Three big economies, including the worlds largest, nafta said lets mor more or less lets ged of the barriers, tariffs that complicate trade between americas three traders. Nafta just passed its 10th birthday, how has the creation of the north amercian trade zone worked not only for americans but for mexicans and canadians as well . We in the United States tend to look at nafta from a specifically American Point of view. What did it do to employment, investment, manufacturing. We look less at quebec, an grocery shopper in teluca or edmonton, do they make more or less with this trade law . Well look at this today. Well look at the memories of the u. S. Chief negotiator. The mammoth nafta treaty between the United States, canada and mexico opened markets at a time when globalization was in its infancy. Today, nafta creates 17 trilliondollar. Those against it say the treaty kills jobs, deepens deficits and hurts economic sovereignty. I sat down with one of the original negotiators former trade ambassador karla hills, for her thoughts on the treaty she helped write and its impact today. What did all of the partners have that the other partners thought would be useful, were there things about canada and the nature of its economy, about mexico about the nature of its economy that made them a good fit for a trade relation with the United States . When we first started to talk about it, which i remember the trade minister of mexico approached me at dabos in january of 1990. We began to talk about how our two economies could work more efficiently together. And at that moment mexico was highly restricted. We wanted that market. 100 million people, 100 million consumers. We wanted open markets. Both parties did. It was only when the rumor got out that we, too, were speaking that we got a phone call from canada saying wait a minute. You just finished a trade agreement with us. Are you going to leave us out of this . Is the average american better off than he or she would have been absent nafta . I think when you take an average picture there can be no question about it. Our nation has expanded its gdp. There are studies that show the opening of trade generates Household Wealth that is substantial. That we have become much more competitive globally with our northern and southern neighbors. What we have achieved is tremendous specialization as a result of our interconnectivity. Those who criticized nafta focused on mexico, and has this been good for americans. I point out that 14 of our total world exports go to mexico. Thats more than what we sell to latin america. Thats more than what we sell to great britain, germany, france, netherlands combined. Its more than what we sell to the socalled bricks, the about stillans, thbrazilians, russia,o was this good, you bet it was. When go into the store much of what you shop from is elsewhere on the planet, not in the United States. Did nafta full till ross perots threat. History teaches us when you take these skills away from people, you lose those skills, you destroy their selfrespect, their pride and their dignity. Ross perot was an error on the jobs going south. What has occurred in the two decades since nafta took effect is globalization. Were much more inter connected in the world. Jobs are moving around as products are moving around. You mention the shelves of walmart and others, but when i had my last year in office as u. S. Trade representative i would go on the floor of a manufacturing facility, and it was teamin teeming with people. People screwing in bottles here. You went on an auto factory floor, and you stumbled over people. Today you go on an auto factory floor, i dont care if that factory is in the United States, or japan or china, nobody is there. Its taken over by computers. The world has changed. Take your mind back to 1992, you probably didnt have a laptop in your briefcase. And so we didnt deal with the digital issues or telecommunications issues. Those are issues that we need to deal with. Reporter now there is a new urgency to tie nafta to another ongoing trade deal, the Transpacific Partnership. Mexico and canada are a quarter, all who have a board on the pacific ocean. Powerhouse china is not involved. Recent ttp negotiations focused on tariffs, environmental protections, and intellectual properties. If the agreement is signed it would encompass close to 40 of the worlds gross domestic product. Joining us to mark the 20th birthday of the enact ofmet of the north american trade agreement welcome to inside story. Thank you very much. Thank you very much. We heard from karla hills who was there at the beginning, ambassador, is nafta popular in canada . It is very popular. Trade with the United States and mexico is extremely popular. And i think that for our purposes when were here in washington we county out that canada is the United States largest customer. We buy more goods, so i think we talk about trade agreements in abstract terms. I think we have to be more effective in talking as customers from each other as well as sellers to each other. So someone standing in an edmonton supermarket or driving a truck out of quebec, if we stop them and ask them did nafta work out for you, what would think say . They may have differing opinions. We look in three great democracies. Im sure youll get people in an interview who would be skeptical of nafta and people who would be positive of nafta. Most of the canadian public believe that trade with the United States and mexico as a canadian country is good for our economy, and good for our neighborhood. Ambassador mora, same question, is nafta popular in mexico . I think it is very popular as well. After 20 years, what weve achieved in terms of trade with canada and u. S. And more over what we have achieved in terms of really integrating at a really deep level the chain because we trade a lot with each other. We are the second largest customer of the u. S. As the ambassador was saying, and this is something which is normally taken for granted. We sell a lot to the u. S. Of course. The u. S. Is our largest market. Many u. S. Jobs depend on how much mexico buys from the u. S. Many u. S. Jobs are dependent on how much canada buys from the u. S. We have figured out to really build together and market together here and in this market in north america as well as the rest of the world. Does that answer depend on where you are in the country. If im in a farm in central mexico that used to grow corn will a farmer tell me that nafta has been such a big deal for this country. It has, opening the market has changed the way we price corn, and this is commodity, and we have an open market. Farmers growing corn is doing much better. We have a balanced cultural trade, we sell our fresh produce, and all sorts of vegetables, and we buy meat and poultry, and we sell, of course, lots of products. We in that sense have eventually come to a very balanced and beneficial approach on both sides. Were going to take a short break. When we return well continue this rare joint interview with the mexican ambassador to the United States, and the canada ambassador to the United States. Nafta 20 on inside story. Stay with us. Welcome book inside story. Im ray suarez. Its been 20 years since the enactment of nafta. It created a vast free strayed zone between the United States, mexico and canada. And we were marking this angle verse with a closer lookwe a. Did nafta become less important because something that we couldnt have really known about in 1990 when it was being negotiated happened, and that is the rise of china. Did china end up being a player in a way that we couldnt have imagined when this trade deal was being worked out . I know this has had a big impact on mexico. It did. Originally the first two or three years of nafta, the Manufacturing Activity in mexico was really booming. Then an uninvited guest appeared in the room, and it was china. Of course lots of manufacturing went away from the region to china. Now amazingly our total cost of production in the region has come down to a very competitive level against china. In 2001 mexico had a large wage comparison to china but now were very competitive. Were getting back many manufacturing new investments that are now seen in north america, mexico, of course, and this is a shared production scheme. A very valueadded chain. Does that change conversation with america. A lot of jobs did leave the United States, but they didnt go to mexico, they went to china. They z and now theyre coming back to our region in that sense. The only silent sucking sound that we hear in mexico is mexicans consuming u. S. And canadian products. This is a different approach than what we saw 20 years back. Has a manufacturing worker in canada had the same pressure on him and his business as one in michigan and ohio . Yes, theyve had a lot of the same pressures partly based on technology. Partially based on outsourcing to countries like china, and it has created a lot of pressure. You heard from karla hills talking about a plant floor. If you go to a boeing plant in my old province of manitoba in winnipeg, the technology, the skills, the people that you need and the training that has to go into their jobs beforehand is quite different than it was it wa20years ago. There are obligations that we have in this trading environment. One, companies are worried about losing their intellectual property. We have to continue to work on a Predictable Property regime. Number two, we have to train people for those skilled jobs and manufacturing even though there is less of them we can do a better job in north america, training people for those jobs of the future. Thats something that we talked about in telucca three weeks ago. We cant stand still. We have to keep moving forward with knowledge about how best to improve our neighbor in north america. But are nafta partners Strong Center their efforts to hold on to what theyve got, to be competitive against china than they are as individual countries . Well, were stronger as a neighborhood. Just look at one of the biggest issues for attracting and retaining business, and thats predictable, affordable, reliable energy. When you look at the reforms in mexico to the constitution to allow for some invite investment into their oil sector, when you look at the innovation and developments in canada, when you look at the developments in United States on the energy side in this neighborhood of north america we have an incredible amount of resources. We can be more sustainable with energy efficiency. We have Light Vehicle emission standards, how do we continue to work on a sustainable economy, also a reliable economy. It gives us a huge advantage not only with china but the rest of the world. I think thats a great reality that we have today when the three leaders meet. Ambassador, your colleague brought up energy resources. That was one of the things that was purposely kept out of nafta, and mexico has jealously guarded its ability to hold on to pmex, the national oil company, as a state enterprise. Is that going to change . Is that something in the interest of not only mexicans, but all north americans. Pmex will remain as a state enterprise. What were doing is opening the sector for domestic and Foreign Investment to get licenses in the territory, to exploit hydr hydrocarbons and the energy needed to produce a lower cost of energy for companies doing business in mexico. Actually, when you see the region and these north American Energy communities its not coming from a political statement. Its coming from a market reality and treatment being blessed by nature. In this sense mexico is looking forward to get the best use of its resources from these reform, which was, of course, unthinkable 20 years ago. But as we say with nafta we say with energy there are two good moments to plant a tree, 20 years ago and right now. Right now were planting the tree of reforms, energy being the most important one. In order to take the cost of transactions in general down. This is going to enhance the competitiveness of our shared economic space north america. Were going to take a short break. When we come back a look at the world in the 90s and the turn of the century that was not anticipated by nafta and the futures of the mexico mexican, canadian, and american economics. This is inside story. Only on al jazeera america. Welcome back to inside story. Im ray suarez and on this edition of the story were marking the 20th anniversary of nafta, the north Amercian Free trade agreement. Did it improve the economies of the United States, mexico and canada . Were here with ambassadors from mexico and canada. You can never anticipate everything thats going to happen. Right now ambassador, the United States is waiting for a final decision on keystone. You mentioned it in the last segment, a pipeline that will bring Canadian Energy resources down through the mississippi a witbasin through the gulf of mexico. How come Something Like that does not fall under nafta . How come we have fights about soft wood lumber, and it doesnt just fall under the mechanism of nafta to get worked out . Well, weve got 80 of our trade free as they say between our countries. We didnt get 100 a number of years ago, but we got a lot of predictability across our countries with nafta. Oil is coming down from canada. Its just how its getting there. Its coming down as part of a commercialthe commercial decisions that are made in the United States. Weve gone from about 19 socalled foreign oil with the United States four years ago to 32 . Its just coming down on rail. Rail instead of the pipeline. Rail instead of the pipeline. The debate about the pipeline is not whether oil is coming down. Theyre wrong. Its a question of how it gets there. We think the safer way to send it is how the state department has articulated it with the state department report. We hope that science and merit makes the final decision on how it gets there. It is getting to the gulf coast. Its just on rail. Ambassador mora, looking at when nafta was negotiated, it was just a few years the immigration h reform act of 198, one of the promises of nafta was that it would reduce the need for mexican men and women head north to find jobs. Has that worked . Were looking at a situation where millions of mexican nationals are living in the United States. They are people that we were told that wouldnt feel the need to come because things would be so much better in mexico. When you look at the numbers from 2010 were negative i have. The numbers in the year 2000 the Border Patrol apprehended 1. 7 million people. In 2012, 386,000. I would say a large proportion of them in 20122013 are nonmexicans. In this sense mexico is not going to be a major source of migrants into the future because the mexican economy is performing much better, and of course we are facing change. In this sense migration from mexico to the u. S. Has changed the demographic dynamics on its own and the way the mexican economy is performing well. Nafta has a lot to do with that in terms of modern indication of our own economy, and now with this wave of reforms we are reducing barriers of entrance and transaction costs to profit from the domestic market and engaging them with these north american equations. If youre in veracruz, and you finished your High School Diplomas as many young mexicans are doing, its a question whether you head north or not, you have a something to do . You look at the numbers, you dont. You always will have flows. You have flows from canada, and this is a country in that sense is very attractive for immigrants from all over the world, but mexico is not going to be a major source of migrants. When i talked to karla hills about where nafta had come short, she noted that it promised that mexican truck traffic would be able to move easily in the United States as canadian truck traffic does. Were 20 years in this treaty, whats going on . Its very frustrating. Were moving forward but were still not there. We have issues that are not fully solved, and some issues that appear on the way. Of course, were dealing with them, and we hope eventually that we get those agreements that were really signed and agreed upon in full force. Will the tran Transpacific Partnership supersede the nafta agreement . No, i think the base principles in the north american trade agreement will become hopefully the base of the final agreement in the tpp agreement with our friends in the asia pacific region. The key part of that is, a, reciprocity, and, b, rule of law. All three of us in generally a e reciprocal trade agreements and rule of law enforcement. Thats key of in were involved in markets that of great size for all countries in the pacific region. There is always offensive and defensive issues at in any trade agreements, and all countries have both offensive and defensive positions with each other. But the macropicture is rule of law and reciprocity. Those are principles that are contained within the spirit and wording of our north american trade agreement. Ambassadors, good to talk to you both, gentlemen. Thank you very much. That brings us to the end of this edition of inside story. Thanks for being with us. In washington, im ray suarez
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