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Friday, 6 April, 2001, 07:26 GMT 08:26 UK
The struggle for Nafta
US President George W Bush and former US President George Bush.
The elder Mr Bush,dreamed of a free-trade agreement that would stretch from Anchorage to Tierra del Fuego.
By BBC News Online's North America business reporter, David Schepp

When US President George W Bush heads to Quebec City next month to talk trade, he will have to pick up the pieces of a trade policy some believe was left in tatters by his predecessor, Bill Clinton.

In addition, he faces challenges in the US Congress, where Democrats may seek to withhold fast-track authority from Mr Bush if he fails to include environmental and labour standards in any free-trade negotiations.

Despite the success of the North American Free Trade Agreement, or Nafta, which came into effect seven years ago, the lack of a coherent US trade policy has left other countries, including those in central and South America, wondering which way to turn.

In the absence of a substantial broadly based free-trade pact (and US leadership), Western Hemisphere countries have either signed or are negotiating over 50 regional trade pacts.

Mexico City skyline
Mexico is the world's 2nd largest importer of US manufactured goods and 3rd largest importer of US agricultural produce.

One goal for Mr Bush in attending the Summit of Americas is to finish up where Mr Clinton - and Mr Bush's own father - left off by implementing the Free Trade Area of the Americas (FTAA), which would link all the western hemisphere's economies (except Cuba).

The elder Mr Bush, when he was president, dreamed of such a free-trade agreement that would stretch from Anchorage to Tierra del Fuego.

History of Nafta

The precursor to the FTAA is, of course, Nafta, which created the world's largest free-trade zone between the US, Canada and Mexico. It was implement in 1994 and promised, among other things, to bring prosperity to Mexico, cheaper goods to the US and ignite job growth in all three countries.

Nafta began in earnest in December 1992 when then-US President Bush, Mexican President Salinas and Canadian Prime Minister Mulroney signed the North American Free Trade Agreement in three separate ceremonies in each nation's capital.

In the US, the Congress approved the trade deal less than a year later, and newly elected President Clinton signed the bill, Public Law 103-182 into law on 8 December 1993, which then took effect the following 1 January.

Under Nafta, the US, Canada, and Mexico became a single, giant, integrated market of 400 million people with $6.5 trillion worth of goods and services annually.

Mexico is the world's second largest importer of US manufactured goods and the third largest importer of US agricultural products.

Prior to Nafta, Mexican tariffs averaged about 250%, compared to US duties. After the pact, about half of the tariffs on trade between Mexico and the United States were eliminated. The United States and Canada have had a free-trade agreement since 1989.

The treaty provides full protection of intellectual property rights (patents, copyrights and trademarks) and also includes provisions covering trade rules and dispute settlement.

Nafta fallout

Since its inception, critics of Nafta have stepped up their efforts to halt what they feel are the failures of free trade. Among them: job losses, environmental degradation and a burgeoning trade deficit.

That could not have been more evident than at last year's World Trade Organization meeting in Seattle, which saw scores of protestors beaten and arrested in rallying against the perceived injustices of free trade.

Those opposed to a Free Trade Area for the Americas intend to make their voices heard in Quebec City, even as FTAA is but one topic that is to be discussed at the conference.

Job losses

Depending on to whom you talk, Nafta has either been a resounding success or an incredible failure. Public Citizen, a government and business watchdog group founded by Ralph Nader, gave Nafta a failing grade in 1999, saying the treaty failed the most conservative of all tests -- to do no harm.

Public Citizen blames Nafta for the loss of hundreds of thousands of full-time, high-wage manufacturing jobs in the US and noted that of the 67 companies it surveyed, 60 had not created any jobs.

But others see the free-trade pact as a success. Economics Professor J. Bradford DeLong at the University of California at Berkeley credits Nafta for moving Mexico toward democracy and prosperity and has argued that US has both a strong interest and a neighbourly duty to try to help Mexican political and economic development.

By that yardstick, Professor DeLong says, Nafta is a qualified success. Nafta has helped Mexico economically and in doing so has brought with it political reform with a shift toward more democratic institutions.

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