1993 – Maastricht and NAFTA

11/05/2015

1 November 1993 – Europe; 8 December 1993 – Washington D.C.

1993 saw the ratification of the Maastricht Treaty in Europe, and the formation of the European Union (EU). Over the pond, the North American Free Trade Agreement (NAFTA) signalled greater economic cooperation between the United States, Canada and Mexico. These agreements, naturally, did not appear overnight – but they signalled the shifting dynamic of economic power. One in which supranational organisation would have an impact upon domestic lawmaking and financial autonomy.

It is an unfortunate quirk of timing that I am writing this before (and publishing it after) the 2015 UK General Election. The rise of the right-wing United Kingdom Independence Party (UKIP) has been built largely upon anti-EU sentiment. After the Cold War, economic integration seemed to offer greater financial security: but at a cost.

Salinas de Gortari, Bush and Mulroney initialing a draft of NAFTA in 1992. (Source)

Salinas de Gortari, Bush and Mulroney initialing a draft of NAFTA in 1992. (Source)

Between them, the EU and NAFTA account for around 40% of the world’s wealth. Included in that are eight of the fifteen largest national economies.1 The point being, that the buying power of these trade blocs is huge, and has a significant effect on the world economy.

In Europe, however, the move from the European Community (EC) to the European Union (EU) was greeted with scepticism. Loyalties were split, although not along the traditional “left-right” axis. In Britain during the 1970s, many in the Labour Party were opposed to the EC because they feared the impact it would have upon trade with the Commonwealth and the ability for a socialist government to control the economy. Conservative support, led by Margaret Thatcher, was needed to offset the Labour rebels. By the 1990s, Labour was the pro-European party against large parts of the Conservative Party who feared a loss of national sovereignty and the impact of European “bureaucracy” on businesses. Today, the leadership of the major parties in Britain support the EU, but a sizeable number of MPs (particularly Conservative) have major reservations and would support another referendum.

At the time of Maastricht, similar splits were evident. For the international left (usually of a middle-class bent), greater political integration was seen as a progressive move towards a post-national society. For some, this was a reaction against the nationalism of the earlier decades which had seen untold destruction across the continent. For those living in large sub-national regions, the EU offered an opportunity for greater autonomy within the national structure under a trans-national regulatory authority. Places such as Brittany, for example, with a local language and culture saw great potential in the European project. But for those with a more nationalist bent, free trade and freedom of movement was the threat to local job security. Large companies would find it easier to move to places where labour was cheaper, and migrants would be able to undercut local workers’ wages.

On the neoliberal right, the EU offered opportunities for greater cross-national trade and greater profits. It would allow businesses to be more competitive by providing a tariff-free trade zone, larger labour pool and the ability to be based in multiple sites across the continent. The traditionalist right, however, were worried about the loss of national autonomy. Especially in those countries with a long history and strong national identity, the idea of ceding control to “Brussels” was an anathema. France only narrowly passed a referendum vote on the Maastricht Treaty; the Danes rejected it.2

The Lisbon Treaty also split European opinion in 2005. (Source) &copy Stephane Peray, 2005.

The Lisbon Treaty also split European opinion in 2005. (Source) © Stephane Peray, 2005.

Across the pond, NAFTA did not pursue such close political integration. There is no Pan-American currency similar to the Euro. But the destruction of tariffs and promotion of free trade has had similar consequences for smaller businesses. Take agriculture, for instance. One of the major bones of contention within the EU has been the Common Agricultural Policy. This provides subsidies to European farmers as a way of combating the threat of cheap food from other areas and ensuring supplies. Some countries have claimed that it benefits large, “industrial” farms at the expense of traditional growers – and that nation states have lost their ability to provide subsidies to their local producers. It has also encouraged over-production.3

The opening up of Mexico’s markets to American agricultural businesses appears to have had a similar effect. Local farms – without the size or technology of the massive food companies “north of the border” – have suffered. Cheap corn, and in particular cheap corn syrup, have flooded the Mexican market, hitting the agricultural sector and having a negative impact upon the country’s obesity levels and tooth decay.4

Obligatory picture of a Mexican farmer. (Source)

Obligatory picture of a Mexican farmer. (Source)

Despite all this, I am a fan of the European Union. But to support it and truly get the best from it, we need to be aware of its strengths as well as its faults.

Both the EU and NAFTA have made a significant contribution to the growth of Western economies over the past 20 years. After a period of recession in the early 1990s, there was near-continuous economic growth until the crash of 2008. In that time, Europeans have enjoyed freedom of movement within the Union, and the somewhat mixed blessings of a single currency (apart from in Britain and Scandinavia). Half of Britain’s trade is conducted within the EU, and the elections held for the European Parliament cover over half a billion people. The European courts over recent years have protected citizens from state overreach, and reversed judgements in breach of human rights legislation. And while this may not mean much to some, freedom to move around the continent and the availability of EU grants are an essential pillar of higher education and research across the continent.

The Union is far from perfect, but it offers the possibility of genuine transnational co-operation in the interests of citizens rather than national governments or large corporations. But it also contains the machinery to outlaw economic controls that would curb the worst excesses of free markets and protect smaller businesses and workers. I firmly believe that these sorts of organisations will become increasingly important in the modern world, a vital check against vested interests which are more powerful than many single nations states. At the same time, they may also create exactly the conditions that would allow billion-dollar companies to force democratically elected governments at the local, national and supranational level to kowtow to their demands.

In any case – Britain will not find protection in some fanciful New Commonwealth or as the 51st State of America. Countries such as Australia and India are already moving towards their own free trade alliances – while the US is tied into NAFTA. Supranational organisation will become inescapable. The question is, do you want to use its powers to democratically provide a better deal for ordinary people? Or accept that power is inevitably and solely in the hands of the businesses with the biggest wallets?

"Nige". (die Quelle)

“Nige”. (die Quelle)

  1. According to the International Monetary Fund in 2014 – USA (largest), Germany (4th), UK (5th), France (6th), Italy (8th), Canada (11th), Spain (14th) and Mexico (15th). ‘List of countries by GDP (nominal)’, Wikipedia < http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29 > (accessed 4 May 2015).
  2. Michael S. Lewis-Beck and Daniel S. Morey, ‘The French “Petit Oui”: The Maastricht Treaty and the French voting agenda’, Journal of Interdisciplinary History 38(1) (2007), 65-87.
  3. There is a long-running debate about CAP which is impossible to summarise here. However, a decent overview is available on the Wikipedia article on the subject: ‘Common Agricultural Policy’, Wikipedia, Criticism < http://en.wikipedia.org/wiki/Common_Agricultural_Policy#Criticism >.
  4. Anjali Browning, ‘Corn, tomatoes, and a dead dog: Mexican agricultural restructuring after NAFTA and rural responses to declining maize production in Oaxaca, Mexico’, Mexican Studies / Estudios Mexicanos 29(1) (2013), 85-119; Sarah E. Clark, Corinna Hawkes, Sophia M. E. Murphy, Karen A. Hansen-Kuhn and David Wallinger, ‘Exporting obesity: US farm and trade policy and the transformation of the Mexican consumer food environment’, International Journal of Occupational and Environmental Health 18(1) (2012), 53-64.
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