The debate surrounding NAFTA has brought to the forefront the clash between the pursuit of profit and the equality of all people. Governments in the past have had to protect citizen's rights against the power of businesses and the desire to cut costs, by such laws as child labor, and regulating hours. In the past fifty years, industrialized nations have had to do more including providing social welfare programs for those who were not able to help themselves. During the Fordist period both workers and factories were able to cooperate under the watchful eye of federal governments. As corporations outgrew the domestic market and began trading, and more importantly, producing internationally, they grew in economic power and governments began to lose their powers of governance. In other words, the decline of meaningful national economies led to the break down of the governmental ability to balance the production of mass consumption and mass production. In this context, governments are increasingly unable to deliver on the established promises of equal rights for all. Included among such rights are human rights, in the form of welfare and education. This chapter will focus on the declining ability of federal governments in each of the sovereignty countries to underwrite and guarantee the protection of human rights in the context of NAFTA.
The power of economic markets to shape government policies has been remarkable, especially in the last decade. From the time of the 1600s states have considered themselves to be all powerful, supervising trade while protecting human rights. Currently, as the world enters into the post-Fordist era, roles have reversed. Trade now curtails government decisions and diminishes the voices for human rights. This has happened both nationally and internationally. More powerful governments, understanding the power of tariffs and trade embargoes, have used these powerful economic weapons to force their decision upon other "sovereign" nations. Though some of these weapons have been in the name of human rights, it has also been in the best interest of powerful corporations. For instance, in the past ten years the major industrial nations, led by the U.S. and Great Britain, have placed trade embargoes on nations with abusive human rights problems such as the Apartheid State of South Africa. The embargo led to a change in government and legal justice for the citizens. (1)
In the last six months, legislators and the public have waged debates on whether the U.S should give China, with its reputation for abusing human rights,"preferred trading status". The argument in defense of China's "preferred status" is that only by connecting the isolated markets of keeping China with the rest of the world will the U.S. and other nations be able to influence how the government of China conducts its internal affairs whereby forcing improved human rights. (2)
Human rights, though, is often a mask. As trading increases over the globe, the concern for human rights have been decreasing, due to the lure of widened markets. Consequently, corporations significantly influence the implementation of political policy. In the South African case, the domestic South African corporations strongly fought for compliance with the international mandate, at the expense of national sovereignty, so that corporations would not lose market share to world competitors. (3) In China's example, many U.S. corporations have invested in the cheap labor factories which were in jeopardy should the lawmakers not renew the trading status guaranteeing lower tariffs of imports from and exports to China. Though catering to corporations provides short term progress, by diminishing the power of the state without a powerful alternative, this practice will destroy the stable growth needed for sustainable development.
As the government officials continue to listen to corporations and to adjust to their demands, the power of the federal government to support the constituents who elected them is limited. When this occurs the institutions designed for human equality and the protection of rights erode. Trade agreements and international competition, designed to improve the lives of those who are able to participate, leads to the reduction of the state and its capabilities to protect the rights of its citizens. This chapter will take a strong look at several roles of the state and how trade agreements, such as NAFTA, has restricted that role.
States [are] perceived as the primary political communities, with the capacity to determine the status of and to make rules for any activity that [falls] within contemporary understandings of the scope of legitimate authority. States [are] sovereign and hence each state determine[s] within itself the nature of its internal and external policies[while] refrain[ing] from interfering in the internal affairs of other states. (4)
States for the time of the 1600s have been designed to protect and support the people and be accountable for its actions to its people, protecting them from unfair external practices. In other words to be self-governing or sovereign. The state is the highest authority, making decisions that will enhance its political and military stability and economic growth. Governments design their own laws and regulations and provide incentives and services such as property rights for the people that encourage economic growth while protecting and supporting those who are not able or could not provide for themselves. As states and governments have grown both in numbers around the world and in their responsibility, international organizations, such as the World Bank, and academics have proven that governments need to take a more active role to create sustainable growth.
Each year the "World Development Report" published by the World Bank investigates a number of indicators to assess the stability of development growth of the country. The bank determines the role of the state if it is to encourage long term development. The bank relies on more than Gross Domestic Product (GNP), as GNP only indicates the money produced in a country, not how well it gets distributed. Instead the Bank uses, in conjunction with GNP, other social standards to evaluate stable growth. From these indicators, the report has declared that "five fundamental tasks lie at the core of every government's mission, without which sustainable, shared, poverty-reducing development is impossible: Establishing a foundation of law; Maintaining a non-distortionary policy environment, including macroeconomics stability; Investing in basic social services and infrastructure; Protecting the vulnerable; and Protecting the environment." (5) The World Bank contends that a government needs to have an active role in providing welfare and program services. With these services, its population is adequately provided for. This leads to growth for there is less income disparity, between the rich and poor. Yet the international trade market has destroyed much of the power and the ability of governments to provide equality for the citizens. For the U.S., Canada and Mexico, CUFTA and NAFTA have contributed the most to this problem.
Part of the role governments play is to create atmospheres where businesses and labor can effectively communicate with one another as well as have equal access to the legal governing body that hears grievances and can correct unfair practices. Yet as more free trade occurs, the mobility of capital around the world increases. In this capital mobilization game, the American government finds itself losing political and economic power to the MNCs, but never so much as with NAFTA. The loss of revenue is leading to the loss of sovereignty. Lawmakers know that they can not force a corporation to stay in the country so they attempt to appease the corporation in order that the company will keep its headquarters or part of its operations in the nation allowing the government the revenue it needs. At the same time corporations, knowing the economic power they pose, demand fewer taxes or less regulation on products and working conditions. (6) In the end, it is the less mobile national population who is suffering. According to Robert Reich in his book, The Work of Nations, as the U.S. aggressively competes in the global markets of the world, more people will find that their jobs will disappear due to comparative advantage and international investors. (7) Because of NAFTA, factory workers are losing their jobs, as assembly line factories move down to Mexico. In the same vein, investors such as Sony, Honda, and IMB are closing businesses in Canada and U.S. to open them up in Mexico with fewer restrictions. Currently 600,000 Americans have lost their jobs to the international labor market of NAFTA and as corporations pay fewer taxes there is less revenue to pay for the social services needed by the now unemployed factory workers and their families. (8) So the true winners of NAFTA are American Multinational Corporations (MNCs) who can readily transport capital all over the world in a moment's notice. Governments are left with a dismantled economy with less power to regulate and balance production with consumption destroying the consumer base as Stacey Stack will further illustrate in her chapter.
There has been much documentation regarding Canada's loss of sovereignty over the past decade. Most of this can be contributed to CUFTA Canadian-United States Free Trade Agreement. This was an agreement designed to lower tariffs and allow for investment capital to flow across borders without regulations, creating one economic territory with little government control and power to regulate. When CUFTA was written and implemented, the Canadian government came to discover that their governmental ability was severely curtailed, from the energy sector used to promote national businesses, to state regulations on banks and foreign investment to ensure self-sustaining growth. The Canadian government in the past had been using its petroleum to help local businesses by selling oil at lower costs than was sold to international corporations. This had helped the small national corporations to sell products at competitive prices. Before the Free Trade Agreement, foreign investment was also restricted to insure that Canadians had a controlling share of their firms and that investments enhanced the people and land of Canada. CUFTA changed all that, with the signing into law that most institutions, unless stated specifically, were to be privatized, or at the minimum, prohibited from retaining their monopoly on a particular sector of society. Lawmakers realized that CUFTA ensured that "no future Canadian government would be able to mount an interventionist industrialist strategy" to promote its economy. (9)
As part of the agreement, governments were not to place any part of this treaty in jeopardy. Written into CUFTA was the clause that any legislation that would affect any of the other government's interests had to inform a head of time, giving the other country a chance to lobby, consider retaliation, or sue the government. (10) With the agreement ratified, any amendments to the agreement must be approved by both the Canadian and American governments, making it impossible to change a clause in the agreement, even if it is hurting a social group, a nation's GDP or jeopardizing the government's autonomous power. (11) Canada is unable to provide services or programs to help its citizens without U.S. approval. 500,000 Canadians have lost jobs and overall business investment was down during the time of CUFTA, and Canada can not take actions to stop it.
Just as CUFTA was the way to get into the Canadian market, NAFTA provides a significant roadway for conducting business in Mexico. The regulations of NAFTA written by corporations was to supersede the Mexican constitution. "With its wide-ranging prescriptions for what the Mexican government must do and cannot do, with the rights of American corporations spelled out in great detail, with the more elaborate dispute-settlement and enforcement mechanisms, with its three-government ratification, and with its difficult amendment process (agreement by the three signatory states), NAFTA introduces a new dimension to Mexico's constitution." (12)
For a country that desires to stay independent, NAFTA has changed all that. The nation of Mexico has had a long history of foreign domination, and has taken pride in recent sovereignty by acting against domination by outside power, especially the U.S. This was seen in the "Import Substitution industrialization" era of the 1930's to the 1970's, until the Mexican government realized, with Mexico's huge debts that financial assistance was needed. In the 80's the Mexican government turned to its neighbor to the north for help, the U.S. Through all the economic hardships, though, the Mexican government expected to maintain state sovereignty. Mexico's leaders believed "the old myth [which] claimed that the state was powerful enough to defy foreign investors in order to implement [nationalistic] social justice" and self-rule. (13) NAFTA is proving them wrong. Through its conditions, NAFTA violates the Mexican constitution. The provisions of NAFTA are challenging the state's interventionist role in the economy,"and much of the state's regulatory authority over commerce, property rights, and investment". (14)
For example, Articles 25 and 26 of the [Mexican] constitution envisions the state as the primary planner and promoter of the economic development of Mexico. However, [NAFTA] assumes that a transcontinental private sector will be the premier planner of investment and production in Mexico and the main engine of economic competitiveness and growth. [NAFTA] also clashes with Mexico's legal tradition of executive authority over commerce, property rights, and investment. The Mexican constitution has traditionally embodied extensive executive branch authority over foreign commerce and over the production, transport, distribution, and consumption of goods and services. Article 131 of the constitution, for instance, originally authorized the Mexican executive to regulate the import, export and transport of goods and to regulate foreign commerce and the stability of national production. (15)
While stripping way the power of the constitution and the legislative power of the country, NAFTA's provisions have empowered multinational corporations to seize control of the economy through property rights, investment, trade, commerce and transportation. What remains intact is the state's legal sovereignty over liabilities: human welfare and the environment. The side agreements allow the nations to protect their people but do not give them the resources in which to do so. As Julie Erfani argues,"NAFTA's side agreements ironically leave the Mexican state with extensive sovereign authority over Mexican people's wages, working conditions, welfare, and lives but minimal ability to improve most people's lives." (16)
Before the two world wars and a starving drought, industrialized nations took little social responsibility. Only with the threat of a social alternative, Communism, did the nations of Western Europe and the Western Hemisphere take on an active role to help their citizens overcome impoverished conditions. In the U.S., under Roosevelt and Eisenhower, social security, unemployment, health care, education and other social issues were aggressively supported and funded by the federal and local governments. These social programs were designed to help those citizens who were temporarily unable to help themselves after a second devastating world war. These services were not as temporary as first expected. The need for social programs has lasted longer due to capital inequality of free trade.
With the increase of international trading and production some citizens were not able to move into an economic position in which they did not rely on the government. They remained "poor". The pursuit of cutthroat competition was creating poverty. "The existence of poverty and inequality is rooted in the 'logic of capitalism'. This inequality appears in the form of an unequal relationship between workers (everyone who must 'sell' their labor power to another in order to survive) and capitalists (those who own all other means of production and therefore control the workers' means of survival)." (17) As open and unregulated trade has been expanding, so has the number of those who are considered to be "poor".
There have been many definitions of poor or poverty from economic to social indicators. The World Summit for Social Development defined absolute poverty as "severe deprivation of basic human needs including health, safe drinking water, sanitation facilities, shelter, education and information" this was evaluated not only on income measurements, but also by the lack of social services. (18) As Vicky Vanderpol will show in her chapter on Children, these conditions exist in the United States and as social services are being cut, more than a million children are being pushed below the poverty line. (19) With a strong corporate voice, influencing governmental policy, often those in poverty can not be heard, and the inequality continues and increases yearly.
The government is responsible to the people for its actions and has become known as the provider for all of its citizens including the poor. Social programs were instituted to fulfill two goals: to provide funds and services for those not able to afford them on their own and the enhancement the domestic market by buying the products, which the local producers provided. It was thought that by allocating money to these people not only would people be provided with the needed capital during the short time they were unable to provide for themselves, but also produced customers who under normal circumstances would not be able to buy products from local merchants. The growth of domestic markets will enhance the success of the NAFTA region. Local and international corporations will benefit from the continuation of citizen's purchasing power. As the poor continue to increase and the state's resources shrink, the consumer base will decline. (20) Governments need to have a stronger hand to produce productive members of society, yet NAFTA is limiting government ability to do so. NAFTA rules only "permit a government to change its social programs by further opening them to market forces and prevents it from expanding the public provision of services." (21) This will hamper internal markets and eventually the economic well being of international corporations.
With the increase in free trade, the U.S. has cut back on its social programs. In 1996 President Clinton and the Republican Congress passed the new social welfare package. It effectively cut welfare for struggling families and for impoverished children (the Chapters by Stacy Stack and Vicky Vanderpol will further examine this). The assumption was that if everyone was working that there would be no need for welfare. This is not entirely true, as part-time service jobs with no benefits will not replace the union factory job with retirement options and stock investment. (22) As free trade continues and factories move out of the U.S., existing lower skilled jobs are becoming unstable, and temporary. Lower skilled workers access to health care, retirement benefits, sick days and family leave is being severely reduced. As workers are forced into these less desirable jobs and losing access to steady work and benefits social services are being eliminated by the government. Unwilling to recognize that these policies are creating poverty, U.S. lawmakers are attempting to eradicate both poverty and social services, such as welfare, at the same time.
While the U.S. has attempted to create small social nets and has continued to cut them back, its neighbor to the north has been more generous with its social programs. In a land where most of its sparse population lives within three hundred kilometers from its U.S. neighbor, the Canadian population is spread out along a long border. With the population so scattered, the government must take a more active role to support its population. For instance, the Canadian government has traditionally controlled and operated most of the transport systems specifically bus and train operations. This was done so that people who live in sparse populated areas are adequately serviced though the service does not bring high economic returns on the investment.
The government also has been active to promote many small businesses, which have been able to each employ low numbers of staff. In this way the government has been able to prompt its population into the industry field. The Canadian government has, up until recently, provided education at the post high school level, free of charge to those who wish to continue their education. Medicare is also highly subsidies for its citizens. But with so many services provided to the population, the government of Canada has taxed all of its citizens and businesses heavily. But after the implementation of the Canadian-United States Free Trade Agreement, most of these social services have been on the decline. As a result, in downtown Toronto, there has been a twenty per cent increase in welfare cases every year sense 1990 (a year after CUFTA was implemented). During the same time revenue that supported these social assisted programs fell by $3.7 billion (Can). (23)
Mexico, not considered a developed nation until the implementation of NAFTA, had its own form of social security. Though not designed for the poor, the policy of Import Substitution industrialization helped the major populations of the Mexican people. These included minimum wage for union labor workers, access to government institutions and government cooperation. Even though the poor were not considered in the Import Substitution implementation and other government policies regarding labor, the indigenous populations were able to raise their voices, which gained them land allocations to be farmed in collective plots. This allocation of land enabled the farmers to produce crops for consumption (a form of food subsidy) and sell the excess food at the local market to buy what ever else the family needed such as medication and school supplies. Although this was not a structured state run program, it enabled the poor to help themselves and provided citizens with needed supplies. Yet NAFTA has demanded that Mexico lower some key "barriers" that "currently maintain jobs and incomes..." in Mexico, such as the agricultural sector. (24) Lower cost foods have flooded into the country creating the displacement of peasant farm workers off their land and into poverty as was explained by Yasmin Azam in her chapter concerning NAFTA's effects on migration patterns.
Education is one of the most fundamental institutions that the state provides for its people. Education is one of the most basic ways that a government can not only improve its workforce, getting people off welfare and also raising GDP. "Research suggests that increasing the labor force's average education by one year raises GDP by 9%. After the third year, the returns to each additional year diminish to around 4% of GDP." (25) In order for a country to grow economically, it must invest in education for all of its citizens. In the past few years, the quality of U.S. schools have been deteriorating to the point they are now considered to be one of the lowest quality in the industrial nations. Surprisingly, Canada in these recent years has had to cut the budget it spends on education on all levels, especially in universities. Matt Sisk will elaborate on the unfulfilled promises of the Mexican government in regards to providing impoverished states (such as Chiapas) and poor town districts with increased, and in some cases any, access to education. As schools have been neglected so have the poor. Government spending on education is a good social indicator of the value placed in developing the population to become productive members of society. Often those in poverty have been unable to raise from the economic level they are at, for they do not have the skills they need to compete for the higher wage jobs and better careers. Without the better education and higher wages their ability to help contribute to the domestic market becomes minimal Accordingly, minimal is their ability to pay taxes and to help fund valuable services needed to keep stability, such as the justice and legislative branches.
Of the three nations, the need for justice is most apparent in Mexico. "Establishing a foundation of law" is especially essential in the state of Mexico, which has been known to have a corrupt police force and an unenforceable judicial system. (26) Amnesty International has sighted Mexico with many human rights violations from rape, kidnapping, to murder. (27) Internal violence of state officials has increased while a rebellion has occurred in retaliation to NAFTA (see Matt Sisk's chapter for further explanation). Many times human rights advocates have been on Capital Hill with complaints that the Mexican government has not attempted to stop these violations. (28) Many are charging that international trade is not discouraging but actually encouraging this violence and abuse, when the main goal is economic success with consideration of human rights They accuse the local officials of being paid by large landowners to keep the indigenous people and other poor populations under control, so that the poor do not fight for their land or for the right to feed themselves. (29)
Programs and research has shown that just because a nation has economic growth does not automatically mean that it will lead to human development. Adam Smith's theory of "Trickle Down" economics has not been working, instead the rich are getting richer while the poor are finding that their income is decreasing. For instance, the number of millionaires in Mexico has increased from two in 1980 to twenty-four in 1994, while the Gross Domestic Product per Capita went down roughly 12%. (30) This indicates that while the standards of living are diminishing, there is still growth in the inequality of wealth distribution. Politicians were willing to make this sacrifice in the name of free market competition. "During this whole process of liberalization, adjustment and privatization, concern for the poor [have been] pushed into the background. Policy-makers [have] assumed that even if poverty increased in the short term, this was a price that had to be paid for long-term stability and growth." (31) By signing agreements like NAFTA and allowing the Multinational corporations to continue this practice of achieving economic success for themselves at the cost of cheap and exploited labor and the environmental conditions that destroy health, social classes will break down. By lowering the labor wages and standards and ignoring the poor and those who need the help of the government, the middle class will find itself shrinking, having to save its money for the essentials and not able to afford the everyday products. This creates inequality not domestic growth. This will defeat the entire purpose of Free Trade Agreements. These agreements were designed in order that products will be produced at competitive rates so that they may be sold to the general public and workers and the corporation will earn a higher profit. Yet to what avail is it, if by forcing wages so low and by displacing workers who can not rely on the government for help, that there is no one who can afford these products? These conditions are seen in Africa where corporations are producing consumer products yet the workers are not able to afford the products they assemble, and it is now appearing in Mexico. Instead of exploiting the lower classes, there needs to be cooperation between economic growth and human development which produces economic stability. (32)
"Human development contributes to economic growth. In recent years more and more studies have documented the strength and diversity of the links between the two." (33) If the social spending is low in a country, economic growth even if high will not generate significant improvements in human development, as seen in Egypt, Lesotho, and Pakistan. (34) If the imbalance continues to occur, income disparities and the job types available will become more polarized, with a few strong rich and a great multitude of poor who are not able to change their social class. Less developed nations will continue to find that they are becoming more entrenched in providing raw materials, not technically advanced products in the global system, especially when they do not spend adequate funds to educate and provide basic social services for their under privileged population.
As this inequality gap is becoming wider in the world, with the poor being neglected and the economic prosperity of the country in jeopardy, many voices have been raising in protest around the world,"including those of trade unions, churches, non-governmental organizations, the International Labour Organization and the United Nations International Children's Fund (UNICEF). [The UNICEF, especially, has] called on the IMF and the World Bank to give more attention to poverty and human concerns. Among a wide range of proposals, it argued for maintaining basic minimum services, especially for the most vulnerable, and for sharing the burden of adjustment more fairly." (35) This would take the form of health and education services and progressive taxation, so that all members of society are helping with the tax load according to their income. "Public policies can ensure that growth is shared and that it contributes to reducing poverty and inequality, but only if governments put the social fundamentals high on their list of priorities." (36)
Currently, President Zedillo is claiming to be working on improving education and other social services such as health and poverty alleviation. Yet this has only happened, not because of trade agreements or what the government has always been doing, but because international pressure is requiring that this be done. As it is becoming painfully clear, states are losing their sovereignty and their ability to help their people, as the nations are becoming creditors and debtors and players in the international economy. It is taking international organizations to do what the state has always needed to do in the first place; take care and economically advance their people so that the population will become participants in the domestic market and eventually produce products that will compete competitively in the international market. But states need to have the voice and the power to be able to protect those who rely on them and have been supporting the governments in taxes and votes. Governments around the world, and specifically the U.S., Canada and Mexico have an obligation to their poor to protect them from rising inequality. They should create safety nets such as progressive taxation and subsiding social services to easing the sufferings of the poorest population. (37)
The following papers will show concrete examples of how NAFTA is hurting specific people groups. These groups have not had a strong voice, but in light of NAFTA have found their voice becoming weaker. One of these groups is that of the women. Stacey Stack explains their dilemma. She explores the problems of the Border Maquiladoras and the working conditions. She, then, examines the problems of service jobs verses the factory jobs that they once held and family hardship that has occurred. She argues that governments need to balance NAFTA with social services.
Another group that has been strongly affected is the children. Vicky Vanderpol states that record numbers of children are living in poverty conditions in all three nations, and the numbers are increasing every year. As social programs are being cut, so is their ability to better their lives.
Matt Sisk explores the last group, the Chiapas Indians, who have been so deeply affected by NAFTA that they have rebelled against the political and economic system, desperately hoping to find a way to keep from starvation.
All these groups are just a small sampling of different people groups that have felt the negative impact of NAFTA's power. Unless there is government and international action to protect the vulnerable, the true potential of economic success of the NAFTA agreement will not be fully realized.