Interpreting NAFTA notes Frederick Mayer Chapter 1: Introduction June 1990: NAFTA negotiations between U.S.
and Mexico begin. Carlos Salinas de Gotari was Mexican President when NAFTA was negotiated. Brian Mulroney was Canadian PM during the same period. U.S.-Canada Free Trade Agreement (CUFTA) came before NAFTA. Originally, Canada didn’t want to add Mexico. In Canada and Mexico, the Executive can initiate trade negotiations on its own. Bush asks Congress to renew fast track for NAFTA: Bitter fight all through 1990. Bush finally gets it, but realizes he has to add in provisions for labor and environmental standards to placate domestic critics. NAFTA talks formally begin June 1991. Slow progress right up until marathon end in August 1992 thanks to pressure from U.S. election. Set to go into force Jan 1, 1994. Some areas of trade excluded from NAFTA, so it did not create totally free trade. Also, a lot of special rules. NAFTA became a major issue in the 1992 campaign. Clinton and Bush were pro, Perot was con. Clinton insisted upon a parallel set of agreements on environmental and labor issues, which started upon him taking office and ended August 13, 1993. Pressure to finish thanks to upcoming Canadian and Mexican elections. Big coalition of U.S. interests united to kill NAFTA+enviro/labor bill Congress vote in late 1993. Clinton masses equally large coalition to fight back. At the time, all credible economists predicted overall large gains for U.S., and only limited damage to low-wage industries. Mexico would have to work the hardest upgrading standards to meet NAFTA. NAFTA passed through Congress and Senate in November, 1993. This book will analyze the political creation of NAFTA at several levels. [Do we think this book is dismissive of the environmental and social concerns opponents had about NAFTA’s effect on Mexico’s border areas? There are still a lot of problems and poverty.] [More general opinions of this book’s narrative analysis structure?] Chapter 2: A framework for political analysis This book will apply different theories of decision making and see which hold in the case of NAFTA’s creation. In understanding international relations, one can focus on different levels of analysis: -International (state-to-state) -Intranational (internal politics) -Individual (key individuals) In understanding how politics work, one can focus on different aspects: -Rational actor theory (always work to maximize gain and minimize loss) -Institutional process (preexisting institutions and norms channel politics down predictable courses) -Symbolism (policies are driven by values and ideology)
These different factors can be combined into a 3x3 matrix. [Skipped a fair deal] [A lot of fluff here] Chapter 3: Why a North American Free Trade Agreement? Feb 1990: Gotari approaches Bush with the idea of a U.S.-Mexico FTA. Aug 1990: Canada joins talks. Mexico had, up until 1990, been almost hostile to the U.S., and fiercely nationalistic and independent, especially where it came to foreign investment and trade. During the 1970’s, Mexico erected very high tariffs and NTB’s to support import substitution. It was also not a part of GATT. The state also took direct control over many industries. Initial growth hid serious problems that would inevitably boil over: Large fiscal deficits and uncompetitive state industries. 1980-82: The shit hits the fan as several bad things happen at once -Worldwide recession hurts Mexico exports -Tighter world credit markets mean Mexico can’t borrow foreign money to finance budget deficits -Peso devalues, so Mexico can’t pay off dollar-denominated foreign debts as easily -In 1982, Mexico essentially declares bankruptcy and stops payment on foreign debts. -Foreign capital flees as a result and no one wants to extend more loans to Mexico. Major economic problems follow. 1982: Miguel de la Madrid becomes President. A classical economist, he enacts austerity measures (Washington Consensus stuff), drawing fire from Mexican leftists, but stabilizing the economy. Mexico joins GATT in 1983. 1987: Second economic crisis in Mexico, but Madrid responds with more and faster liberalization: Cuts tariffs even more. U.S. has always been Mexico’s biggest trade partner, so opening trade and investment meant opening up to U.S. The two silently integrated over the 1980’s. Mexico had political differences with U.S. over Central America. Free trade deal with U.S. seemed highly unlikely even in the late 80’s. Carlos Salinas de Gotari was elected President in 1988. Was an economics Ph.D. from Harvard. Immediately pursued even further liberalization and close relations with Bush and major American business leaders. Americans wanted to let dust settle from CUFTA and to finish Uruguay Round before considering a Mexico FTA. Salinas met with ministers, and they decided to start FTA negotiations with the U.S. for three reasons: -A logical extension of what was already ongoing -Putting everything on the table for negotiations would get a better deal than continuing piecemeal deals, where the U.S. could just refuse to talk about sensitive issues -A FTA would bolster international confidence in Mexico’s economic policies and would lead to more investment. USTR enthusiastic about proposal, but unsure if they had enough resources considering ongoing Uruguay Round.
USTR office did a preliminary analysis: Good prospects for deal since most of American business community in favor, and modeling showed overall impact would be positive. U.S. and Mexico worked in secret to hammer out details before the big announcement. DEA abduction of Dr. Humberto Alvarez Machain from Mexico came during this time and strained relations. Part of U.S. drive for NAFTA was to improve Mexican economy to staunch illegal immigration. Bush-Gotari announcement June 10, 1990. AFL-CIO voiced immediate displeasure. Bush and Gotari wanted talks finished ASAP before some problem could develop and before campaigns neared. Canadians initially against participating since CUFTA (1988) had been hard fought and was unpopular thanks to their recession. Mulroney reconsidered once he saw there was more support for it, and he didn’t want the U.S. to become the center of the North American trade network. U.S. initially resisted Canadian participation—didn’t want them complicating it. Agreed to include Canada in early 1991. Motivations for the countries to start negotiating NAFTA: Neorealism -Posits that states are self-interested, pursue self-interest rationally, and that the international scene is anarchic, so security and interests are often rationally achieved through alliances with other states. -All states joined NAFTA for greater economic strength. -Doesn’t explain why states didn’t create NAFTA in 80’s when it would have had same benefits. -Realism itself holds that treaties and international alliances are worthless, so why did the states bother negotiating them? -Why even negotiate? Unilateral trade barrier lowering is beneficial. [Easy answer: Politically there must be a quid pro quo.] Motivations for the countries to start negotiating NAFTA: Regime theory -States and leaders are in fact influenced by their international deals and commitments, and national action is guided and constrained by them, even if this is always voluntary. -International institutions and agreements foster mutually beneficial cooperation that would not otherwise occur. More efficient to create an international institution than to deal with issues ad hoc. -Mexico could not undertake a FTA with the U.S. until its economy had liberalized considerably from its near-Marxism of the 70’s. The whole period of the 80’s was needed for that. This is why NAFTA happened when it did. -Still doesn’t explain hesitance to unilateral open trade. Motivations for the countries to start negotiating NAFTA: Symbolic politics -Ideologies and worldviews are sustained by nations and are valuable to them in a tangible sense. -Shared ideologies and values foster cooperation among nations, even if they have other, real differences. -End of Cold War symbolized death of Socialism. Mexico was already liberalizing, and its leaders had new, liberal economic ideas. NAFTA marked a switch in ideologies and dramatized Mexico’s change. However, none of these international theories fully explains NAFTA because the international focus is designed to analyze security interests and decisions. Economic interests are strongly affected by disparate internal domestic groups. All internal groups have an interest in national security, however.
Domestic influences on NAFTA -Salinas didn’t want later Presidents to undo his liberalization. He knew that NAFTA would lock in his changes. Stability would be needed to attract foreign investment. -Mexican and Canadian executives had a lot of power in the late 80’s and could get bold initiatives approved. -Individual personalities also played a role *Salinas’ thinking could be estimated by his Harvard economics Ph.D. He was also a bold and forward-looking politician, which guided all of his actions. *Bush was a dedicated free trader, and as a Texan, he was friendlier to Mexico than most Americans. Chapter 4: Domestic politics matters: The fast track fight Bush had to ask Congress for fast track renewal in March 1991. Special interests fought it because they knew he wanted it for NAFTA. NAFTA opponents: Industries that stood to lose, unions, environmentalists, food safety advocates, workers’ rights advocates. Bush put Bolton and Zoellick in charge of getting fast track renewed in late 1990-early 91. U.S. and Mexico created a free trade zone in 1965 that spawned maquiladoras in northern Mexico. U.S. manufacturing suffered and thought NAFTA would make it even worse. Unions made strategic choice: Started focusing on environmental degradation and worker abuses on the Mexican side. People cared more than they did about lost American jobs. NAFTA first time environmentalists had a table at a trade negotiation. Labor, enviros and others came together for Jan 15 conferences with Congressmen. Attracted unexpected media attention. Conferences and media appearances continued into Feb. Democrats started going on record against NAFTA. Bush team realized it had an unexpected problem. Became clear that side agreements on labor and pollution would be needed to get fast track renewed. White House focused on talking to enviros in effort to splinter them. Dick Gephardt, Rostenkowski and Lloyd Bentsen were major Congressional players. Wanted NAFTA privately, and communicated to Bush what needed to be done to get Congressional votes. [Good point of this book is to show how powerful personalities shape trade negotiations and support.] All agreed to an Action Plan that would satisfy Congress. It provided escape clauses, TAA and strengthened enviro rules. Business community started lobbying Congress hard in favor. Once Action Plan went public, Gephardt, Rostenkowski and Bentsen voiced support. Opponents noted it ignored illegal immigration, human rights abuses and other issues. White House giving minimum necessary to divide opponents. [Had Bush won reelection, would the Action Plan, plus the intense pro-lobbying later seen, have been enough to get NAFTA passed? Or were the side agreements an inevitability? NAFTA passed by a comfortable margin, so maybe not.] Bush agreed to appoint environmentalists in NAFTA trade negotiation team. At last minute, Dems tried to make fast track vote apply only to Uruguay Round and not to NAFTA. It failed.
Piecemeal trade negotiations can be done quietly, with winners running the game and through the logic of collective action, gaining while everyone else loses a little bit. Open, comprehensive trade negotiations are better because they bring all winners and losers together and play them against each other. Fast track is good because Congressmen can credibly claim they have no sway over the legislation, so they won’t get blamed by constituents. [A good example of “political cover”—one of many in this book.] Opponents thought strategically and knew that they could derail NAFTA by blocking fast track renewal. Fast track was authorized for five years in 1988, and the 1991 extension vote had to be up-ordown, which made Bush’s life a lot easier. Had it been a simple reauthorization, he probably wouldn’t have gotten it. Chapter 5: Two-level bargaining: The NAFTA negotiation Three countries with three different political systems next had to bargain over the specific terms of NAFTA. Key provisions of NAFTA: -lower trade barriers -lower barriers to investment -dispute settlement mechanism -intellectual property protection -government procurement rules -gradual phase-in Long time spent on making rules about phase-in, protected industries and North American rules of origin. Trade ministers met in Toronto for start of talks. CUFTA was the starting point. Mexico could not budge on petroleum industry. Canada wanted to protect cultural and agricultural industries. Domestic consultations with key industries slowed down negotiations. U.S. negotiators and top business reps all sworn to secrecy and needed security clearances. Smaller guys left out and were insulted, even though it was necessary. NAFTA issues that were agreed by the end of 1991 -All quotas and tariffs would be eventually eliminated under NAFTA. -Tariff reductions would start from applied (current) rather than bound (maximum possible) rates. Questions left at end of 1991: -How fast should the tariffs and quotas come down? -What counted as a North American good? All agreed that more sensitive industries required more time (as much as 15 years) to go to full free trade, while others could start immediately. Different teams of negotiators worked on sensitive issues: Oil, cars, agriculture U.S. wanted guarantees of Mexican oil sales. Mexico would not budge at all on its ban on foreign ownership. [Do we understand how Mexico’s oil industry is so important to them? Worth explaining.] Cars
-Mexico was protecting its market from imports. U.S. manufacturers wanted in. -U.S. car companies didn’t want Mexico to become a springboard for foreign cars to enter America, so North American rules of origin were critical. What % of the car’s parts needed to be made in North America for it to be considered a North American car and hence protected under NAFTA? Agriculture -Canada actually least flexible. -30% of Mexico’s population was small farmers on ejidos—inefficient small farms that only existed thanks to protectionism. Salinas wanted to get rid of them. -U.S. sugar and fruit producers wanted to block Mexican imports. Financial services -No foreign banks allowed in Mexico. -No foreign full- or majority ownership of any Mexican company -Capital very expensive in Mexico thanks to inefficient banks -U.S. high priority to get them open Other exemptions: U.S. shipping, Mexican railroads, all basic telecommunications Late 1991: Environmentalists upset at lack of progress on NAFTA enviro talks. During same period, GATT rules U.S. laws preventing import of Mexican dolphin tuna were illegal. Enviros said NAFTA would lead to more of that: U.S. would be dragged down to Mexico’s level. Initial NAFTA text done in Jan 1992, but was mostly square brackets, so meant nothing really. Mexicans had to make the most concessions because they had the most regulated economy. Feb: EPA releases U.S.-Mexico plan to spend less than a billion dollars to clean up the U.S.Mexico border. Enviros not impressed. Leaked NAFTA preliminary agreement also showed enviros for the first time how much Mexico had successfully fought off tighter enviro standards. Mexico felt they were being used as an excuse to press unfair trade deal. In response, U.S. changed language of treaty allowing more room for stringent enviro standards. U.S. pressured Mexico hard to open up to foreign investment. NAFTA allowed moderate, gradual increase to Mexican sugar export quota to U.S. American sugar lobby barely accepted it. 15-year phaseouts of protections for U.S. warm weather fruits. Bush used NAFTA against Clinton: NAFTA’s passage was popular, and if Clinton supported it, as many Democrats didn’t, he would look bad. But if he opposed it, he would appear to waffle as he had previously indicated support. Starting in mid-July, all three countries had their teams meet round the clock for a month to finish NAFTA negotiations. Canadians wanted restrictions on American films and magazine imports to keep Canadian culture from being erased. Canada kept this, but U.S. said it wouldn’t have much of an effect. Mexico didn’t demand similar restrictions. It was agreed that a North American car tradable under NAFTA rules would consist of at least 62.5% North American parts. Created an obstacle for foreign car companies. Aug 12, 1992: NAFTA text finalized. Into Sept, Bush team tried finishing up the enviro and labor side deals, but could not get full support. Bush was slipping in polls anyway, and those groups wanted to wait and see if Clinton won, because he would probably give them a better deal.
If states were unitary, rational and self-interested, they would unilaterally cut trade barriers. But thanks to real-world politics, equal concessions had to be obtained from the other side for every “sacrifice.” [Do we like the style of this book? How it analyzes happenings towards the end of each chapter? Is it really necessary? Does it seem redundant—just reinforcing the obvious?] In reality, losers from trade exert greater political power and shift trade negotiations. Mexico wanted to protect its corn market from the U.S. [Do we think all these charts are really necessary for explaining the concepts? Are they even more confusing than helpful? Pg 154 is a great example.] Mexico wanted liberalization regardless of NAFTA. NAFTA provided a good way to placate domestic interests since it looked to “losers” and critics that something was being gained from America. In fact, something would have been gained in any case. The international perspective is thus not suited to explaining the nations’ actions during NAFTA negotiations. Domestic powers controlled events. The autoparts companies and the UAW wanted 100% rules of origin to keep out foreign competitors. The U.S. auto companies wanted 60-70% since they saved money by using some foreign parts. No one wanted 0% since that would have allowed foreign car companies to ship in cars duty-free, even though this would have been optimal for the country’s economy. The auto companies’ preferences were far more important and dominated the U.S. demand for 65%. In the end, the three countries just agreed to split the difference at 62.5%. [Is optimality really that simple? Aren’t phase-in periods and TAA less costly to the economy than a cold turkey switch to free trade? Labor dislocation causes temporary costs that might outweigh the benefits of free trade.] Mexico didn’t want to open its financial sector in large part because the government was also negotiating with the national banks to privatize them. The process was already very controversial, and opening the banks to competition simultaneously might have asked too much and scuttled everything. They finally relented in some areas after the bank privatization deal was settled. Chapter 6: Making side issues central: The labor and environmental negotiations When Clinton came into office, he demanded new side agreements with Canada and Mexico regarding labor and the environment. He would not ratify NAFTA until these agreements were complete. The side agreements were finished on August 13, 1993, a full year after the main NAFTA text had been finalized by the three countries. The agreements created weak international institutions for monitoring and enforcing compliance with national labor and environmental laws. Clinton’s campaign stance on NAFTA—which was one of qualified support—was a good strategic compromise supported by other top-ranking Democrats. Canada and Mexico made it clear they would not reconsider the NAFTA text. The Clinton side agreements were totally separate. The real focus was on Mexico’s labor and environmental practices. No one thought the other two countries would have any problems. Mexico already had adequate labor and environmental laws on the books. Enforcement was the big problem. Mickey Kantor became new USTR under Clinton.
New Democrat majority in both houses meant side agreements would have to be even more extreme. Kantor first had to figure out a dispute settlement and enforcement mechanism for the enviro and labor laws. U.S. interests simultaneously wanted to protect American sovereignty from Mexico and Canada over labor and enviro laws. The bigger, more professional enviro organizations like WWF and Audobon Society were willing to deal on NAFTA, but more grassroots ones like Greenpeace and Sierra Club thought NAFTA would be destructive in any form. During Feb 1993, the different sides issued different recommendations, some of which Clinton could accommodate. Enviros very fragmented. Some wanted to reopen NAFTA text. Labor wanted Mexican promises to uphold minimum wages, have good workplace safety, and allow Mexican unions. Even if these were agreed to, the unions could not promise their support, which contrasted with the clear front demands of the enviros. Clinton knew he couldn’t satisfy the labor demands. Some unions were willing to deal with NAFTA while others wanted to totally oppose it from the beginning. A complicating factor was the desire not to alienate Clinton—the first Democrat President in 12 years. [Interesting seeing how big name Senators and Congressmen like Gephardt and Bentsen led the trade debate and heavily influenced other Democrats to vote for or against.] Business leaders didn’t like the idea of a supranational judicial organ that could investigate and punish companies that violated NAFTA or the side agreements. They wanted the authority to remain national. [Presumably, so they could influence the process favorably] They and Republicans started warning Kantor that Republican and business support was not automatic. Mar 18, 1993: Clinton announces part of the side agreement plan -No new laws, but better enforcement of existing national laws -Single, independent, supranational judicial body Remaining question: What powers would the judicial body have to punish violators? Some U.S. insiders wanted to allow it to have sanction authorization authority, but others did not. Canada and Mexico opposed sanction power. The large, moderate enviros came together and negotiated a joint stance among themselves that was acceptable to the administration. Small enviros felt betrayed. The judicial body could investigate complaints of noncompliance if individuals, governments or the secretariat of the body reported them. If the body found systematic and continuing noncompliance, it could authorize one country to initiate sanctions on another. Not easy to do, but still possible. Republicans disliked it. Mexico did as well since big unions integral to PRI didn’t want to lose control to smaller, fairer unions or to have their own laziness and corruption with respect to labor rights exposed by the judicial body. U.S. business hit back hard with a joint statement condemning the independence of the secretariat and of the sanction authorization ability. Clinton, Kantor and some high-ranking Dems furious. Sick of negotiating and felt compromise was already satisfactory and reasonable. Secretariat didn’t even pose a real problem to business. Kantor created new proposal making it harder to launch complaints to the secretariat, but he would not budge on sanction ability—it was the only credible way to enforce compliance with NAFTA.
Enviros wanted strongly independent secretariat to investigate pollution and didn’t care about sanctions. Substantial disagreements with Canada and Mexico on the issue of sanctions and the secretariat also continued. Final, marathon negotiations happened in August, 1993. Mexico agreed to accept the secretariat’s sanction powers and to extend them to issues of Mexican minimum wage enforcement and child labor, but not labor rights. Canada didn’t accept the sanctions at all. It was the best agreement the three could hope for, so on August 13, 1993, the finalized the side agreement text. Thus, dispute settlement under NAFTA treats Canada differently from the other two. The need for side negotiations arose due to U.S. domestic pressure. The other two countries didn’t want it. The election caused the side agreements: Labor and enviros held off support for NAFTA once they realized Clinton would become President and they could get a better deal from him. Clinton’s promise of doing the side agreements got the votes of these two groups. Mexico acceded to the U.S. position on the secretariat and sanctions because it badly wanted NAFTA. U.S. unions had less influence over the negotiations because they committed themselves in the beginning to inflexible opposition. As a result, they were discounted and got little. The enviros were more flexible and got more. Enviros had to negotiate within their groups and between groups to reach a unified stance on sanctions and the secretariat. Many Dems wanted to vote for NAFTA, but the enviros were causing too much of a fuss. Max Baucus was a very influential Senator because he held sway with the enviros and was seen as their interface with the Senate. Key lesson: Every negotiation is nested in smaller negotiations. At many points, the negotiations are secret. Chapter 7: Symbolic politics: Growing grassroots opposition [1993 was an intense year for Clinton: His budget barely passed, he was trying to get the ban on gays in the military lifted, he and Hillary were advocating universal healthcare, Waco happened, the Uruguay Round was ongoing, China was trying to get MFN status, and NAFTA was being finished. A lot of conservatives didn’t like Clinton anyway because he had only narrowly won the election and he came into office with a scandalous private life. Things only got worse the following year with the new gun laws.] Once the side agreements were finalized, Congress had to approve them. A kinds of people (Ross Perot, Pat Buchanan) and groups united to fight it, and NAFTA almost died. Critics were concerned about NAFTA’s impact on American jobs, immigration, the environment, drug smuggling, and Mexican human rights. All credibly economic analyses indicated that NAFTA would lead to small job gains in the U.S. Moreover, serious people realized that NAFTA would lead to an improvement in Mexican enviro enforcement, though pollution would increase no matter what with industrialization. There was also no evidence that companies were relocating to Mexico to escape American enviro laws, which were relatively cheap to comply with. [But how does the author define “credible”? Certainly, during 1993, there were many different economic analyses of NAFTA’s impact. People just learning about the issue can be forgiven for
not knowing reputable fro disreputable. Maybe they were really thinking rationally, but relying upon bad info, which contrasts with the author’s thesis.] The problem of drug smuggling worsening with greater U.S.-Mexico traffic was real, but could have been corrected with more border police. There was an argument that NAFTA would economically reward an oppressive regime that didn’t respect human rights. This ignores the fact that America, in any case, as little effect on Mexican internal politics. To unions, NAFTA symbolized lost jobs and lower pay. Unions were almost completely against. Citizens’ Trade Campaign (CTC) formed specifically to fight NAFTA and brought together very diverse interests. United We Stand was Ross Perot’s separate anti-NAFTA group. CTC bombarded Congress with letters for months and held many high-profile events to oppose NAFTA. Perot opposed NAFTA on the grounds that it would undermine the American working class. Perot made several personal, public appearances, in some of which he mocked local Mexican ads in American trade magazines meant to attract offshoring. Perot also paid for a primetime infomercial with his own money. Pat Buchanan and some Republicans opposed NAFTA because it symbolized the decline of U.S. sovereignty and an influx of Mexican immigrants. [Were they wrong? Illegal immigration is now worse than ever. Is this NAFTA’s fault?] The opponents held the stage in the first half of 1993 because the defenders—the Clinton admin, business leaders and moderate enviros—were occupied hammering out the side deals. The Business Roundtable’s counteroffensive was initially weak and lethargic. They focused mainly on lobbying Congressmen and had little grassroots ability. They helped create USA*NAFTA. Mexico hired lobbyists in Washington and spent $30 million total on the effort. Clinton was distracted with many things in early 1993, and could not focus on NAFTA, so he could not fight back hard against the critics. Congressional Dems and Reps favoring NAFTA were frustrated by the critics’ seizure of the debate. In part, NAFTA was needed to keep America competitive with East Asia and the E.U. in the 21st century. Spring 1993: White House aide Leon Panetta comments to the press that “NAFTA is dead.” Public opinion turned against NAFTA that summer as the opposition shifted to influencing public opinion. In 1993, there were several high-profile incidents that worsened Mexico’s image, such as a shooting of a Catholic cardinal by the mob and the discovery of a major smuggling tunnel under the border. Issues with illegal immigration were also especially bad that year in California. Some Clinton aides wanted to drop NAFTA as too politically costly during a time when every vote was needed for bigger priorities like national healthcare. In August, once the side agreements were finalized, the opposition went into high gear with public appearances and town hall confrontations with Congressmen on recess. By early September 1993, the majority of the public and of Congressional Democrats were against NAFTA. People are consumers of ideology and entertainment, which were provided by the anti-NAFTA spectacle. While the interests themselves might not be rational, there pursuit is given the
preferences, and hence anti-NAFTA behavior is rational even in spite of the fact that the treaty was beneficial to the U.S. and would only hurt small industries. [Does that really make sense? Well, yes, human welfare is not strictly monetary. People want to have fun and feel intelligent.] In group settings, the rational choice for many actors is realize that their individual efforts won’t make a difference and to free ride off the efforts of other group members. However, people value actively working for a group (voting, advocating, etc.), which overcomes the initial impulse and shifts the valuation of what is rational for the person. They ignore the fact that their marginal efforts accomplish almost nothing, and instead find value in just participating and doing their duty. [Read The Logic of Collective Action] Voting is thus irrational since the act has such a low probability of changing anything. A better approach is to lobby between elections. The logic of rational ignorance: It isn’t worth spending time and energy analyzing a choice if the consequences of the choice are less costly than the process of analysis itself. Many people concern themselves with politics essentially for entertainment and self-amusement: They might enjoy arguing politics with other people or enjoy the respect that comes from appearing well-versed on the subject. The fight over NAFTA was symbolically important to many people on both sides and was part of different narratives. People enjoy taking part in a fascinating, metaphorical struggle—politics. Fighting against NAFTA was an act of identity assertion, not one of rational calculation. The major critics also created exaggerated narratives about NAFTA’s problems that spurred average people to action. Chapter 8: Diagnosis and strategy: The campaign for NAFTA In September, Clinton appointed Bill Daley of the famous Chicago family to head the proNAFTA campaign. Leading Congressmen and Senators were also added. Clinton’s team held a big meeting with business leaders at the White House. Polls showed that most Americans had bought the NAFTA critics’ claims about NAFTA’s negative impact on America. High-ranking members of White House group started writing newspaper editorials and appearing on political talk shows in support. September 14: Clinton signs NAFTA side agreements alongside Bush, Carter and Ford. Clinton and Gore began meeting personally with Congressmen who were listed as against NAFTA, and they began switching sides after hearing persuasive pitches from the two. The Clinton team’s public message gradually took shape: -NAFTA was good for American jobs since it would open new markets and make America more competitive with Japan and Europe. -NAFTA would actually improve labor and environmental problems in Mexico and would be an important foreign policy tool. -Rejecting NAFTA would mean shirking away from progress and destiny. Business started lobbying Congress hard with phone calls and meetings. CEO’s participated. USA*NAFTA started running slick TV ads—mostly in the DC area. Prominent people like Bill Gates were featured.
Companies started a grassroots campaign by educating their workers about NAFTA and urging them to contact their representatives and speak to friends. Billboards and radio ads were also run, and millions of postcards to be mailed to Congressmen were distributed. Congressional whips shared info with the White House allowing the calibration of lobbying efforts to Reps who were still not voting Yes for sure. Carter and Bush called members of their parties still wavering on NAFTA. All of America’s Nobel Prizewinners endorsed NAFTA. The opposition was strong, but disunified: -The unions hated Ross Perot -Environmentalists hated Pat Buchanan AFL-CIO started airing its own ads after USA*NAFTA started. Perot suffered from negative press coverage, and he was unable to buy primetime TV slots for extra 30 minute infomercials. His public approval rating sharply dropped in October. Buchanan’s sway over right wing Republicans was damaged by the public support of Ronald Reagan, Pat Robertson, the Heritage Foundation, and the Cato Institute for NAFTA. Organized opposition within Congress was weak compared to the support groups. By late October, Congress had become much more favorable to NAFTA, but 33 more Democrat votes were needed in the House to pass it. Jean Chretien’s election as Canadian PM on October 25 and his liberal party’s capture of the Canadian parliament frightened Clinton since Chretien had promised to renegotiate NAFTA. Clinton considered backing out of NAFTA to avoid an embarrassing loss in Congress. However, Chretien’s landslide victory reduced pressure to act on his campaign promise, and he quickly reassured Clinton over the phone. Bush admitted that NAFTA would cost some American jobs, so he pledged $2 billion in TAA. Extra concessions were expected from Clinton. Labor Secretary Robert Reich was tasked with creating a larger Clinton plan. In September, he went to Congress to display it, and it was rejected. A NAFTA-specific TAA expansion was proposed at a cost of $90 million over 10 years. It provided political cover for fence sitting Democrats to vote for NAFTA. NADBank was created to fund cleanup along the U.S.-Mexico border. It was funded by the U.S. and Mexican governments and by private companies. This shored up enviro votes. The complete NAFTA bill was transmitted to Congress on November 3. Fast track mandated them to vote on it within two weeks. Lobbying reached its climax. Clinton personally took part. Freshman congressmen were getting phone calls from the President, former Presidents, CEO’s, and Nobel Prizewinners. Gore challenged Perot to a public debate on NAFTA, and the two did so on the Larry King Show on November 9. Gore was intelligent and articulate whereas Perot was confused and irritated. Perot was also repeatedly unable to explain what he wanted as an alternative to NAFTA. It shattered Perot’s already sinking image among the public and Republicans, leading to significant NAFTA defections. On November 14, a national poll showed a plurality of Americans favored NAFTA. The White House agreed at the last minute to alter sugar tariffs to get Louisiana and Florida reps to support NAFTA. On November 17, the House approved NAFTA by 234 to 200. The Senate approved it four days later 61 to 38. NAFTA entered into force on January 1, 1994.
To understand NAFTA’s passage in Congress, one must create a theory of Congressional decision making. It was clear that NAFTA would have easily passed had it not been for outsider lobbying. Business interests were not lobbying against NAFTA, except for a few small industries like glass makers and citrus fruit companies. Constituent preferences are shaped by activist “interpreters” like Ross Perot, who will often present a skewed perspective on an issue. These same interpreters will also run groups that mobilize constituents to action, and lobbying will begin. The group’s beliefs don’t need to be completely rational or well thought-out. Politicians will change their votes in response to activist pressure if they think not changing their votes will hurt them during the next election. [This book is an exercise in analyzing the obvious.] Citizen groups—not business interests—were the main stumbling blocks to NAFTA support in Congress. The pro-NAFTA camp in part worked to change the Congressmens’ perceptions of what the public thought of NAFTA. The Gore-Perot debate convinced Congressmen that Perot was weakened and could not challenge them at their next elections if they voted for NAFTA. [Interesting to show how the credibility of figureheads is so important even if the facts of the matter remain unchanged. More on human psychology.] Chapter 9: Conclusions Opponents fought NAFTA because of what it symbolized, and not because of what it would really do. [Really? Isn’t the author kind of dismissive of the con case?] The final two week fight for NAFTA was an effort by supporters to reconstruct its symbolic meaning. The workload was crushing.