The Band Aid Fix

By: Luke Kuo

Donald Trump’s presidency introduced new tariffs on foreign goods and projects like the wall on the southern border with Mexico. Previous milestones of international cooperation like the Transpacific Trade Partnership vaporized.1 Restrictions on immigration ignited nationalistic fervor in the United States. Where is international cooperation? Where is economic cooperation? Both left and right wing politicians have denounced previous trade agreements as disasters which have wiped out millions of American jobs. Many believe free trade to be the culprit responsible for the damage as a result of outsourcing. The political and economic situation during and after the 2016 election questions the purpose and practicality of international free trade and economic integration. One of the monumental cornerstones of economic cooperation is the North American Free Trade Agreement (NAFTA) which formed a “continental trade bloc with Canada, United States, and Mexico.”2 Historian Imtiaz Hussain investigates the effectiveness of this trade agreement in fine detail in his book Reevaluating NAFTA: Theory and Practice. By inspecting this topic thoroughly, the American people and its leaders can discover the correct steps to take in the modern economic world.

The inquiry begins by shedding light on the origins of NAFTA. After many decades the Cold War ended, revolutionizing global politics and economics. Global boundaries and the iron curtain are torn down. New technology and inexpensive transportation erased the international and regional divisions. Competitive spirit revived with new leaders expanding into Eastern Europe and economic skyrocketing in Japan and Germany. Latin American countries also gained economic autonomy after relying on “the United States’ support throughout the Cold War.”3 After Canadian Prime Minister Pierre Trudeau’s aggressive nationalist industrial policies known as the “Third Option” policy created a downward economic spiral for his country, new reports called the MacDonald Commission Report revealed enormous “benefits for free trade with the United States.”4 Similarly, Mexican President Carlos Salinas de Gortari’s efforts failed to establish European or Asian trade partners, making the United States a promising prospect. Due to the super competitive global environment and mistakes made by Canada and Mexico, a North American trade bloc appealed to many politicians and economists. Started by George H. W. Bush and signed by Bill Clinton in 1992, NAFTA came to force and began its story.

Before diving right in, the theoretical tenets must first be discussed in order to measure and to interpret NAFTA’s performance. The book discusses three different theoretical interpretations of the trade deal. One view asserts that the goals of NAFTA mirror the objectives of the European Community’s Single European Act which established “a single market in Europe” in 1957.5 It created an economic system which transcended beyond national boundaries, hence the Single European Act advanced supranational goals. Some historians, after observing the integration of European, saw the North American Free Trade Agreement as a “North American version” of the similar event that happened in Europe.6 United States, Canada, and Mexico headed towards transforming into a supranational continent. Another interpretation which the author presented in the book was the growth of North American interdependence. This view refutes the notion of an integrated continent but shines light on the plausibility of unprecedented communication and cooperation. Such an alliance allows the countries to rely on each other’s strengths to thrive in the competitive world. Not only would NAFTA boost economic growth, it would also “displace military usage.”7 Cooperation between countries reduce the need and urgency to defend the country or otherwise attack another one. Thus, the second perspective of interdependence leads to international cooperation in many forms. To recap, the two views which are presented thus far view mutual aid as the main goal, however the first view hopes for complete integration while the latter only expects the three countries to rely on each other but still remaining completely separate. The author does not adopt either of these approaches but instead embraces the neofunctionalist view which views NAFTA as an attempt to fulfill “14 different functions necessary for integration.”8 These include concepts like economic symmetry, democracy, adaptation, trade, and economic growth. Instead of evaluating the success and failures of the trade agreement based on an ill-defined ideal, the book judges it on a grade scale consisting of fourteen points. After setting up the stage, each component of NAFTA is thoroughly examined and reevaluated.

Imtiaz Hussain critically reevaluates the eleventh chapter of NAFTA which deals with international investments and legal disputes. Previously the continent was paralyzed by investment barriers which prevented economic growth in all three countries. The United States’s practice of investor screening would be erased, allowing the economy to move beyond the state. Mexican low-wage foreign factories called maquiladoras would need to be reformed to prevent the low cost of production from disrupting the economy in the rest of the continent. The results of the new rules for invests may appear promising at first, with increased investments for United States, Canada, and Mexico. However further investigation shows that this fruit may be attributed to other causes like the growing employment, not necessarily due to the investment provisions. Even if Chapter eleven of NAFTA turns out to have doubtful benefits, it certainly brought massive changes to the processes of legal disputes. According to the chapter, “individuals or corporations are allowed to sue countries which violate the international law.”9 Instead of having completely separate legal systems in the countries, after the establishment of NAFTA, disputes are resolved supranationally via international law. During the first fifteen years of NAFTA, the councils and committees have encountered 349 court cases, enabling unprecedented judicial cooperation among the three countries. Although a few weaknesses remain in the dispute-settlement system, the judicial mechanisms of NAFTA proof to be quite successful while the new provisions on investments hold questionable effectiveness.

Then the book’s reevaluation of NAFTA extends into the topic of intellectual property rights. The pre-NAFTA continent consisted of multiple forms of intellectual property rights. Conflicts which rose from the differences hindered trade. In addition, the production of modern digital technology by companies like Apple accelerated the need for uniform intellectual property rights across the North American countries. The newly established rules were effective. Before, cheap “bootlegged cassettes and compact disks were bought and sold all over the streets of Mexico City.”10 After the NAFTA’s eleventh chapter introduced new regulations on intellectual property, the sales of those products vaporized. This example confirms the positive results of NAFTA and the victory of multilateral enforcement of those provisions. During the years after NAFTA, counterfeiting diminished, and patent laws were clarified. Even though some problems like piracy in Mexico persisted, evidently NAFTA has improved laws and enforcement of intellectual property rights.

Clearly, Imtiaz Hussain intends to examine the effectiveness and results of the North American Free Trade Deal. The book investigates the various chapters and the theoretical components of each. With fifteen years of history between the birth of NAFTA and the publication of the book, there have been plenty of statistics and information to formulate a sophisticated, albeit not fully complete, evaluation. Here comes the final verdict: NAFTA temporarily fixed economic problems and allowed a certain degree of international cooperation, however the trade agreement is not longer viable and “must be replaced.”11 He explains that despite the efforts by the North American continent, Mexico still remains the weakest of the three. In addition, cooperation within the continent may not be enough on the global level. The economic growth of Latin America and dominance of China cannot simply be ignored. NAFTA would have to merge with larger world trade agreements or it would become obsolete. The book discusses NAFTA’s effectiveness but the book’s main thesis would not be complete without mentioning the theoretical framework behind NAFTA which can be applied for further research in the future. Future historic analyses can summon the neofunctional tenets to learn more about international trade deals as well as global and regional integration both economically and politically.

Apart from scrutinizing the book’s contents, it is also valuable to review the author himself. Syed Imtiaz Hussain holds two Master’s degrees, one in Political Science and another in Administrative Science (Human Resources) from University of Karachi.12 Before getting his Master’s degrees, Imtiaz got a postgraduate certificate in Public Administration. He likewise holds Bachelor’s degrees in Law and Arts. With more than twenty-eight years of experience as a human resources practitioner, he has been working in HR administration and legitimate and mechanical relations for prestigious multinational and in addition national associations. Working in multi-confronted orders of human resources has built up his vision and abilities in commonsense utilizations of administration hypotheses and methods, while working with other individuals to increase handy bits of knowledge into gathering and cooperation. Not simply considering theory, he—as a competent specialist—has committed his life to helping human resources practitioners accomplish their dreams. So his reconsideration of NAFTA holds high credibility. Imtiaz Hussain also wrote various books on politics for example By Other Means For Other Ends? which examines George W. Bush’s reelection and books on human resources like HR Global Challenges: How Developing Nations Can Find Their Dreams by Demanding Excellence in the Workplace. His wealth of knowledge is certainly useful and reliable in discovering the truth behind the North American Free Trade Deal.

Research into the context of the book can provide some insight onto the conclusions it conjures. First it is necessary to note that the book was written fifteen years after the establishment of NAFTA, thus historians had plenty of information to draw theories and conclusions from: they could extensively dissect the trade deal and scrutinize both the short term and long term effects. The 1990’s displayed a promising economic growth, so some of that could be attributed to trade deals like NAFTA. However during the remainder of those fifteen years, economic conditions declined. Although not mentioned in the book, the criticism of NAFTA may be influenced by the Great Recession, an economic decline which began in 2007.13 This started in the United States when the housing bubble burst. Since this event and many others escalated into a worldwide catastrophe, it is not surprising that historians would search for potential causes including economic policies and free trade agreements. The Great Recession must have shifted general opinions on free trade towards the negative side. So it is not surprising that the author would synthesize all of the data into a conclusion which only mildly supports the trade agreement. The post-recession years would be a perfect time to be skeptical and to write a book which reexamines a past achievement. When reading Reevaluating NAFTA, the reader should keep in mind the historical context especially the Great Recession to accurately understand the trade agreement.

The Office of Economics in the United States International Trade Commission reviewed many analyses of NAFTA. This review which was published in 2013, examines some of the observations and ideas presented in Reevaluating NAFTA. In regards to the Mexican economy, the review agrees with the book in that the free trade agreement increased trade but has questionable effects on Mexican prosperity. Both sources reveal the recovery from the Mexican peso crisis as very likely “even without bilateral or trilateral North American agreements.”14 But the review points out that this point can be further supported by comparing the effects of Mexico to the economy of other Latin American countries which had no part in NAFTA. In scientific terms, Imtiaz Hussain could have included those countries as a control sample to fully prove that NAFTA caused only small lasting improvements. For Canada, the review agrees with a view presented in the book that describes NAFTA as an extension of the Canadian-U.S. Free Trade Agreement (abbreviated as CUFTA in the book and CUSFTA in the review). Rather than looking at the North American version as a completely new invention, it should be considered an add-on to another pre-existing agreement, so the review praises the book for the insightful discussion on the relations between the bilateral and the trilateral trade agreements.

The theoretical portions of the book differ from many other historical analyses. While many authors focus only on the causality and implications of certain events and policies, this book dives into many of the ideals and interpretations of the North American Trade Agreement including the perspective which uses fourteen tenets. Then judges it by those tenets presented. The mix of factual objective observations and idealistic criticism makes the book a better read than plain history textbooks which usually do not include theoretical discourse. So this book is suitable for any avid historian interested in more than just analysis of causality and monologues of future implications. Although the topic may be for a narrow audience, the book organizes the information in an easily comprehensible fashion. The points of discussion are listed at the beginning of every topic, making the presented ideas simple to track. If the readers become lost in the text, they can refer back to such a list to grasp the essential ideas. Overall, Reevaluating NAFTA is a helpful resource which provides plenty of factual data and complete theoretical analysis on the North American Free Trade Agreement.

As mentioned earlier, the end of the Cold War contributed to the development of a new world with new politics and economy. Free trade, now possible without the power struggles between the United States and the Soviet Union, allowed countries all over the world to grow economically. Political and economic integration seem like possible considerations and trade blocs appear as feasible options for countries looking to thrive in the post-Cold War competitive world. What has not been previously mentioned is the new threat of terrorism in the modern world. Terrorism plays a small but not negligible role in the formation of NAFTA. Canada and Mexico can “depend on the military strength of the United States” for safety in a dangerous environment.15 So apart from the economic benefits of working alongside the United States, there are also safety incentives for cooperation. Another topic to consider is the development of digital technology. It has certainly enabled many countries to gain an economic advantage. New markets and free trade are high priorities for these countries. Outsourcing and foreign investments require agreements like NAFTA to enable such possibilities. Although there are many contributions to the beginning of NAFTA, some causes worth investigating include the end of the Cold War, the beginning of terrorism, and the new introduction of digital technology.

By examining the details of the North American Free Trade Agreement, the research reveals that in the circumstances of the post-Cold War world, the decision by George H. W. Bush, Brian Mulroney, and Carlos Salinas de Gortari was adequate to deal with the economic and political situation. The trade agreement’s provisions on intellectual property rights and agriculture increased productivity and economic growth in all three countries. The thorough analysis however does point out some long term caveats. Though NAFTA temporarily solved the continent’s economic problems, another free trade agreement must be created to answer some of the major global changes of the past several years. Evidently, NAFTA is a fix, but only a band-aid fix.

[1] Ian Clark, The Post Cold War Order: Spoils of Peace, Oxford, New York: Oxford University Press, 2001. 3.
[2] Clark, Ian. 19.
[3] Clark, Ian. 81.
[4] Clark, Ian. 143.
[5] Clark, Ian. 157.
[6] Clark, Ian. 191.
[7] Clark, Ian. 206.
[8] Clark, Ian. 206.
[9] Clark, Ian. 233.
[10] Clark, Ian. 58.
[11] Ikenberry, G. John. “The Post-Cold War Order: The Spoils of Peace.” Foreign Affairs. N.p., 28 Jan. 2009. Web. 27 May 2017.
[12] Ikenberry, G. John. “The Post-Cold War Order: The Spoils of Peace.” Foreign Affairs. N.p., 28 Jan. 2009. Web. 27 May 2017.
[13] Beshara, Hana. “Reviewed Work: The Post-Cold War Order: The Spoils of Peace by Ian Clark Review by: Hana Beshara.” JSTOR. Institute of International Relations, NGO, n.d. Web. 26 May 2017.
[14] Clark, Ian. 253.
[15] Clark, Ian. 17.
[16] Clark, Ian. 251