13.2 Foreign Policy: NAFTA and Globalization

NAFTA, signed in 1992 and implemented in 1994, aimed to eliminate trade barriers between the US, Canada, and Mexico. This agreement, championed by President Clinton, was part of a broader push for globalization and free trade in the 1990s.

The agreement sparked controversy, with supporters touting economic benefits and critics warning of job losses and environmental concerns. NAFTA's impact was mixed, increasing trade but also leading to job shifts in certain sectors.

The North American Free Trade Agreement (NAFTA)

Provisions and impact of NAFTA

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• Trilateral trade agreement between the United States, Canada, and Mexico signed in 1992 and implemented in 1994 aimed to eliminate trade barriers and promote economic integration among the three countries
• Gradually eliminated tariffs and quotas on goods traded between the member countries (automobiles, textiles)
• Established rules for fair competition and investment protection
• Facilitated cross-border movement of goods and services
• Protected intellectual property rights (patents, trademarks)
• Increased trade volume among the three countries
  • U.S. exports to Canada and Mexico grew significantly (machinery, electronics)
  • U.S. imports from Canada and Mexico also increased (oil, automotive parts)
• Created a larger, integrated market for businesses
• Increased foreign direct investment (FDI) flows among the member countries
• Mixed effects on employment and wages in the U.S.
  • Some job losses in manufacturing sectors due to increased competition (textiles, automotive)
  • Job gains in other sectors, such as services and export-oriented industries (finance, technology)

Clinton's globalization policies

• President Bill Clinton strongly supported free trade and globalization viewed trade liberalization as a means to promote economic growth and create jobs
• Negotiated and signed NAFTA in 1992
• Pushed for the ratification of NAFTA in Congress, despite opposition from some Democrats and labor unions (AFL-CIO)
• Supported the creation of the World Trade Organization (WTO) in 1995 aimed to promote free trade and resolve trade disputes among member countries
• Pursued other bilateral and regional trade agreements (Jordan, Chile)
• Clinton's embrace of globalization reflected a shift in the Democratic Party's stance on trade
  • Traditional Democratic constituencies, such as labor unions, were more skeptical of free trade
  • Argued that the U.S. needed to engage in the global economy to remain competitive

Controversies surrounding NAFTA

• Faced criticism and opposition from various groups
  • Labor unions and some Democrats argued that NAFTA would lead to job losses and lower wages in the U.S. due to concerns about companies moving production to Mexico to take advantage of lower labor costs
  • Environmentalists worried that NAFTA would lead to the erosion of environmental standards due to fears that companies would relocate to countries with less stringent regulations (pollution, deforestation)
  • Some critics argued that NAFTA would undermine U.S. sovereignty due to concerns about the ability of corporations to challenge domestic laws through investor-state dispute settlement (ISDS) provisions
• Debates on the effects of NAFTA
  • Proponents argued that NAFTA would create jobs, increase trade, and promote economic growth
  • Opponents claimed that NAFTA would lead to job losses, wage stagnation, and environmental degradation
  • Empirical evidence on the effects of NAFTA is mixed and contested due to difficulty in isolating the impact of NAFTA from other economic factors
    • Some studies suggest net positive effects on the U.S. economy, while others highlight negative consequences for specific sectors and communities (manufacturing, agriculture)

U.S. Foreign Policy during the Clinton Era

U.S. peacekeeping in Clinton era

• Faced several international crises and conflicts
  • Ethnic conflicts in the Balkans, particularly in Bosnia and Kosovo
    • U.S. participated in NATO-led peacekeeping missions and air strikes against Serbian forces
    • Dayton Agreement (1995) aimed to end the war in Bosnia
    • NATO intervention in Kosovo (1999) to protect ethnic Albanians from Serbian aggression
  • Humanitarian intervention in Somalia (1992-1993)
    • U.S. troops deployed as part of a UN peacekeeping mission
    • Mission ended after the Battle of Mogadishu, where 18 U.S. soldiers were killed
  • Bombing of Iraq (1998) in response to Saddam Hussein's non-compliance with UN weapons inspections
• Clinton's foreign policy approach
  • Emphasized multilateralism and cooperation with international organizations, such as the UN and NATO
  • Selectively engaged in international conflicts, with a focus on humanitarian interventions and peacekeeping efforts (Haiti, East Timor)
  • Promoted democracy and human rights as foreign policy goals
  • Faced criticism for inconsistency and lack of a clear doctrine, as well as for the failure to intervene in the Rwandan genocide (1994)