NAFTA represented the integration of markets among asymmetric associates. At present, in the face of an economy such as that of the United States, with a per capita income of US $59,531 for 2017, are Canada with US $45,032, and Mexico with US $8,902.[1]. Comparatively, Canada and the United States are more symmetric than Mexico. The average monthly wages of the United States, Canada and Mexico, in 2016, were: US $3,016, US $2,494 and US $496 respectively [2]. In relation to Mexico, the average wage in the United States is six times higher and in Canada five times more.

The great asymmetry is between the Anglophone economies and Mexico. The objective of NAFTA was to produce a bigger market for goods produced in the United States and a market of cheaper labour, mainly on the Mexican side. This can be seen, not only in the average wage, but in the unqualified minimum wage: for the US it is US $7.25 per hour, for Canada US $8.43 and for Mexico US $0.48. A question arises: how, with average productivity five times higher in the United States than in Mexico, can the American minimum wage be 15 times higher and the Canadian 17,50 times higher?

In Mexico, the consequence of NAFTA was de-industrialization, opting for maquiladoras as the industrial contribution to interregional trade, with a result of precarious employment, without social benefits and with low wages. This negatively affected the tax collection of the Mexican Institute of Social Security as a proportion of the GDP and reduced the share of wages in the GDP from 32.5% to 28.6% between 1994 and 2013. With NAFTA many industrial proposals and new petrochemical projects were unfulfilled, manufacturing enterprises were transformed into importers (such as the San Isidra de Vajillas and Cristal Luxus companies); PEMEX was dismantled along with all its industrial branches, including refining. The coefficient of imports in the input-output matrix of 1980 and 2013 showed an increase of nearly 500%, while in the export sector industries disappeared; value chains were destroyed alongside part of the existing agricultural production, which was replaced by imports of basic foods such as wheat and pork.

In Canada, given that free trade with the United States has existed since 1987, the industrial structure was not greatly modified, while automobile production was strengthened and the country specialized in the export of prime materials and natural resources to the United States. Both in Mexico and in Canada, the productive apparatus has become linked and bound to US industry, as Aroche has indicated with the input-output matrix of North America, published in April 2012 in the journal Geografía, Datos y Espacio (Vol. 3, No 1, pp. 70-90).

For the United States, the signing of NAFTA did not reverse its loss of productivity (see the graph) nor did it improve the salary level and the loss of manufacturing and less qualified jobs. At the same time, the share of wages in the GDP fell from 45% to 42%, between 1994 and 2017, according to the Federal Reserve Bank in Saint Louis. Nor did exports increase their weight in the US economy in any important way. This is the cause of the deficits. They consume many imported goods and export little.

                                                        Productivity of the manufacturing sector, USA, 1991-2016

                                                Source: obela.org, with data from the Bureau of Labor Statistics

The NAFTA negotiations continue with Canada on the basis of the agreement with Mexico. But in no way will the result change the serious problem of US productivity, nor will it resolve their problem of wages that, being excessive, generate a consumption level for which the economy cannot provide. In the face of the present scenario, NAFTA will be in force until April 2019, and then North America will start to trade through bilateral agreements. Mexico and Canada will need to sign one.

The main industrial sector affected will be that which, paradoxically, motivated the renegotiation of NAFTA: the automobile industry. The tentative bilateral United /States-Mexico Free Trade Agreement established an increase of the minimum regional composition from 62.5% to 75% over four years. This surpasses the present composition of production by 30%. In addition, this measure implies, for the South American, Asian and European auto parts market, a high barrier for the export of their products and a higher price for automobiles finally sold in the United States. Or perhaps it is possible that the automobile industry will change its destination market and ignore these rules, ceasing to export primarily to the United States.

The US will put an end to multilateral or plurilateral trade policies and will maintain only unilateral relations. They establish all the conditions and do not respect the agreements of the WTO (See: http://www.obela.org/analisis/abandono-eeuu-la-political-comercial-internacional). They put the United States first, over all the rest (uber alles). The strengthening of bilateralism may possibly involve the withdrawal of the United States from the WTO and the abandonment of the rules that bind the rest of the world.

(Translated for ALAI by Jordan and Joan Remple Bishop)

- Oscar Ugarteche is Senior Researcher IIEc-UNAM, Project Coordinator obela.org

- Armando Negrete is Academic Technician IIEc-UNAM, member of the OBELA project

1 Source World Bank, https://data.worldbank.org

2 Source https://www.numbeo.com/cost-of-living/prices_by_country.jsp?displayCurrency=USD&itemId=105 consulted 14/09/2018