disappeared” (Hartman, 2010, 17). This decline of manufacturing jobs in Mexico is due to new technological advancements in manufacturing that reduce the amount of human labor required for generating profits by the capitalists, and new trade agreements allowing the private sector to establish manufacturing efforts in other developing states with even lower wage requirements. The poor working conditions that the capitalist non-state entities establish in developing states such as Mexico should also be noted. The NAFTA agreement itself “included a side accord regarding labour rights and standards, although these provisions have even fewer teeth than the EU measures” (Scholte, 2000, 168). In addition, “income inequality has been on the rise in Mexico since NAFTA took effect” (Hartman, 2010, 20) and “compared to the period before NAFTA, the top 10% of households have increased their share of national income, while the other 90% have lost income share or seen no change” (Hartman, 2010, 20). This is a general characteristic shared by the majority of states touched, or slowly strangled, by capitalism.
In closing, neither NAFTA nor any of the other free trade agreements under globalization strengthen the state for future sustainment or development. NAFTA and other free trade agreements are established to transition capital regeneration from the state to the private sector, and especially allow the private sector exploitation of so-called developing states to take on very parasitic characteristics.
Daniel Papp, Loch Johnson & John Endicott. 2005. American Foreign Policy: History, Politics, and Policy. New York, NY: Pearson
Scholte, Jan. 2000. Globalization: a Critical Introduction. London, England: MacMillan.
Stephen W. Hartman. 2010. “NAFTA, the Controversy,” The International Trade Journal 25, no. 1 (December 2010): 5-34, accessd December 28, 2013, https://edge.apus.edu/access/content/group/226023/Hartmann%20NAFTA%20Controversy.pdf