BBC NEWS
NAFTA trade talks likely to stall
* Analysis * By Steve Schifferes Economics reporter, BBC News
* As the three leaders of the North American Free Trade Agreement (Nafta) meet in Canada, they face growing protectionist pressures at home. *
US President George Bush, Canadian Prime Minister Stephen Harper, and Mexican President Felipe Calderon will meet Monday at a Quebec resort complex.
But their plans to expand and deepen the trade deal are under attack from activists, trade unionists and farmers.
The fiercest attacks have come from US Democrats as the 2008 election looms.
* Mass demonstrations *
The mood is very different from the early years of the Bush administration, when the president journeyed to Quebec to push for a Free Trade Area of the Americas, stretching from Alaska to Tierra del Fuego in Argentina and rivalling the EU in size.
But now the pressure is on Nafta, which accounts for $700bn in cross-border trade and investment, and which Mr Bush has made the cornerstone of a Security and Prosperity Partnership with his two Nafta partners.
Thousands of anti-globalisation protesters are expected to converge on the summit at the weekend, although the police have established a 25km security cordon around the site.
* Union worries *
All the Democratic presidential candidates condemned the Nafta trade deal as unfair to workers at a rally last week organised by the US trade union federation, the AFL-CIO.
* Even Hillary Clinton, whose husband Bill Clinton played a key role in getting Congress to pass the Nafta deal in 1993, expressed scepticism about whether US workers benefited from free trade deals.*
"Nafta and the way it has been implemented has hurt a lot of US workers. So clearly we have to have a broad reform in how we approach trade," she told 17,000 union workers at Soldiers Field in Chicago.
Barack Obama, Hillary's main rival for the Democratic nomination for president, said US trade agreements had tilted against workers, because "corporate lobbyists" had too much influence.
US unions, who will have a strong influence on the Democratic primaries, have long held that unfair free trade deals with countries without strong labour laws have cost US workers their jobs, especially in the manufacturing sector.
* Nafta, Cafta, Afta... *
Despite the rhetoric, the Democrats are unlikely to roll back the 13-year old Nafta treaty completely.
But their approach could lead to more aggressive US enforcement.
And their opposition is affecting the prospects of other trade deals being implemented.
Even small-scale trade deals with individual Latin American countries are in trouble, after Democrats insisted that countries which sign free trade deals with the US must introduce tough labour laws.
The Andean Pact free trade deal, which includes Colombia and Peru, is being blocked by Congressional Democrats, although the deal with Peru may survive if the government passes a new labour code.
Gary Hufbauer, of the Peterson Institute for International Affairs, said the approach smacked of a new imperialism which involved "bullying Latin America", was "heavy-handed" and gave fodder to populist regional leaders.
And the Central America Free Trade Agreement, which passed Congress by just two votes in 2005, is also in their spotlight.
* Mexican woes *
It is not just in the US that there is unease about regional economic co-operation.
In Mexico, where Felipe Calderon won a narrow victory against a populist opponent last year, the costs as well as the benefits of Nafta are evident.
Mr Calderon desperately wants an immigration deal with the US to improve the rights of the millions of Mexican immigrants who have flooded across the border for a better life, despite the promise of Nafta.
But despite Mr Bush's efforts, the US Congress rejected his immigration reform plans.
At home, Mr Calderon also faces opposition from farmers to the imminent opening-up of the politically sensitive maize sector to corn imports from the US, which, it is feared, could wipe out the livelihood of many in rural areas.
* Blame Canada? *
Even in Canada, which has gained enormously from being able to export its raw materials freely to the US, there is frustration over the aggressive US enforcement of the trade deal.
One point of friction has been Canada's exports of softwood timber to the US housing market.
The US has long claimed that the Canadian government, which owns much of the land on which the timber was harvested, was giving its firms an unfair subsidy by not charging them enough for the right to cut down the trees.
Despite several rulings in both Nafta and the World Trade Organisation, the US has continued to pursue the matter for several years, and it is now likely to go to another arbitration court.
Canadians are worried about growing protectionist pressures in the US, and their mood has not been improved by the tight security regulations implemented in regard to cross-border travel.
* World trade *
The US domestic pressures come at a time when the world trade talks have stalled, not least because the US Congress has refused to extend the Bush administration's trade promotion authority.
Without that extension, trade deals negotiated by the president can then be amended piecemeal by Congress.
The growing tensions over trade and immigration could also weaken the US position in Latin America, which is already under challenge from rival ideologies.
And the protectionist pressures are likely to strengthen as the US presidential election approaches in November 2008, particularly since many of the key battleground states are in the highly industrialised Mid-West.
Story from BBC NEWS: http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/6940189.stm
Published: 2007/08/18 00:41:09 GMT
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