Participants at a recent conference in Washington blamed Mexico’s failure to achieve above-average economic growth in the past decade on the North American Free Trade Agreement (NAFTA). This criticism is unfair and unwise. The NAFTA agreement is one of the best examples in recent history of a successful, mainstream, and bipartisan project. According to the U.S. Chamber of Commerce, in the 15 years since NAFTA came into force annual U.S. trade with Canada and Mexico has tripled to nearly $1 trillion. More than 100,000 small and medium-sized U.S. firms now employ Americans to produce goods and services for export to our NAFTA neighbors.

NAFTA was conceived by President Bush 41, ardently supported by President Clinton (at some considerable political cost to himself), and later promoted as a good model for economic development under the administration of President George W. Bush. The discussion at the Carnegie Endowment seems to be an ideologically driven departure from something that has delivered good results and should be continued.
The real problem, of course, has been the steady refusal of the deeply entrenched public-sector labor unions and politicians on the left in Mexico and the corporatist enablers who head Mexico’s many monopolistic and oligopolistic companies to make the badly needed economic and governance reforms that would open key sectors such as energy to competition and private foreign and domestic investment. NAFTA has been a success for both the U.S. and Mexico, to the extent that it has been permitted to succeed in both countries. Unfortunately, since President Obama came into office he and the U.S. Congress have taken some steps that conflict with either the letter or the spirit of NAFTA (e.g. the cases of “Mexican Trucks” and “Buy America”).

President Felipe Calderon has been trying to get some reforms through the Mexican Congress, but has been largely stymied. The answer is not “to overhaul NAFTA” but to finish the overhaul of the economy and to observe NAFTA rules in the U.S.

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