Ralph Nader said that any true free trade agreement would be no longer than one page: there would be nothing more to say than that there would be no barriers, no tariffs to the movement of goods. NAFTA is notorious for undermining labor and environment standards. The new report from the Carnegie Endowment on the effects of NAFTA on Mexico reveal interesting results that problematize these assumption. (The article is written with Latin American countries, who would join FTAA, in mind.)

According to CEIP’s evaluation, NAFTA has caused few real problems in Mexico. The problems that have emerged were not related to the trade agreement, and in some cases, preexisted it. The problem of NAFTA is not that it created problems, but that it did not address the problems of Mexican economy and society as had been promised ten years ago.

• There was a negligible transfer of jobs from US to Mexico.
• Mexico experienced a growth of 500,00 jobs due to the treaty, but it lost 1.3 million jobs. 30% of the jobs created by NAFTA were relocated to Asia.
• Productivity increased dramatically, but that did not lead to improvements in wages or to living conditions. Higher productivity negated incentives for job creation: higher skilled workers became more important for the economy, and the wage divide between skilled and unskilled widened significantly. Furthermore, the loss of real wages was due to the peso devaluation–something which was not tied to NAFTA, but for which US stepped in to save the treaty.
• Immigration to US did not decline. Quite the opposite happened. Mexican agricultural products could not compete with US subsidies. Only larger commercial enterprises in agriculture were able to keep up. For independent rural farmers the competition squeezed them out. Their quality of life decreased (they relied more heavily on ‘animal-based fuels’.) They had to rely on more primitive technics. The economic growth could not create sufficient jobs for them.
• The environmental record has been mixed: Mexico has improved in some areas, regressed in others.

The conclusion of the report is that NAFTA was not a cause of hardship. However, politicians presented it as a solution of economic problems that NAFTA could not solve. It could not stop immigration to US: “sharp growth in the movement of goods and capital has proven to be no substitute for the movement of people.” The mechanisms for distributing the benefits of free trade, which would not have been part of NAFTA, were not addressed by the Mexican government. While the report writers acknowledge that there are many issues that should be addressed in future free trade agreements, the unbalanced benefits of NAFTA were more the result of the government than the agreement.