Obama: Renegotiate NAFTA as You Promised

Starting my first year in office, I will convene annual meetings with Mr. Calderón and the prime minister of Canada. Unlike similar summits under President Bush, these will be conducted with a level of transparency that represents the close ties among our three countries. We will seek the active and open involvement of citizens, labor, the private sector and non-governmental organizations in setting the agenda and making progress.

- Barack Obama, in a February 20, 2008 Dallas Morning News op-ed

Though Mexican President Felipe Calderón and Canadian Prime Minister Stephen Harper have done everything to maintain the status quo on the North American Free Trade Agreement (NAFTA), President Barack Obama has promised to “push the restart button” on several trade deals. While it’s debatable how much his administration actually differs from its predecessor in these areas, trade activists remain hopeful that Obama will stick to his promises to renegotiate NAFTA and reconsider its expansion through the Security and Prosperity Partnership (SPP).

Those promises include the above comment, which Obama made when he was still vying to become the Democratic presidential nominee.

Obama wrote those words shortly before the fourth annual SPP summit took place in New Orleans. By that time, the annual gathering of North American government officials and private-sector executives had become a lightning rod for criticism across the political spectrum and across borders. Indeed, the summits have been closed-door venues for pursuing a private sector-led agenda of deregulation and militarization, an agenda that calls for lowering environmental and consumer safety standards and curbing civil liberties, under the guise of making North America more “secure and prosperous.”

Once Obama took office we became hopeful, despite the unwillingness of our countries’ own leaders, Calderón and Harper, to widen the North American dialogue. However, more than six months into this administration, with the next North American leaders’ summit coming up on August 9 and 10 in Guadalajara, trade activists like us are more in the dark than ever about what the United States would like to accomplish during the next phase of these trinational talks.

Will opening up the summits to greater civil society participation become just another forgotten campaign pledge? Will the Obama administration continue to ignore calls from concerned citizens in Canada, Mexico, and the United States to renegotiate a free trade agreement that increasingly serves only the slimmest of elite interests and needs a complete overhaul?

Security for Whom?

The Guadalajara meeting will be the fifth such gathering since the current three North American leaders’ predecessors — former presidents Vicente Fox and George W. Bush and former Canadian prime minister Paul Martin — committed, in Waco, Texas in 2005 to deepen the NAFTA relationship and expand it into areas not covered by that agreement. The three leaders, nicknamed the “three amigos,” called this new trilateral arrangement the Security and Prosperity Partnership (SPP). It included different attempts to merge policies in the three countries on a number of areas: border security and anti-terrorism measures, energy sector integration, environmental protection, emergency preparedness, safety standards and more.

While regional cooperation in many of these areas is desirable, it became clear early on in the SPP process that the ultimate policy objectives were less so, at least for the public interest.

The SPP has meant the escalation of U.S.-led militarization in Mexico via the Mérida Initiative and other mechanisms that haven’t stopped Mexico’s growing human rights violations or the unstoppable violence in a failed “war on drugs.” In Canada, new Homeland Security-RCMP policing operations (such as the Shiprider project on the Great Lakes and shared Pacific waters) blur traditional state borders, allowing armed U.S. Homeland Security officers to operate on Canadian soil.

Prosperity for Whom?

The SPP’s economic agenda has included efforts to “harmonize” how and what all three governments regulate with the stated aim of “reducing the cost of doing business across borders.”

Effectively, this business-driven demand has meant deregulation in areas as important as food safety — moving to industry self-regulation — and environmental protection, including increased pesticide residue limitson hundreds of fruits and vegetables.

Other corporate demands have resulted in plans to cut the “transaction costs of exports” — like NAFTA’s rules of origin — by $100 billion, according to the leaders’ latest joint statement (although a report from governments of how much has actually been cut is pending). Rules of origin can guarantee the inclusion of local and national content in goods traded across borders, and their elimination affects small producers who could use them, with the help of development agencies, to provide input in trinational trade. In practice, eliminating these rules means renegotiating NAFTA in closed-door ministerial meetings.

The SPP’s “energy integration” provisions have meant churning out five times more dirty oil from Canada’s tar sands and pressure on Mexico to privatize its state-owned oil and gas industry, which does nothing to help the North American region to transition away from fossil fuels, while further tying Canadian and Mexican resources to insatiable U.S. energy needs, and deepening U.S. dependence on foreign energy sources.

And finally, whose partnership are we talking about here? Our leaders have pursued these goals without any public oversight. Legislators haven’t been consulted, and working groups often were dominated by big business. The North American Competitiveness Council, comprised of 30 of the continent’s largest corporations, has been the SPP’s only advisory body and the only group invited to the annual summits like the one coming up in Guadalajara. Business groups are currently waiting in the wings, ready to “offer strategic advice and support to the leaders,” in the words of the Canadian and U.S. Chambers of Commerce, “either through the NACC or its successor mechanism.”

Failed Model

The abject failure of NAFTA and its SPP offshoot to bring “security and prosperity” to North America is clear with the economic, environmental, and social crises now affecting this region and much of the world. Unemployment is high, global warming is escalating, and the need to transition away from carbon-intensive energy sources is irrefutable. Multiple food and consumer product safety scandals, notably the recent swine flu epidemic that has been linked to poorly regulated meat processing plants that have spread throughout Mexico since NAFTA came into effect, have called the bluff of business lobbies seeking further deregulation. So has the financial crisis — which resulted from unregulated trade in novel financial products totally detached from the real economy.

Mexico in particular is sinking into an unprecedented social and economic crisis. The drug war, perpetrated by Calderón with U.S. military help, has only exacerbated the nation’s plague of violence. Since 2006, an estimated 12,000 people have died because of this war — the body count in 2009 so far is 3,363. There are also reports of a six-fold increase in human rights abuses also since 2006.

The International Monetary Fund (IMF) has just announced that while most of the world is seeing signs of recovery, the contraction of the Mexican economy this year will be double what was predicted just three months ago: a 7.3% rate. The fact that Mexico has become so vulnerable makes it crucial to critically analyze why NAFTA has not helped the country, even when trade and investment has increased.

New Model

The “free-market” ideology at the heart of NAFTA and its expansion to the realms of security through the SPP must be replaced with a people-focused model of sustainable economic growth that puts human rights, environmental protection, and job creation ahead of profits. These were Obama’s promises as a candidate, when his refreshing new ideas tore through the language of “security” and “prosperity” to reveal the divisive policies these euphemisms hide.

Will the U.S. president turn back on his promise by simply reviving, even if it’s under a new name, the failed Security and Prosperity Partnership dialogue? Or will he heed, for example, the advice of over 100 U.S. members of congress and civil society networks who want to revisit NAFTA, to strengthen environmental and labor standards and promote just investment rules and fair trade among other changes?

Maybe Obama hasn’t made his mind up yet. In that case, we offer a simple piece of advice: In Guadalajara, make it clear that you will reverse the corporate coup d’etat that took over North American relations; announce that you’re closing down the SPP and push the reset button. Agree with Calderón and Harper to start renegotiating NAFTA. Give us hope that another North America is possible.

Manuel Pérez-Rocha, an associate fellow at the Institute for Policy Studies in Washington, DC, and Stuart Trew, the trade campaigner for the Council of Canadians in Toronto, are Foreign Policy In Focus contributors.