The previous four chapters outline many of the pitfalls of the neo-liberal system as it relates to national and regional economic situations. NAFTA has freed the markets of Canada, Mexico, and the United States in almost every sector, and has subsequently exposed the national economies to the fallout which typically follow such a neoliberal agenda. However, it is agreed that the existing system can be changed to reflect citizen's needs in the three countries, and also maintain long term economic stability and viability. In no way do we propose protectionism, but a free trade system with some additions and regulations to create a fair trade environment is vital.
Erin Hallock explored the economic crises that occurred in Mexico in both 1982 and 1994. She concluded that the liquidity of capital flows into Mexico has had, and will have, adverse affects on Mexico's economy as well as a negative impact on the developed economies of the U.S. and Canada. Nisha Thirumurthy looked more specifically at the banking sector, and how the changes in banking caused by NAFTA have affected the economies of the three countries. Thirumurthy found that the unrestricted mobility of capital flows pull down the economies of the countries, and she suggests that the creation of controls on capital flows will strengthen the system by safeguarding financial institutions from poor lending and spending practices. Nicole Stubbs looked to the European Union's model for answers to the economic and social problems created by NAFTA, and found that the EU's system could be usefully applied in North America to create a more economically stable and socially acceptable situation for the long term. She promotes a system that reflects a more humane policy of integration, concentrating on improving the behind-the-border situations in the three countries. David Cagen explored the more specific wage and compensation problems created by NAFTA, and examined the winners and losers produced by the agreement. He found that policies and innovations for deepening the NAFTA to address the inherent problems of neoliberalism need to be created for a stable economy and a fair system for the citizens of the three countries. Cagen concluded that in conjunction with the proposals from the additional authors, coupled with an overhaul of the North American Agreement on Labor Cooperation, many of the problems created by the NAFTA can be alleviated.
All the authors agree that the NAFTA needs to be changed in a fundamental way to become a fair, stable, and economically viably agreement for the long-term. These changes will address the inequality in wages exacerbated by NAFTA, the instability constructed by the unfettered flow of capital between the three countries, and the behind-the-border problems for which NAFTA has been responsible. The proposals outlined below should be implemented and integrated to create an agreement which is humane, viable, and insures the long-term economic stability of Mexico, the United States, and Canada.
Both Thirumurthy and Hallock concluded that the risk of financial flight due to an unregulated system of capital flows can be a detrimental drain on the economies of the three countries in both the short- and the long-term. NAFTA's failure to address these problems heavily contributed to the peso crisis of 1994, and the many small disturbances in the respective economies that have occurred since NAFTA's implementation. The problem is derived from the unfettered liquidity of capital flows between the three countries. Financial flows currently lack time and financial limits on the movement of capital across borders. This caused a flight of capital out of Mexico in 1994, driving down the Mexican economy. Amazingly, these events fostered no reform in the lending practices of banks and financial institutions to avoid such situations in the future. The authors concluded that reforms to safeguard the economy, and avoid crises like the 1994 peso crisis, are necessary additions to the NAFTA.
As Stubbs and Cagen have shown, the current NAFTA has caused a downward harmonization of wage levels, an increasingly widening gap in wage inequality, and an unbalanced distribution of wealth to the winners and losers of the agreement. Further, it lacks a development element to promote economic growth in Mexico and future developing members. It has also failed to address the behind-the-border issues that have been created as a result of the agreement. A Structural Funds Program (SFP), funded by the aforementioned Tobin Tax, will be created to address these issues and continue long-term economic prosperity.
NAFTA has clearly shifted policy objectives on a national level away from issues such as public health, environmental standards, labor situations, basic domestic affairs, and the widening income gap to a mantra of increasing economic competitiveness. The formation of the North American Agreement on Labor Cooperation (NAALC) clearly reflect these trends, as it failed to address the target issues because of a fear of losing a competitive edge, thus creating a gutless and ineffective side agreement. Those adversely affected by the NAFTA have not been considered in trade negotiations between the three countries, and this must change in order to create a fair commercial system, as well as social and economic stability. One of the main problems of the NAALC is the lack of enforcement capabilities within the agreement, and coupled with the poor enforcement of national labor standards, has shown that the agreement has not led to an alleviation of the problems which prompted its adoption.
The institution of these changes will have an overall, long-term beneficial effect on the NAFTA. No longer will the agreement only benefit political and social elites with access to capital and political influence, but the benefits will also be brought down to the lower-skilled worker's level. Furthermore, economic stability will be insured with the monitoring of the banking industry and the financial sector. EU-like social and development funds will create a high road to economic vitality while preserving an increase in competitiveness. Also, the adoption of a NAALC with a strong enforcement mechanism which addresses the behind-the-border problems can stretch the benefits of free trade to the lowest paid workers, resulting in an upward instead of downward harmonization of economic and social situations. It is entirely within the limits of the NAFTA to wed an upward harmonization of standards, while continuing aggregate and median economic growth, with safeguards to eliminate the risk of crisis and economic fluctuation. However, these changes require an ideological shift away from corporate driven and competition based free trade negotiations, towards a more fair, equal and comprehensive conceptual basis which considers each citizen, from the highest paid CEO to the lowest paid workers.