NAFTA will fail a thousand times before its advocates beg forgiveness. Not that an apology should be accepted, but justice requires, at least, that they admit their complicity in the century’s biggest intergovernmental financial seam.
NAFTA led (thanks to the Republican leadership) to a $50 billion American bailout of Mexico, the loss of the dollar’s value on international exchange (and the ruin of many European vacations), the wrecking of small traders who had informal trading relations with counterparts in Mexico, the violation of American and Mexican sovereignty, and general fiscal and financial chaos. At the height of the NAFTA debate, recall, the right split into two camps. Siding with the Clinton administration and neoliberals were the usual suspects. They were internationalist pundits of the left-libertarian and neoeonservative variety, backed by their allied think tanks in Washington, Manhattan, Mexico City, and Victoria. In the media, the Wall Street Journal‘s editorial page was their echo chamber. Their official line was fatuous and counterfactual: NAFTA will someday lead to lower tariffs and therefore it’s great. Every other concern—sovereignty, cost, multinational regulations, Mexico’s financial shakiness, the drug trade—was deemed irrelevant. They called opponents protectionist bigots.
But should “free trade” be legislated in books the size of Will Durant’s Story of Civilization? Sure, they said, NAFTA’s imperfect, but still a great thing “in the balance.” If the scheme goes wrong, they assured us, they would be its harshest critics. But, of course, that did not happen.
This side “won” the debate because of the support of the banking, corporate, government, and media establishments in the United States, Mexico, and Canada. But their disinformation never convinced real conservatives. Evidence: their think tanks’ annual reports, seen by regular contributors, downplay NAFTA, if they mention the treaty at all.
The opposition on the right was a grand coalition of paleoconservatives, a revival of the old “isolationist” pre-Buckley movement. It consisted of American nationalists, constitutionalists, old-fashioned free traders of the Austrian school. Southern agrarians, and populists. The coalition had no media “access” and very little money. Some groups even lost corporate donors because of their principled stand against NAFTA. But they had good political instincts and a willingness to speak truth to power.
NAFTA is not what its boosters claimed, they said. It is a convoluted government-to-government plan to guarantee corporate, banking, and governmental profits at the expense of the savers, taxpayers, and small traders. The Ricardian free trade rhetoric trotted out to defend NAFTA was a smoke screen to hide what was essentially an insider racket. The proof came in a whirlwind of studies ranging from the general to the highly detailed. But the NAFTA fix was in, and the Establishment bought the necessary margin of victory.
Hardly a day passes that does not confirm the views of the paleo-right. Thanks to a stopgap bailout fund, NAFTA made the United States the lender-of-last-resort for the Mexican economy. The Clinton administration responded to mass outrage at the bailout by creating a “debt restructuring” function within the IMF to pay for future bailouts. The logical result of this policy is a world central bank capable of monetizing debt from anywhere in the world. NAFTA, let’s remember, was the catalyst.
NAFTA opponents also said the treaty would violate the sovereignty of signatory countries. It has. Bill Clinton told an audience in Quebec he would cut off trade if it seceded from Canada and thus from NAFTA. New York banking interests are dictating Mexican government policy. Meanwhile, the United States cannot deregulate our economy without activist left-wing groups filing suit with a NAFTA commission.
NAFTA’s side agreements make this possible. They forbid regulatory policy from giving an “unfair” economic advantage. This leads to “upward harmonization”: Mexico’s economy has become strictly regulated while the United States cannot deregulate. Congress, for example, enacted a moratorium on expansions of the Endangered Species Act. But green groups in the United States and Mexico have appealed to NAFTA’s Commission for Environmental Cooperation to stop it.
If this detestable Commission intervenes, the United States will have to pay fines and suffer trade penalties. Politicians will do whatever is necessary to prevent that. This is one more reason —among hundreds—why the United States should immediately withdraw from NAFTA. It is also why, in a just world, NAFTA’s supporters should be dragged before a people’s tribunal, where they might finally recant.
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