Original Post – October 21, 2018 ISKRA
The North American Free Trade Agreement (NAFTA), which officially entered into force on 1 January 1994, was an extension to Mexico of the economic agreement that had already linked the United States and Canada since 1989. As is now well known, the Trump administration, as the representative of American capitalist interests, imposed a renegotiation of the agreement on its economic partners in order to better satisfy the imperialist interests of the United States. In fact, during the last U.S. election campaign, Trump strongly insisted that the free trade agreement was the main cause of the U.S. trade deficit and the decline of the U.S. manufacturing sector over the past 30 years.
BACK TO THE NAFTA
What has been formed with NAFTA is a major market area of more than 400 million people and sharing a gross domestic product (GDP) of several trillion dollars. The integration of the economies of the United States, Canada and Mexico has thus fostered the emergence and development of a powerful capitalist bloc capable of competing with other major economic blocs, notably the bloc composed of the Member States of the European Union (USA).
Through NAFTA, the United States has become the hub of regional trade in the Americas. Indeed, NAFTA members have close ties with each other. In particular, Canada and Mexico occupy a privileged position with the United States (representing the top two export markets of the United States), considering their respective real weight in the world economy (i.e. GDP equivalent to 1.3% and 1.9% of world GDP in 2016 for Canada and Mexico respectively). In addition, the United States, which accounted for 15.5% of world GDP in 2016, is Mexico’s and Canada’s main trading partner. In 2016, the latter exported 81.3% and 76.4% of their goods to the United States respectively, while 46% and 52.2% of their imports came from the United States respectively.
Given such a close relationship between the various capitalist economies, it seemed normal for the latter to seek to perpetuate the relationships they maintain with each other in order to ensure the functioning of the North American economic entity. However, it should not be forgotten that behind any agreement between capitalists is always and necessarily the regional organization of the division of labour between States, which makes it possible to maintain the most favourable exploitation relations for capitalism to the detriment of the proletarians (and of peasantry if we consider Mexico).
THE ROLE OF ECONOMIC AGREEMENTS UNDER CAPITALISM
The emergence and development of economic agreements between States (but undoubtedly having political, social and cultural ramifications) that also compete fiercely with each other on the markets is explained by the demands of extending the capitalist market and results mainly from the generalized crisis of capitalism that has imposed on all capitalists the obligation to implement a general policy aimed at extending, particularly for the most powerful capitalist countries (the countries grouped around the G20), the dictates of international trade to the whole planet.
Presented as economic agreements, agreements such as NAFTA allow the most powerful imperialist countries to increase their hegemonic role in specific and increasingly expanding geographical areas, including by integrating the weaker economies through the restructuring of these economies to enable them to serve the interests of the dominant capitalists. Indeed, taking advantage of the fall of the Eastern countries, the world capitalist was able to perpetuate itself by opening and monopolizing new markets and thus we witnessed a long period of international trade development that temporarily solved the serious problems that were then hindering capitalist economies (in particular the overproduction of capital).
That said, far from improving the situation of workers, the expansion of the capitalist market and the agreements that accompanied it have mainly benefited the capitalists alone. Indeed, wherever agreements are signed, the economies of dominated countries have been increasingly subservient to regional and international powers. Far from benefiting from the “trickle down” effect, the poorest countries have remained essentially at the same stage as before. Far from flowing to the exploited masses, the wealth produced has increasingly been monopolized by the most powerful capitalists.
WHY RENEGOTIATE THE NAFTA?
In response to the capitalists’ desire to increase trade, the volume of trade has actually increased overall with NAFTA. However, this has resulted in a growing deficit of the United States vis-à-vis its economic “partners”. Indeed, it turned out that low production costs, particularly in Mexico, pushed American capitalists to move part of their production. If we add the weakness of these countries’ currencies against the American currency, this has resulted in an imbalance in trade.
However, there are other reasons that may explain the American administration’s insistence on renegotiating NAFTA. Indeed, although it remains true that American imperialism is the main imperialist power in the world, the fact remains that this power is going through a long period of manifest decline. However, with the long-term crisis that has taken hold in the capitalist world, American imperialism is faced with the obligation to reclaim at all costs the ground lost in the world economy (especially vis-à-vis China) if it wants to avoid further development of internal contradictions in the United States. Indeed, what ultimately threatens the integrity of American capitalism, if it does not succeed in becoming a hegemonic power again, is the threat posed to it by the development of class struggle in the United States. In fact, the gaps between rich and poor in the United States increase and accelerate the development of contradictions in American society. The American strategy is therefore to seek to recover part of the production that had been relocated and repatriate it to the United States. It was within this framework that negotiations were held to update the NAFTA agreement. In fact, in July 2017, the Office of the US Trade Representative published the general objectives of the US administration in this area. In this report, the United States reaffirmed, in particular, its desire to reduce its deficit within the agreement.
Given Canada’s strong economic integration with the United States and its economy’s dependence on exports to its southern neighbour, it was to be expected that Justin Trudeau’s Liberal government would seek at all costs to maintain the NAFTA agreement. Moreover, considering the weight that exports to the United States represent for Canadian capitalism, this explains why Trudeau and his key ministers are promoting free trade around the world. Indeed, it is a question of Canadian capitalism going beyond the limits imposed by American capitalism by affirming the interests of Canadian capitalists around the world.
Considering that Canada’s economy depends on international trade for a significant percentage of its GDP, it is to some extent normal that to maintain its status as an imperialist power, Canada must succeed in maintaining and developing this sector. However, during the renegotiation of NAFTA, the Liberal government, as the board of directors of the capitalists in Canada, was faced with the obligation to arbitrate between the demands of two powerful lobbies, the auto industry lobby (mainly located in Ontario) and the dairy products lobby (mainly located in Quebec). However, given the importance of the automotive sector in terms of exports to the Canadian economy and given that, without an agreement, production in this sector would decline and that Canada would be particularly affected (24% decrease) because of its privileged position in the automotive production chain, it was foreseeable that the Liberal government would seek first and foremost to preserve this sector to the detriment of the dairy industry. In fact, Canada is not a major exporter of dairy products. Indeed, its production of milk and dairy products is mainly intended for domestic markets. Moreover, it should not be forgotten that behind the image of small family farms that the dairy industry seeks to promote are powerful monopolies (Saputo, Agropur, Parmalat, etc.) that organize and control the industry as a whole (approximately 6,000 dairy farms in Quebec – nearly 55% of milk production in the country – dairy product processing employs nearly 42,000 people in the province). It should be noted that although the new version of NAFTA undermines supply management, Ottawa has already announced that there will be significant financial compensation for dairy producers.
AGREEMENTS BETWEEN CAPITALISTS AGAINST PEOPLES
Often presented as instruments of progress for states and peoples, capitalist agreements rarely lead to substantial improvements for the majority of workers. The reason why NAFTA and other economic agreements always produce disappointing results for proletarians and peasants is simple: these agreements are always aimed first and foremost at consolidating capitalist companies and monopolies. In other words, these agreements aim above all to make capital grow and not to improve people’s living conditions and therefore any consolidation of capitalism will always be at the expense of the workers who produce the wealth.
For example, according to a study by the Institute of Economic Policy, NAFTA has eliminated nearly 700,000 American jobs, many of them in the “rust belt” factories in the three key states – Wisconsin, Michigan and Pennsylvania – that promoted Donald Trump’s election as president of the United States (Le Devoir, November 2017).
In Mexico, the free trade agreement has mainly meant the destruction of traditional agriculture and the increase in poverty. In addition, the orientation of agricultural production towards exporting rather than meeting the food needs of the local population in the three NAFTA countries has favoured the concentration of production in the hands of multinationals, which in turn has favoured the transformation of the agricultural structure, particularly through the increase in monoculture and high-intensity farming (e.g. corn in Quebec), ultimately leading to a steady decline in the incomes of small and medium-sized producers. NAFTA has also discouraged the diversification of the Mexican economy into other sectors, as there is virtually no added value in the factory assembly of spare parts largely manufactured in the United States and Canada and rarely in Mexico.
As reported in an article in the bourgeois press, “The fall of trade barriers has put Mexican farmers in a weak position compared to large American producers, who benefit from large subsidies. Smallholder maize farmers, the staple food, are marginalized. The country imports 10 million tonnes per year, 50 times more than in 1993” (La Presse Edition of 21 December 2013).
In fact, although it has increased its trade with the United States and Canada fivefold, the fact remains that Mexico’s socio-economic situation has not improved. Indeed, the unemployment rate has remained high; wages have stagnated at their lowest level while 52% of the population lives in poverty, which explains why the phenomenon of emigration to the north persists.
In Canada, the manufacturing sector has been greatly affected by the offshoring of production, forcing Canada to establish itself as a supplier of natural resources. That being said, in Canada as elsewhere, the most negative effects of NAFTA on workers derive from the benefits granted to multinational corporations, particularly the protections granted to capitalist corporations. This protection increases the mobility of capital by reducing risks for investors. Thus, at the tri-national level (Canada-USA-Mexico) there has been a decline in wages and an increase in income gaps.
FOR PROLETARIAN AND PEASANT UNITY
The proletariat cannot afford to remain passive and let the capitalists freely share the world. Fighting capitalism has also been opposed to agreements between capitalists that allow them to increasingly exploit the global proletariat. However, this opposition must be alive and therefore not be confined to the mere debate of ideas but must be accompanied by actions that highlight the international character of the proletariat and its aspirations for a more just world.
The proletariat must first of all seek to develop proletarian internationalism more and more, in particular by promoting the emergence and development, both theoretically and practically, of initiatives and actions at the international level against the capitalists. Indeed, the widespread struggle against capitalism, here as elsewhere, regardless of whether it is still at the embryonic level or has taken a more complete form (for example, the popular wars in India and the Philippines) objectively contributes to strengthening international solidarity among workers, while the advances made by the revolution make it possible to consider the possibility of going beyond the exploitative capitalist system and considering the establishment of a just world, free from exploitation, having adopted communism as the only political horizon capable of ensuring the full and harmonious development of individuals, societies and the environment. What the proletarians must oppose to capitalist agreements are 1) proletarian internationalism; 2) the sharing of the revolutionary experiences of the exploited proletarians and peoples and 3) the adoption of revolutionary slogans of action encompassing more and more workers!
Let us shake up the unity of the capitalist world!
Let us develop proletarian unity!
Let’s abolish capitalism!