Why the United States Will Not Withdraw From NAFTA

Senator Barack Obama and Senator Hillary Clinton caused a stir with recent promises to rust belt voters that the United States would unilaterally withdraw from NAFTA unless certain environmental and labor concessions are addressed.  In taking a closer look at the structuring of NAFTA and the history of the agreement, full withdrawal from NAFTA may not be necessary – as the environmental and labor issues have been fully considered.  While in any trade agreement it is reasonable to review the parameters of the agreement over time to ensure fair compliance as needs and questions arise, NAFTA is an atypical trade agreement.

Since its incarnation more than a decade ago, NAFTA has benefited the economies of all three partners – and it is widely seen as a successful trade arrangement.  According to the Office of the United States Trade Representative, NAFTA created the world’s largest free trade area.  “The total volume of trade among the three NAFTA partners expanded from $289 billion in 1993 to $623 billion in 2003,” the US Trade Representative’s Office states.  By wide measures, the agreement has been good for the American people.  “Income gains and tax cuts from NAFTA were worth up to $930 each year for the average U.S. household of four.”

But NAFTA also represents a curiosity in scope.  The DNA of the agreement is in the promotion of trade and the prospect of gains in overall North American continental and individual national commerce – and yet it is tethered to trilateral side arrangements on environmental and labor issues.  Many of these straddling issues were born out of the U.S. congress at NAFTA’s inception, and the stickiest components are generally found in those side questions.

In 2000, a report from the U.S. Department of State summarized the history behind the issues.  “Further environmental (and labor) assurances were needed to secure passage of NAFTA, and ultimately, the parties agreed to a side accord that promotes trilateral cooperation on environmental matters and includes provisions to address a party’s failure to enforce environmental laws.”

The U.S. Department of State report also highlights an oddity in the democratic senators’ recent comments in Ohio on pulling out of NAFTA entirely.  “Candidate William Clinton endorsed NAFTA but promised to negotiate side accords on environmental and labor issues.”  There was a very clear intent to establish these separate pieces on labor and on the environment – both of which are independently negotiable from the core NAFTA document.  “In September 1993, the three NAFTA governments signed the North American Agreement on Environmental Cooperation (NAAEC), which includes provisions to address a party’s failure to enforce environmental laws.”

NAAEC is a unique platform for Senator Clinton or Senator Obama to renegotiate environmental terms should either of them become president.  In addition, a side agreement on labor – called the North American Agreement for Labor Cooperation (NAALC) – was established.  In March 2004, UCLA’s Center for Labor Research and Education concluded, “The NAACL has failed to protect workers’ rights to safe jobs and is in danger of fading into oblivion.”

While there are numerous issues on NAAEC and NAALC grounds, each of these protocols – negotiated with the open knowledge of the Clintons in particular – stand as acceptable environments from which to launch further revisions and adjustments.  Given this unique structure, there is no need to even suggest withdrawing from the NAFTA agreement – other than as an advantageous political appeal to the unionized rust belt, where labor costs have ballooned beyond the manufacturing thresholds that exist elsewhere in the United States and in the broader world.

The disassembly of NAFTA would amount to broad economic hardship and would be political suicide for any U.S. administration – and with NAAEC and NAALC in place, it is unnecessary to tamper with the centerpiece of NAFTA.  On Senator Clinton’s campaign trail, former President Bill Clinton referred to Senator Obama’s White House bid as a “fairy tale.”  The same moniker can be applied here.  The dissolution of NAFTA is a broad-scale fairy tale.