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2003 Summer Institute for Teachers

Ten Years After NAFTA:
How Has Globalization Affected Mexico?

Research Questions

What is globalization? What is good about globalization? What is lost?

“Globalization: Threat or Opportunity” is an article by the International Monetary Fund (IMF) that explains the concept of globalization and argues that it is, in sum, a good thing.

Globalization: A Primer” is written for the lay person and tries to put economic ideas into everyday language. The author, Mark Weisbrot, is critical of the current process of globalization, blaming it for falling growth rates, increased inequality and declining wages for the average worker. The sections “Is Globalization Progress” and “Comparative Advantage” are especially clear and offer a contrasting opinion to the IMF article above.

“Mexico, Labor Standards and the Global Economy” lays out the challenges labor faces in a global economy where capital is mobile and workers are not. The author argues that international labor standards are a critical first step in combating low wages, poor working conditions and income polarization.

“Globalization” is an article that looks at the process of globalization from several different angles and tries to offer solutions for making the process more equitable.

“Globalization Erodes Local Languages, Fuels ‘Glocal’ English” looks at how the need for global efficiency is causing English to replace local languages.

“Globalization, Culture, and Identities in Crisis” is a long, but interesting article on how globalization affects culture and identity. It analyzes the differences between how globalization of culture is received in countries with “modern values” like Europe and Japan and those with “traditional values” like many Islamic states. It is written by a political scientist and an artist, and they each try to use their area of expertise to understand cultural change.

Why did the United States, Mexico and Canada decide to sign the North American Free Trade Agreement (NAFTA)?

“The New U.S.–Mexico Relationship” is an excellent, albeit long, article that analyzes the recent history, not only of NAFTA, but also of other binational issues such as immigration and drug trafficking. The paper was written in 1997, but on most topics it does not seem dated. Very clear, balanced and informative.

“Getting to ‘No:’ Defending Against Claims in NAFTA” is a fascinating paper prepared for the conference “Developing Countries and the Trade Negotiation Process” held in Geneva, Switzerland in 2003. It explains the strategies that Mexico used in the process of negotiating NAFTA with the United States and gives tips to other developing countries that need to make deals with more powerful governments.

Why were the side agreements on labor and the environment added to the original agreement?

If you read one article about NAFTA’s side agreements, this should be it. Negotiating the NAFTA: Political Lessons for the FTAA” gives an overview of the history that led up to the drafting of the NAFTA treaty under the first President Bush and explains why labor and environmental side agreements were added under Clinton. It also details the backlash that the U.S. insistence on these agreements caused in both Canada and Mexico.

Does the labor side agreement protect workers? How have labor unions adapted to NAFTA and globalization?

In “NAFTA and after: Unions test labor side agreements” the author argues that even though the side agreements are very weak, they have encouraged cross-border union organizing and provided an international forum where workers can protest illegal actions and human rights abuses.

“North American Labor Under NAFTA” is a very long but thorough and balanced paper on how labor has been impacted by NAFTA.

“NAFTA’s Double Standard: What Can You Do if Your Rights Are Violated” compares the legal options available to the business community and workers under NAFTA.

In “The New Global Economy: Trade and Production Under Nafta,” a paper on labor, productivity and wages in Mexico, Harley Shaiken uses the Mexican auto industry as a case study to support his claim that there is “a paradox associated with a new international division of labor: world-class productivity and quality are driven by first world markets, while wages are set based on third world institutions.”

Does the environmental side agreement protect the environment? What positive developments have come out of the North American Commission for Environmental Cooperation (NACEC)? What have been its shortcomings?

“Citizen Enforcement Submission Process Under NAFTA’s Environmental Side Agreement” explains how citizens can bring complaints to the NACEC against the NAFTA governments for failing to enforce their own environmental laws. The author explains how the complaint is processed by the NAAEC and points out flaws in the system.

“NAFTA and the Environment: Lessons for Trade Policy” is the text of a speech by Gary Clyde Hufbauer and Diana Orejas of the Institute for International Economics. It gives an outline of crucial events in the history of the environmental side agreement. It also includes a table that lays out the strengths and weaknesses of the agreement.

What is Chapter 11? Why are citizens — and governments — concerned about it?

“Private Rights, Public Problems: A Guide to NAFTA's Chapter on Investor Rights,” was put out by the International Institute for Sustainable Development in 2001. It gives a clear, detailed and thoughtful explanation of Chapter 11: why it was enacted, how it is being used and how it might be amended. The article is long — 64 pages plus annexes —but its length allows it to do justice to a complex topic. It argues that Chapter 11 has been transformed from a “shield” designed to protect investors from expropriation, to a “sword” which can be used to challenge any law that might threaten the profitability of their business. This article is rare in that in addition to describing the problem, it lays out realistic steps that could be taken to make the Chapter 11 process more fair and transparent.

“NAFTA’s Chapter 11 and the Environment: A Discussion Paper for the CEC’s Public Workshop on Chapter 11” is an updated (2003) and abbreviated version of the above article.

“Nafta’s Powerful Little Secret; Obscure Tribunals Settle Disputes, but Go Too Far, Critics Say” is a New York Times article that examines the role of the secretive Chapter 11 tribunals and their power to overturn national laws.

In “Localizing Globalization” Chris Mooney examines Chapter 11 from a states’ rights perspective.

“NAFTA’s Chapter 11 Threatens the Environment and Democracy” gives a brief overview of the consequences of Chapter 11 in two high-profile cases: Methanex v. the United States and Ethyl v. Canada.

This Canadian article on Chapter 11, “Government Relations Communications No Longer Secret” examines how Chapter 11 has forced the Canadian government to produce documents that could formerly be kept secret on the basis of Crown privilege. The authors argue that the documents produced during Chapter 11 proceedings show that the Canadian government, influenced by native lobbyists, passed protectionist trade rules in the guise of health and environmental regulations.

“NAFTA’s Chapter 11: Environmental Claims” is an article in that analyzes Chapter 11 from a legal perspective.

How has globalization affected patterns of growth in Mexico?

“Industrialization, Urbanization, and Population Growth on the Border” describes how the maquiladora industry has caused a population boom in the medium-sized cities near the border. The author analyzes how this demographic change has affected national politics, migration patterns and the environment.

In “Latin American Perspectives: The Maquila Program Its Challenges Ahead,” the author makes the case that Mexican President Salinas de Gortari pushed for NAFTA because he believed it would make Mexico a Latin American economic leader. It goes on to analyze the problem of “saturation of infrastructure” in the maquila region, that is infrastructure strained to the breaking point by new development and population growth.

Who benefits from NAFTA? Who does not? Is there a way to distribute the benefits and costs of NAFTA more equally?

“Decade of NAFTA brings pains, gains” is a balanced article that tallies up NAFTA’s winners and losers from a mainly American perspective.

“How NAFTA Failed Mexico” makes the case that NAFTA has increased, rather than decreased immigration from Mexico to the U.S. by engineering the depopulation of rural Mexico.

In the New York Times article “Nafta to Open Foodgates, Engulfing Rural Mexico” from Dec. 19, 2002 explores rural Mexicans reactions to the end of Mexican tariffs on U.S. farm products.

“Free Market Upheaval Grinds Mexico’s Middle Class” outlines the precarious state of the Mexican middle class.

In “Gracias al TLCAN somos la novena economía: Fox” Fox gives NAFTA credit for making Mexico the ninth-largest economy in the world. However, he also promises assistance to rural workers to help them adapt to increased competition from the U.S. and Canada.

“La prosperidad que se ofreció con el TLCAN nunca llegó” argues that NAFTA has undermined Mexico’s industries and threatened its food security.

“La explosión que viene” is an editorial that claims that conditions have become so bad in rural Mexico, due to the inability of campesinos to compete with subsidized American industrial agriculture, that an explosion of popular resistance could occur in the near future.

What is sustainable development? Does NAFTA in particular and globalization more generally, lead to greater sustainable development in poor countries?

“Measuring Real Progress” pokes holes in the assumption that development can be measured by a country’s Gross Domestic Product (GDP). The author, Ronald Colman, argues that a new measure — the Genuine Progress Indicator (GPI) — should be used to account not only for economic activity but also social and environmental costs.

In the NY Times Article from Aug. 7, 2003 “Grim Facts on Global Poverty” reports on the release of the United Nations Human Development Report. According to the report, the economies of many countries stagnated during the 1990s and several are actually doing worse now than 20 years ago.

The article “Sweatshops and Globalization” lays out some of the issues that surround sweatshops in the third world.

“The Relative Impact of Trade Liberalization on Developing Countries” explores the hidden costs of economic liberalization. The first two sections of the article are very accessible. When the authors begin exploring the flaws of various economic models in the third section, it because more technical.

“NAFTA: A Cautionary Tale” argues that NAFTA has not led to greater development in Mexico. It uses NAFTA’s record in Mexico to argue against the Free Trade Area of the Americas.

Should NAFTA be expanded? If so, what steps should be taken to further integrate Canada, Mexico and the United States?

“Should We Trade NAFTA for a Customs Union?” offers a Canadian perspective on the benefits of deepening NAFTA to create a customs union.

“Corporate Control of North America: And How to Bring NAFTA Under Popular Governance” argues that corporate elites in all three NAFTA countries have benefited from the agreement while ordinary citizens, the environment and labor have not. The author calls for a reopening of NAFTA to include “enforceable human and labor rights, social protections and the preservation of local democracy.”

“A North American Community” is the text of a speech by Robert Pastor in which he argues that deepening the integration of the NAFTA countries will improve the security of all three.

“Whither NAFTA: A Common Frontier” proposes creating common border policies in Canada, the U.S. and Mexico in order to enhance security, legalize migration and promote trade.

The article “NAPU: A New Trajectory for Globalization,” reports on a talk given by David Bonior at the Center for Latin American Studies where he advocated for a North American Parliamentary Union that would create a forum for consistent cooperation between the three NAFTA countries and work to create a more transparent system for resolving issues of continental concern.

Research Questions

What is globalization?

Why did the U.S., Mexico and Canada sign NAFTA?

Why were the labor and environment side agreements added?

Does the labor side agreement protect workers?

Does the environmental side agreement protect the environment?

What is Chapter 11?

How has globalization affected growth in Mexico?

Who benefits from NAFTA?

What is sustainable development?

Should NAFTA be expanded?

© 2012, The Regents of the University of California, Last Updated - December 11, 2003