Source: http://www.slideshare.net/MariaRey/nafta-may-18-2011-rey
Topic: 4: NAFTA & US hegemony: Canada and
Mexico (Kit: Quintero-Ramírez; Mize, R.L.; Pantaleo, K; Wise, C. ; Wise. T.A.;
Abboushi, S.)
WST
• Financial Meltdown (2008)
• Trade liberalization (Neoliberalism)
• Continental Commodification
The Wonderful World of NAFTA (Part 1, 2) - 2007
http://www.youtube.com/watch?v=ZnVL0d9fwkY 7min p1
http://www.youtube.com/watch?v=XxQQael1ueE
7 min p2
NEED TO KNOW | After NAFTA | PBS 13.57 min
http://www.youtube.com/watch?v=mSXmB_my0ls 0c1 2011
Thesis: Under U.S. hegemony, NAFTA has integrated Canada
and Mexico into a continental free-trade system. As a result,
Canada’ s raw materials are exploited for reconstructing the
declining U.S. global hegemony. As a result of US-led 2008
financial meltdown, workers face a sharply depressed job
market in a de-industrialized Canada barely buffeted by the
welfare system.
In contrast, Mexican cheap, but skilled and surplus labour is
exploited for restructuring the industrial sector in the U.S. The
failure of the US financial system has worsened the
unemployment of the Mexican workers intensifying their poverty
as they have no welfare system.
Both, Mexican and Canadian economies, have become dependent
on the U.S. through the commodity chain of exploitation.
Peripheries: NAFTA
Periphery: Mexico
Semi-periphery: Canada
Arguments in the literature:
1. Wise T. A.(2011): Hegemony and dumping
NAFTA + U.S. Farm Subsidies Devastates Mexican Agriculture 2010
https://www.youtube.com/watch?v=N4KRd7Qjyys 8 min
1. Abboushi, S (2010):
• US trading power, US disregard for agreements,
land-ownership structure vs. strategy of acquisition;
and Managed (not Free) trade
3. Quintero Ramirez (2002)
• NAFTA deindustrialized & depressed labour
conditions in Canada and exploits workers in
Mexico
4. Susan George: WTO is ineffective
http://www.youtube.com/watch?v=NQ952ba75Yk you tube uploaded May 5, 2011)
5. Wise, R.D & Cypher, J.M (2007).
Cheap-labor embodied Mexican exports but not
achieving new high-value added production or
specialization.
Source: The Strategic Role of Mexican Labor under NAFTA: Critical Perspectives on Current Economic Integration, THE
ANNALS OF THE AMERICAN ACADEMY, March 2007
6. Carol Wise (2009):
Regional market integration of US, Canada and
Mexico has been superseded by China’s use of NAFTA
to facilitate its entry into US through Mexico
7. Gandasegui, M.A (2006) Kit #17:
Using its hegemony, US wants to gain advantages over 4
areas in making trade agreements with each country in LAm
:
1.
2.
3.
4.
Government contracts
Pharmaceutical markets
Agricultural markets
Intellectual property (GRAIN 2004).
8. Katherine Pantaleo (2010).
the murders as gendered sexual serial killings primarily
perpetuated and caused by: NAFTA, Gender issues &
Corruption of the criminal justice system.
NAFTA's Ultimate Effect on Mexico P1 of 2 2010 april 9.29 min murder city Charles bowden
http://www.youtube.com/watch?v=WSrOAfMylAs
NAFTA's Ultimate Effect on Mexico P2 of 2
http://www.youtube.com/watch?v=nokmc36jnOI 7 min
9. Cormier & Targ (2001)
• Globalization led to workers’ poverty &
global income inequality
Cormier , D & Targ, H, (2001) Globalization And The North American Worker. Labor Studies Journal, Spring 2001 v26 i1 p42
Paul Ciccantell (2001). NAFTA and the Reconstruction of U.S. Hegemony: The Raw Materials Foundations of Economic
Competitiveness. (Statistical Data Included), Canadian Journal of Sociology, Wntr 2001 v26 i1 p57
How does NAFTA de-industrialize & depress
labour conditions in Canada and exploit
workers in Mexico?
(Quintero Ramirez: 2002)
By:
• Reducing the number of full-time jobs
• Subcontracting work outside the plant
• Increase of part-time workers
• Piecework outsourced to home work
Core: NAFTA & US (as Core):
http://www.slideshare.net/MariaRey/nafta-may-18-2011-rey 1-40 slides
Core: NAFTA & US (as Core):
• Power of the US: Neoliberalism is imposed on
Mexico and Canada
• Impact of US financial boom-bust cycles affect
their trade balances.
Semi periphery and Periphery:
• Continental commodification of Canada’s (semi
periphery) and Mexico’s (Periphery) raw
materials
Driving force of Global market integration: (Cormier &
Targ: 2001)
• Neoliberalism (NL) deregulate commercial activity. Liberalize trade, open for
foreign investments. Deregulate finance/currency, privatize the economy, ensure private property
protection
Why should Canada and Mexico adopt NL?
• US’s enforcement: How?
• By integrating Canada and Mexico through
NAFTA
• As requirements of loans: WB, IMF & SAP
Feb 2010: UNCTAD’s new economic report shows that
neoliberal policies have negatively affected the countries
that were forced to follow them
Why does Mexico as a peripheral country bow
to American hegemony
IMF requires each country to balance export vs.
import payment in trade. It lends money to
bridge the gap (imports minus exports) and
imposes the rules of neoliberalism (LAPDoGS)
on the borrowing country.
Core: NAFTA & US (as Core):
• Power of the US: Neoliberalism is imposed on
Mexico and Canada
• Impact of US financial boom-bust cycles affect
their trade balances.
Semi periphery and Periphery:
• Continental commodification of Canada’s (semi
periphery) and Mexico’s (Periphery) raw
materials
WST: US’s commodification of Canadian and
Mexican raw materials: How?
1. Continentalization of the 3 economies
• Corporatization of production in NAFTA
countries
• Continental expansion of US’s MNCs
• Continental enforcement of neoliberalism
2. FT
• FT-terms favourable to the US
• GCC & Continental commodity chain
http://www.dfaitmaeci.gc.ca/eet/research/naf
ta/nafta-en.asp#aconmond
Global Integration by trade agreements in
Table 1
• US vs. European Union (EU).
• European U: Sovereign states may resist
global integration because it would mean
surrendering national control on economic
policies
• CU allows greater bargaining power
between trading nations
• FTA may appeal to small states as exporters
need to adjust only to block standards not to
global standards.
WST: Continentalization of the three economies & US
(Core’s)hegemony:
Mexico (periphery) and Canada (semi-periphery) are integrated
through NAFTA
• Favourable terms of trade for the US (unequal exchange)
• US disregards WTO’s decisions
FT: Continental commodification of Canada’s (semi
periphery) and Mexico’s (Periphery) raw materials
• US power within NAFTA leads to the
continental commodification
Under the US hegemonic power Mexico and
Canada abide by the US strategies.
How does a hegemon in a trade block make
gains?
• Political influence
• Terms-of-trade (TOT)
• Discrimination against non-members
• Greater influence over multilateral trade
negotiations
http://www.pecc.org/trade/papers/bangkok-2001/low.pdf
http://www.pecc.org/trade/papers/bangkok-2001/low.pdf
Impact of Neoliberal Trade Policies:
UNDP Human Development Report 2004 :
• 46 countries’ people are poorer today (2004)
than in 1990
• Liberalization and privatization restrict
countries’ supply of basic services
• WB conditionality undermines local service
industries that cannot compete with transnational service corporations
http://www.un-ngls.org/cso/cso5/cfmm2004statement.pdf
http://ageconsearch.umn.edu/bitstream/61895/2/AAEA_RGR_PAPER_May_3_2010.pdf
Rafael Garduño Rivera 2010
UN Economic and Social Council, 2000:
committee on human rights reports:
• Most global trade is controlled by multinational enterprises
• Trade and commerce have serious human rights implications
• WTO: gender insensitive
• Patents for genetically engineered species
– economic high-jacking.
http://www.unhchr.ch/Huridocda/Huridoca.nsf/(Symbol)/E.CN.4.Sub.2.2000.13.En?Opendocument
.
NAFTA: Impact of US on Mexico
US hegemony
• Advanced industries,
technology & market
(P)
• Mergers and expansion
of MNCs (NDL)
• Financial stability (P)
• Largest & desirable
market for capital and
for export (P)
Mexico: Periphery
• Raw material based
industrialization/
agriculture (Mexico)(unequal
trade: UT)
• Development model –
locked in by US market (oil
demand & manufacturing)
(lack economic resistance to US market)
• Export dependence (since 1970s,
oil to pay debt dependence on US)
• Smaller domestic market
& lacks LAm’s economic
development pull
NAFTA: Impact of US on Canada
US hegemony
• Advanced industries,
technology & market (P)
• State support of MNCs:
Mergers and expansion of
MNCs (NDL) for capital
accumulation
• Neoliberalism, Washington
Consensus, market
liberalization
• Financial stability (P)
• Capital flow from and
dominant pull of the largest
market for export (P)
Canada: Semiperiphery
• Continental integration of
raw materials industries
(heaviest, bulkiest, and largest volume, e.g., petroleum,
iron, coal, aluminum and copper, for industrial
production.)
• Promote higher technology
manufacturing and service
sector industries as the
Development Model
• Maintain export dependence
on US as a secure market
(U.S.
negotiators aimed for and got 'secure and enhanced
access' to Canada's resource sector)
• Smaller domestic markets &
less globally powerful
NAFTA: Comparing impact of US on Mexico and on Canada
Mexico (Periphery)
Canada (Semi-periphery)
(Weaker state and dependence on Core
Manipulative power
and semi-periphery)
• Different goals in negotiating
CUFTA: protect resource and
manufactured exports from U.S.
trade discrimination (stronger
State and econ stability)
• Regulated NAFTA ties with US
but weakened by continentally
integrated economy
• 1980s: NEP (National Energy Program), of
Canadian government aimed at
self-reliance in oil and natural
gas & increased investment &
production & restricted exports
• Restrictions on US re: foreign
ownership of petroleum, uranium
production, mining leases,
transportation industries
• Different goals in negotiating
NAFTA: promoting economic and
political restructuring were central
(lack of powerful and stable State)
• Locked in dependence on exports
of oil and raw resources & US
industries shaped its econ.
development
• Mexico, a major world producer of
lead and zinc, pollution intensive
production, drew U.S. investment
(UT)
• US demand for bulky/heavy raw
resources has continentally tied
Mexico to the capital and markets
of US & Canada
WST: US’s commodification of Canadian and
Mexican raw materials: How?
1. Continentalization of the 3 economies
• Corporatization of production in NAFTA
countries
• Continental expansion of US’s MNCs
• Continental enforcement of neoliberalism
2. FT
• FT-terms favourable to the US
• GCC & Continental commodity chain
Ciccantell (2001): NAFTA: an institutional
framework of integrating raw materials
Why was U.S. interested in NAFTA?
•US raw materials supply systems
were declining
•To access cheap labour and to gain new
markets
Name a resource that is expensive today:
oil & gas
e.g.: oil price increases of 1973-74 led to
1979-80 decline of U.S. economic
competitiveness
http://www.acs-aec.ca/Polls/Poll55.pdf
Core: NAFTA & US :
1. Problems of U.S. & its MNCs:
How did they solve insecure supplies of the
raw materials ?
Canada’s & Mexico’s oil, natural gas, and
other natural resources
2. Why was US interested in these supplies?
To reduce for U.S. MNCs’ cost of production
to advance their profit & competitiveness.
Core: NAFTA & US (cont’d):
3.Core-Periphery unequal exchange continues
under hegemonic FT rules:
FT ensures:
• Cheap access to heaviest, bulkiest, and
largest volume raw materials
• Monopolistic (MNCs) extraction
peripheries’ raw materials at low costs
What is ‘Direct foreign investment’?
branch plants -- central mechanisms of core
economies' control over their raw materials in
peripheries
Limit processing to certain refineries:
physical relationship tightly links many
extractive peripheries to particular core
firms
Foreign Direct Investment in Canada 1995 - 2004
FDI received in to Canada $449 billion in 2006
http://www.witiger.com/internationalbusiness/FD
http://revista.amec.com.mx/num_7_2004/Peter_Kresl.htm
Increasing Productivity (red) gains were not passed on to workers (labour costs (yellow:
Annual % Changes for 10 years of NAFTA
John W. Foster and John Dillon1 http://www.kairoscanada.org/e/economic/trade/NAFTACanada.pdf
http://www.stat.gouv.qc.ca/donstat/econm_finnc/conjn_econm/compr_inter/ipcvar_an.htm
2005: Mexico’s cost of living increased double that of Canada
Sources: Canadian Institute for Health Information, Gouvernement du Québec, Government of Canada, Institut de la statistique du
Québec, International Monetary Fund, Organisation for Economic Co-operation and Development, Population Reference Bureau,
Statistics Canada, US FedStats, World Bank.
40 mil. Poor in Mexico
http://www.stat.gouv.qc.ca/donstat/econm_finnc/conjn_econm/compr_inter/index_an.htm
2005
Sources:
Canadian Institute for Health Information, Gouvernement du Québec, Government of Canada, Institut de la statistique du
Québec, International Monetary Fund, Organisation for Economic Co-operation and Development, Population Reference
Bureau,
Statistics
Canada,
US
FedStats,
World
Bank.
Quintero Ramirez (2002): How does NAFTA deindustrialize & depress labour conditions in Canada and
exploit workers in Mexico?
In Canada: by
• Reducing the number of full-time jobs
• Subcontracting work outside the plant –affects
jobs:
- increase of part-time workers
- piecework
- outsourced to home work
Quintero Ramirez (cont’d)
In Mexico:
• average of 70 hrs. per week without overtime pay no health insurance, no benefits
• violation of the Employment Standards by
employers – workers received no compensation
under the Workplace Safety Act
• no welfare or UI (unemployment insurance)
http://www.stat.gouv.qc.ca/donstat/econm_finnc/conjn_econm/compr_inter/chomage_an.htm
2003
Canadian Institute for Health Information, Gouvernement du Québec, Government of Canada, Institut de la statistique du Québec,
International Monetary Fund, Organisation for Economic Co-operation and Development, Population Reference Bureau, Statistics
Canada, US FedStats, World Bank.
http://www.dfaitmaeci.gc.ca/eet/research/naf
ta/nafta-en.asp#aconmond
http://www.dfaitmaeci.gc.ca/eet/research/naf
ta/nafta-en.asp#aconmond
http://www.dfaitmaeci.gc.ca/eet/research/naf
ta/nafta-en.asp#aconmond
http://www.dfaitmaeci.gc.ca/eet/research/naf
ta/nafta-en.asp#aconmond
NAFTA benefits the capital investors but workers lose
jobs: Source: G & M Feb. 15, 2008, p.A18.(editorial)
•Trade Area 440 mil people
•1993-2006: $15 Trillion (value of goods and services
produced)
• Economies grew by :
• U.S.
50%
• Canada
54%
• Mexico 46%
•NAFTA partners’ total trade /a minute
• $1.7 million (worth)
Source: G & M
Feb. 15, 2008, p.A18.(editorial)
The Wonderful World of Nafta
http://www.youtube.com/watch?v=ZnVL0d9fwkY 7 min (the wonderful World
of Nafta 1/2)
http://www.youtube.com/watch?v=XxQQael1ueE (2/2)
Does Canada control its own sovereignty,
taxation and borrowing?
Yes, but:
•U.S. hegemony
It ensures that its huge sunk capital in
raw materials, overpowers Canada’s
claims to sovereignty
Pre 9/11: What % of Canadians were
‘continentalists’?
Two thirds
Post-9/11: Who is a close ally of the U.S?
http://www.acs-aec.ca/Polls/SoCloseYetSo
What is hegemony?
Arrighi (2004):
When a state uses its economic, political,
military and cultural power to control a group
of sovereign states.
Arrighi, G (2004). "Hegemony and Antisystemic Movements". In I. Wallerstein, ed., The Modern World-System in the Longue Duree.
Boulder, Co: Paradigm Publishers, 2004
Core: NAFTA & US :Ciccantell, P. (2001)
1. Problems of U.S. & its MNCs:
How did they solve insecure supplies of the
raw materials ? Ciccantell, P. (2001).
Canada’s & Mexico’s oil, natural gas, and
other natural resources
2. Why was US interested in these supplies?
To reduce MNCs’ cost of production for
U.S. to advance their competitiveness.
(Ciccantell, P (2001). NAFTA and the Reconstruction of U.S. Hegemony: The Raw Materials Foundations of Economic
competitiveness. (Statistical Data Included) , Canadian Journal of Sociology, Winter 2001 v26: 1, p57)
Core: NAFTA & US (cont’d):
3. What does US as a hegemon want to monopolize
trade in the world?
• Cheap access to heaviest, bulkiest, and largest
volume of raw materials
• Maintain its hegemony to extract raw materials
at low costs from the peripheries.
WST explains Core’s Globalization agenda & its
consequences to the peripheries
Expansion of US Hegemony: (read: Ciccantell, P:
2001)
•Enforced uniformity in development
•Hegemonic control over technologies
•Unsuitable, costly & centralized solutions
•Lack of locally effective problem solving
Wise, Timothy A. (2011) (in course kit)
Dumping margin In a case of dumping, the difference between the "fair price" and the price charged for export. Used as the basis for setting
anti-dumping duties. http://www-personal.umich.edu/~alandear/glossary/d.html
NAFTA + U.S. Farm Subsidies Devastates Mexican Agriculture 8.23 min 2012
http://www.youtube.com/watch?v=N4KRd7Qjyys
Peripheries: NAFTA
Periphery: Mexico
Semi-periphery: Canada
1. Wise T. A.(2011): Hegemony and dumping
2. Abboushi, S (2010):
• US trading power, US disregard for agreements,
land-ownership structure vs. strategy of
acquisition; and Managed (not Free) trade
3. Quintero Ramirez (2002)
• NAFTA deindustrialized & depressed labour
conditions in Canada and exploits workers in
Mexico