by Laura Lai/Comment
The process of developing
regionalized based institutional cooperation dates back to the 1920s (the trade
agreement between Australia and New Zealand), got differently shaped in the
late 1950s and during the 1960s (the European Economic Communities in Europe,
the Latin American Free Trade Association in South America, the Association of
Southeast Asian Nations in Asia (ASEAN), etc.) and got a boost in the 1990s: the
North American Free Trade Association (NAFTA) in North America, the South
American Common Market (MERCOSUR). They all have in common the regional
economic integration, but they all differ in comparison to the European Union
(EU) in some regards: the degree of institutionalization (the EU developed
supra-national institutions, a permanent supra-national court, etc.), the
degree of sovereignty (the loss of national sovereignty is evident in the case
of EU). I will focus on the NAFTA’s most recent reform developments, on the
reasons of the American delay in ratifying the new trade deal, and on any
possible way to have avoided the ratification deadlock.
NAFTA
is a regional agreement that came into effect in January 1994 and it gradually
eliminated most commercial tariffs and barriers between the three countries of
the North American continent: Canada, Mexico and the United States of America.
It actually relies on a previous bi-lateral trade agreement from 1988 between
Canada and the United States, which got extended, in order to include Mexico,
too.
From
an institutional point of view, NAFTA is run at the level of national
ministries and through three relatively small secretariats in each of the three
countries’ capital cities. The eventual economic and commercial disputes are
settled through arbitration panels rather than by a permanent court of justice,
as in the case of the EU – but that’s because all continental regional
agreements remained at the level of free trade cooperation, the EU being the
only one having passed to political integration and basically developing
towards a supra-national genuine new state.
But NAFTA is outdated. Its
shortcomings were evident. And the need of a new free trade agreement to
address the current issues of economic development dynamics was imperative. In
November 2018, the U.S. President Donald Trump joined the Canadian Prime
Minister and the Mexican President, in signing a new trade deal: the USMCA
Agreement. Mexico was the first country to have overwhelmingly ratified it in
June 2019, followed by the Canadians that are about to ratify it. Despite the Canadian Prime Minister’s visit to the US, in order to urge the Congress to ratify
this mutually beneficial trade deal, the United States still did not ratify it.
The
USMCA is considered mutually beneficial for agriculture and industry, farmers
and workers, for businesses; it protects intellectual property, addresses the
bio-technology issue, which was not the case when NAFTA was signed and
ratified. In the car industry, for example, the new deal eliminates the
possibility to buy auto parts from somewhere else (ex. China, EU, etc.), assemble
it in Mexico and sell the car duty free in the US. With the USMCA there are
precise requirements that at least 75 percent of a car to be built with auto
parts made in North America and at least 40 percent of it to be made by workers
earning at least $16 per hour. (to be
continued)