NAFTA at 30: The mother of all free trade agreements

Governments are increasingly signing free trade agreements (FTA) that dismantle national legal frameworks to benefit corporations, while at the same time restricting people’s ability to defend their common interests.

As the North American Free Trade Agreement (NAFTA) -the first free trade agreement in contemporary history- turns 30, it’s a good time to ask why this particular treaty played such a watershed role in the history of the global regime of trade and investment? To what extent this FTA has been the blueprint for a new global dynamic between governments, and between governments and their societies? For movements confronting free trade across continents, delving into the intricacies of NAFTA offers valuable insights.

With the entry into force of this agreement in 1994, the world entered into the unprecedented standardisation of the terms of reference of its international relations, while already weak democracies further eroded.

International financial and commerce institutions wielded free trade agreements as padlocks to enforce the structural reforms promoted since the eighties. These FTAs progressively expanded their reach, gradually subduing national and international legal frameworks to the economic interests of corporations. This trend was exacerbated by the ambiguous legal loopholes that allow these agreements to deviate from their intended public mandates, prioritising private interests instead.

One year after NAFTA came into force, the General Agreement on Tariffs and Trade (GATT), in place since 1947, became the World Trade Organisation (WTO). A barrage of bilateral trade agreements followed, introducing numerous additional channels that bypass the traditional roles of national congresses and governments in determining public laws, norms, and policies. Already back then GRAIN was warning that these bilateral agreements were ways to pressure weaker countries into servitude, and to break those reluctant governments concerned about protecting their national industries and sovereignty.

The veil was lifted, revealing that these bilateral investment and trade agreements were mere instruments for the “deviation of power”. They served as moulds for crafting public norms and policies that significantly expanded the leeway of companies, while restricting the legal avenues for people seeking justice.

At a time when many governments and certain civil society organisations advocate for the reform of free trade agreements -such as the inclusion of sustainable development provisions or stronger labour protections- as a panacea for all the negative consequences of trade liberalisation, the experience of NAFTA shows us the limitations of this approach. Once again, NAFTA pioneered the inclusion of safeguards to mask potential negative impacts. US President-elect Bill Clinton supported the trade deal, but on the condition that environmental and labour pacts would be added in parallel. Thirty years later, these proved to have little, if any, positive effect. Nonetheless, the strategy was repeated in other free trade agreements later negotiated by the US and the European Union, with the same results.

The most striking effects of NAFTA include the following:

1. Labour and environmental deregulation: an “advantage” offered by governments in the unequal relationship between partner countries. These policies weaken labour relations to the detriment of workers, and lead to reckless environmental devastation.

2. The fragmentation, outsourcing and dispersal of production and distribution processes: Concerning labour deregulation, the most severe case is probably represented by the proliferation of “maquiladoras”. They emerged in 1964 but were boosted by NAFTA, which fragmented the production processes, importing tariff-free raw materials to manufacture parts of products or semi-manufactured products and exporting back the finished products to the country where the raw materials came from, or even exporting them to a third country.

This fragmentation of industrial production processes into “sweatshops” that produce unrecognisable components across different workshops and production areas has led to what we now call supply chains.

The above has undoubtedly shaped an industry characterised by subservience and the invisibility of production processes, all aimed at reducing costs. This involves fragmenting production and scattering it across different countries, subjugating workers to subhuman conditions and creating labour precarity through outsourced contracts. This outsourcing, managed by intermediary companies, facilitates the dissolution of labour unions or makes them unviable.

3. Land grabbing and privatisation: In Mexico this process began two years before the signing of NAFTA with the counter-reform of Article 27 of the Constitution. This reform altered the previously unseizable, inalienable and indefeasible nature of collective land tenure held by indigenous and peasant communities. The agrarian regime established by the Mexican Revolution recognised two parallel collective modes of possession of the land: indigenous agrarian communities and ejidos (a form of collective agrarian land ownership meant to allocate dispossessed or landless communities with common lands).[1]

Although the details may vary from country to country, NAFTA promoted the grabbing and the privatisation of land, particularly that of indigenous peoples, afro descendant populations, and any type of communal peasant land (communes and ejidos). To this end, the registration of plots of land collectively used was enforced, pushing ejidos and community land to be individually titled, de facto dismantling the collective ownership of their lands. By altering land ownership in this manner, powers thought it would be easier to align “with neoliberal programs […] and with the restructuring of US and global agriculture.”

4. Direct investment of foreign corporations began to take place in regions of the country, economic sectors and stages of supply chains previously untouched. The most devastating example is the Yucatan Peninsula and the Interoceanic Corridor of the Isthmus of Tehuantepec, where a “multimodal land grab” is taking place.

5. Migration soared, mainly due to the eviction of communities and individuals from their lands. Additionally, the increasing violence fuelled unregulated land grabbing, contributing to the migration wave, where these migrants end up working as inmates in the semi-slave labour system of US private prisons.

6. Dumping and disloyal imports: With FTAs there is open season for unfair imports, with the rules being set by companies from different countries. This phenomenon happens at a global level. In Mexico maize imports were boosted, despite the fact that maize is a staple food for the Mexican population and significant disparities in productivity and subsidies between U.S. and Canadian producers, on one hand, and Mexican producers, on the other.

7. Processed food and distribution control. The arrival of the foreign food industry quickly spurred direct investment, ushering in a new era of processed foods that altered consumption patterns. Consequently, cancer, diabetes, and obesity rates soared, posing serious health concerns. Competition for control of distribution channels intensified, particularly at the neighbourhood level, leading to the displacement of small corner shops in favour of rapidly proliferating convenience stores.

8. The increase in monocultures reinforces the entrenched model established since the Green Revolution, a model now further cemented by FTAs and integrated into public policy systems. This system encompasses the widespread use of hybrid and GM seeds, as well as agrochemicals, aimed at fostering dependency among farmers on both corporate entities and government programs. These dependencies are exacerbated when coupled with sweeping structural reforms, which also introduce a series of constraints. Consequently, this trend disempowers and erodes peasants and rural communities, increasingly cut off from their traditional environments of subsistence and hindered in their ability to pursue strategies to solve what matters most to them.

9. Public policies interfere with farmers’ own production criteria, force the standardisation of production methods and the acceptance of products. These policies also impose sanctions for not following or complying with treaty parameters, promote inequality, and marginalise peasants, independent producers, farmers and entrepreneurs.

10. Industrial Property and Intellectual Property Rights are being promoted, including plant breeders’ rights on plant materials and seeds. This push directly advocates the adoption of the Convention of the International Union for the Protection of New Varieties of Plants (known as UPOV, for its French acronym), which promotes intellectual property rights and the privatisation and monopolisation of seeds and plant varieties. This poses a direct threat to independent agriculture -where communities and peoples exercise their autonomy, without depending on corporations or governments to dictate their goals, although they may receive subsidies from conscientious governments.

11. The clauses and chapters of the FTA that establish dispute settlement mechanisms between investors and States are biased in favour of investors, going against the established rules that should regulate their activities. These mechanisms establish a parallel legal system that places investors and governments on an artificial equal footing, as adjudicated by commercial “arbitration courts” which bypass national courts, and confront and subdue national laws.

12. NAFTA paved the way for significant distortions in the legal frameworks of nations, leading up to a systemic dismantling of laws and constitutional articles that protected collective or community rights. This included labour rights through reforms to Article 123 of the Constitution and agrarian rights of peasants in Article 27, as previously mentioned.

13. There is subservience to the logic outlined in the treaty itself and opens the door to all possible treaties, including bilateral investment treaties. Adhering to this logic leads to a gradual erosion of national sovereignty.

14. The promotion of environmentally destructive companies has led to significant sacrificial zones in Mexico. The severe toxic contamination of at least dozens of Mexican regions speaks of the extreme living conditions in areas affected by these treaties.

15. Extractivism, characterised by the invasion of territories to extract raw materials such as hydrocarbons (oil and gas), minerals through mining, water plundering, and even soil depletion through agrochemicals for large industrial monocultures, is also rampant. Dispute resolution mechanisms have allowed unchecked growth and establishment of mining operations.

The understanding of the damage NAFTA would bring to the country was so profound that the most significant symbol of its rejection was the uprising of the Zapatista National Liberation Army, an indigenous, community-based movement with global frames of reference that amplified its impact and influence throughout the world. The same day NAFTA came into force, thousands of Zapatistas declared war on the government of Carlos Salinas de Gortari.

This entry into force of NAFTA, which represented a “change in the rules of the game” between countries, and between corporations and the populations of those countries involved, triggered a movement for the autonomy of peoples and communities that has expanded and continues to expand, at least through Latin America. From their corners, communities began to understand the extensive repercussions and the truth behind the euphemised objectives sold by their governments in support of the agreements and treaties.

The effects of these instruments of power diversion are so negative and far-reaching that communities are unable to fight the FTAs directly. Doing so requires resources, time, travel, sacrifices, legal support -underscoring the significant disparity of means at play. Communities cannot be demonstrating or fighting against FTAs because the disparity is brutal: they are fighting against their negative effects and repercussions (attacks, invasions, dispossession, devastation, disablement) that occur directly in the regions and localities where peasants and indigenous people live. This also applies to residents of urban areas.

Between 2011 and 2014, the Permanent Peoples' Tribunal held a session in Mexico, gathering grievances and motivations from over 25 regions across the country, to reject not only FTAs but also the entire range of their effects today. This ongoing work of reconstruction legitimises the need of popular resistance in Mexico, the continent and the world.

More information:

Don’t miss bilaterals.org podcast “NAFTA’s 30th anniversary”

bilaterals.org · bilaterals.org podcast: the 30th anniversary of NAFTA

[1] With regards to indigenous communities, the reform of the Mexican Revolution relied on the Spanish colonial regime's recognition and granting of land to Mexico's indigenous peoples according to the historical rights that each community possessed over a given territory.