Mexico not worried about Obama campaign pledge to renegotiate NAFTA

By Alec MacGillis
Washington Post Staff Writer
Tuesday, May 18, 2010; 6:35 AM

Remember when Barack Obama vowed to voters in the industrial Midwest that he would renegotiate the North American Free Trade Agreement to make it more advantageous to U.S. workers? His promise, made to appeal to Democratic primary voters in his battle with Hillary Clinton, set off alarm bells among free-trade advocates, worried that he would yank the country toward protectionism.

Well, our neighbors to our south aren't exactly quaking in their boots about Obama following through on that pledge. In fact, they never put much stock in his promise to begin with, Mexican labor minister Javier Lozano Alarcón said in an interview during a diplomatic visit to Washington.

"We understand that during a campaign a lot of groups and unions present their demands and petitions and complaints, and that as a part of the campaign [Obama] has to listen to everyone and be sensitive to all this," said Lozano, who was in town late last week in advance of Mexican President Felipe Calderón's two-day state visit this week.

During the run-up to the Ohio primary, in the late winter of 2008, Obama and Clinton were trying to outdo the other's protectionist rhetoric. In a Feb. 27 debate, NBC's Tim Russert asked Clinton if she would threaten to pull out of NAFTA unless Mexico and Canada agreed to more U.S.-friendly terms, and Clinton said she would. Russert asked Obama and he said he would, as well.

"I will make sure that we renegotiate, in the same way that Senator Clinton talked about," Obama said. "And I think actually Senator Clinton's answer on this one is right. I think we should use the hammer of a potential opt-out as leverage to ensure that we actually get labor and environmental standards that are enforced. And that is not what has been happening so far."

And according to Lozano, the "hammer of a potential opt-out" is not what is happening now, either. The United States and Mexico are working closely together, he said, to ensure that the treaty's labor and environmental provisions are upheld. Lozano was in town partly for a bilateral meeting with U.S. Labor Secretary Hilda Solis. They discussed, among other things, a U.S. initiative to help Mexico in restricting child labor. Washington is also taking an interest in improving Mexican mining standards, Lozano said.

But there is no talk whatsoever about withdrawing from NAFTA or scrapping it and starting over, he said. All of the signatories would have to agree to any amendment, he said, which lent an air of unreality to the campaign threats to change the treaty.

"The agreement has to be amended by agreement by all of the parties . . . and we haven't considered a possibility to sit down and remove the whole of NAFTA," Lozano said. "We are all doing well with NAFTA."

The residents of the industrial Midwest might take issue with that assessment, but in Mexico, at least, the evidence seems to back Lozano up. The country has weathered the global recession relatively well: While its GDP dropped by 6.5 percent last year, its unemployment rate rose by only 1.3 percent, to 4.8 percent in its "formal economy."

That was a much smaller increase in unemployment than it suffered during its financial crisis in the mid-1990s, a soft landing that Lozano attributes in large part to the country's decision to subsidize manufacturers who faced a drop-off in demand so that they would keep workers on the rolls at reduced pay instead of laying them off.

Workers used the free time to get training and were ready to go back to work as demand recently started to pick up. "The manufacturers that were hit hardest are back and leading the recovery," Lozano said. "It was much better than the workers' losing their jobs."

As it happens, several economists urged the Obama administration to adopt a similar approach, expanding into a national initiative the efforts in 17 states to subsidize the paychecks of private-sector employees who agree to work fewer hours to avoid layoffs at their workplaces. But the same White House economists who reined in Obama's protectionist rhetoric also weren't keen on that idea.

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