Via Todd Tucker at Eyes on Trade, I came across a Reason magazine interview with Jagdish Bhagwati. The whole piece is interesting, but I'm going to focus on this one part:
reason: Was NAFTA a mistake?
Bhagwati: I think in retrospect, yes. It’s not a slam dunk argument because it did bring in Mexico. Otherwise, they were talking about CAFTA which included just Canada and the U.S. But when you brought in Mexico, it made it a much bigger thing.
President Clinton was carrying on the multilateral negotiations in tandem with NAFTA. But NAFTA created worries on the part of the unions here, because this is a poor country and they were worried that Mexican competition would really hurt their wages. So even though the multilateral talks would’ve gone through without any difficulty, President Clinton ended up having to fight very hard for NAFTA, which survived by a very narrow majority. In order to win NAFTA, he had to give in on things like labor standards and so on. That’s when all these social things became part of trade deals. From there, it never looked back.
So in retrospect, I would say, because of the concessions they had to make, Clinton started us down a road which really has been counterproductive.
There is another thing to worry about. When you look at a trade agreement like NAFTA, it’s about that thick (holds his hands about two feet apart). When I debate people like Lori Wallach of Public Citizen, she arrives with a lot of books, and among them is this NAFTA treaty she carries for effect. I hope she gets a hernia from doing this often enough, because it looks pretty heavy to me. I wouldn’t be carrying it around. Anyway, she shows this book and asks, “Is this free trade?” And mad as she is, she’s right to raise that issue. You should be able to say maybe in 10 pages that in these sectors we are going to liberalize and so on. But nine-tenths of what’s in these agreements are things which have nothing to do with trade. Labor standards, environmental standards, intellectual property rights. If I were Jane Fonda, in order to sell more workout tapes, I could put into the agreement a clause that the president of Mexico has to do his exercise to my tapes. And it would go in, because ours is a lobbying culture and nobody really would know that it’s there. Because who opens these things except the lobbyists?
So many developing countries are now waking up to the fact that they’re being sold a bill of goods in the form of trade agreements.
