The history of trade is that two or more parties enter into
agreement to exchange goods or resources exclusively within their respective
territories of negotiated values. It happened the World over as exploration
expanded the reach of humanity. The purpose and usage of the traded resources
was not discussed but was intrinsic to valuations placed upon the resources
exchanged. Also, of importance, is the stage of development of the societal
communities engaged in trade partnership. Industrial developed societies were
trading for raw materials to supply manufacturing while their trading partners
were farmers and tribesmen that thrived from livestock and agriculture. The
result was strip mining of territories for commodities such as precious metals,
oil & gas, gems, etc. in exchange for livestock and developed economy coinage
(money).
Trade balances (surplus and deficit) result from a
multivariate dependence of development levels of trading countries, among other
things. While one country conducts trade in manufactured goods, its partner may
be trading livestock or even the labor of it citizens to manufacture goods with
a lesser expense of capital. The NAFTA agreement is an example of the creation
of a three country trading bloc establishing a North American marketplace where
corporations, to take advantage of the variances, created business strategies
to break up the manufacturing process for a comparatively lower wage labor in
Mexico. The strategy also gets reflected in the Foreign Direct Investment comparisons
between Mexico and the United States and Canada. Politics recognize the foreign
direct investment in Mexico as the United States’ lost opportunity to create
jobs for its citizens. However, no evidence supports the fact that the FDI in
Mexico would take place in the United States absent NAFTA. This leads to the
geopolitics of renegotiating trade agreements for better job creation and
location of the creation.
The Congressional
Research Service published a NAFTA report authored by M. Angeles Villarreal
and Ian F. Fergusson summarizing NAFTA and its impact along with possible
renegotiations. Potential topics include:
Automotive
sector – rules of origin
Services – removal of
barriers to electronic payment card services, electronic signatures, mobile
telecommunications, international roaming rates, and additional market access
in areas such as audiovisual services.
E-Commerce,
Data Flows, and Data Localization – cross-border transfer of
information by electronic means or forced localization of data centers.
Intellectual
Property Rights (IPR) – consideration for expanded provisions related to
widespread use of the Internet on copyright in the digital environment.
State Owned
Enterprises (SOEs)- addressing potential commercial disadvantages to
private sector firms from state supported competitors receiving preferential treatment.
Investment – NAFTA
was the first FTA to contain investor-state dispute settlement (ISDS) provision,
which allows investors to bring arbitration against a host government to
binding arbitration to resolve disputes over alleged violations of a host government’s
investment obligations.
Dispute
Settlement – a binational dispute settlement mechanism to review
anti-dumping (AD) and countervailing duty (CVD) decisions of a domestic
administrative body.
Labor –
strengthening provisions related to the protection of worker rights.
Environment
– hold parties to more enforceable environmental provisions
such as those that require parties to adopt, enforce and not derogate from
their environmental laws to attract trade and investment.
Energy – The United
States may seek greater access to Mexico’s oil sector or to enhance bilateral
cooperation on energy production and security.
Customs and
Trade Facilitation – Discussions could address customs automation
procedures, the creation of a single-access window at one entry point for importers
and exporters.
Sanitary
and Phytosanitary Standards (SPS) – considerations such as
science-based and transparent regulatory activities, including the use of risk analysis
to improve the scientific basis of SPS regulation, notification to importers or
exporters of shipments detained for SPS issues, or consultative mechanisms to
seek quick resolution of such detentions.
As evidenced by the topics and renegotiation summaries, a
major alteration of NAFTA is not likely. What is likely is a tightening of the trading
bloc integration to create a more seamless marketplace similar to the European Union
and the economic political developments of China – Asia.
