NAFTA “Superhighway” Spells the End of NAFTA Countries Manufacturing Alliance
William R. Hawkins
American Economic Alert
Tuesday, July 18, 2006

“HIGHWAY OF DEATH” FOR NAFTA

There has been a flurry of media reports about what has been dubbed the “NAFTA Highway,” a corridor of both highways and railroads running through Mexico and into the American Midwest. Interstate Highways 35, 29 and 94 are central to this transportation network and the key terminal is an “inland port” in Kansas City, Missouri.

Many of the reports have sought to reopen the debate over the North American Free Trade Agreement, which allowed many U.S. factories to relocate to Mexico, laying off thousands of American workers and replacing them with much cheaper labor south of the border. Some reports have taken an alarmist tack, claiming that further economic integration of the United States and Mexico would lead to a political union that would open America to mass migration and political corruption on a scale that would destroy U.S. institutions, culture and sovereignty.

In actuality, the new energy being put into expanding the transportation network from Mexico into the United States heralds the collapse of NAFTA, and further discredits the trade strategy followed by the administrations of George H. W. Bush, Bill Clinton and George W. Bush.

NAFTA was enacted in 1993. The main public arguments put forward by its proponents were that it would open Mexico to more U.S.-made exports and that Mexico, with the addition of new, American-owned factories, would become an export platform permitting American firms to compete in markets throughout the world. (It was also supposed to halt illegal immigration and illegal drug transhipment – but that’s a subject for another column.)

Since the Mexican economy was only five percent the size of the American economy, our export opportunities were limited by the lack of purchasing power to the south. The real interest of the business groups that pushed NAFTA through Congress was to combine cheap Mexican labor with American capital and technology to improve competition with overseas rivals – for shares of the American market. At the time, Japanese firms, which had located factories in other Asian countries with cheap labor, were thought to be the main rivals. Yet China was already looming, unrecognized, over the horizon.

Two of the most vocal proponents of NAFTA testified to this effect before the House Ways and Means Subcommittee on Trade on September 11, 1997. C. Fred Bergsten and Jeffrey Schott, of the Institute for International Economics, stated, “The United States sought to increase its imports from Mexico as a result of NAFTA. In particular, we wanted to shift imports from other countries to Mexico – since our imports from Mexico include more U.S. content and because Mexico spends much more of its export earnings on imports from the United States than do, say, the East Asian countries.” The higher U.S. content in imports from Mexico was the result of sending components from American factories to Mexican factories for assembly into products that are then exported back to the United States.

Such imports from Mexico grew rapidly (while Mexico never emerged as the “export platform to the rest of the world”), and there was congestion in the US-Mexican transportation system as a result. But that is not what is driving the NAFTA superhighway activity now, over a dozen years later. The North America’s SuperCorridor Coalition (NASCO) was formed in 1994 to lobby for government funding for improvements in the multi-modal U.S.-Mexican transportation system. But over half the money it claims to have raised has come since 2003. In 2005, the Kansas City “SmartPort” received $4 million for highway corridor projects, plus another $500,000 earmark from Sen. Jim Talent (R-MO) to further develop the capabilities of the inland port to process a greater volume of international trade. Additionally, the first steps to establish a Mexican customs office at the Kansas Smartport were taken last year. And it wasn’t until last December that the Texas Transportation Commission opened negotiations with a the Spanish-led Cintra consortium to start the first phase of a $7.5 billion, 800-mile corridor from Oklahoma to Mexico that would parallel Interstate 35.

Upon closer examination, something other than the “success” of the NAFTA model, as sold to the American voter, is propelling all this transportation and Smart Port activity – and that is the massive wave of imports from the previously unrecognized export superstar, China. U.S. west coast ports are swamped with container ships filled with Chinese goods, and a scramble is on to find new Pacific ports to bring even more Chinese products into the United States. Container ship traffic from China is growing at a rate of 15 percent a year. Between 2003 and 2005, annual imports from China increased by $92.2 billion, and from other parts of Asia by $41.0 billion. (So much for NAFTA allowing American firms to compete more effectively with the Japanese.)

The Hong Kong-based shipping company Hutchison Whampoa and retail giant Wal-Mart are partners in a new $300 million expansion of Mexico’s Pacific port of Lazaro Cardeñas to increase its annual handling capacity from 100,000 containers to 700,000 containers initially, with possible expansion to two million containers by the end of the decade. Hutchison Whampoa is run by billionaire Li Ka-shing, whose business empire is closely aligned with the Beijing regime.

In April, the American Chamber of Commerce in Guangdong, China conducted seminars to promote Lazaro Cardenas as a destination for good shipped from Chinese ports. At the Mexican port, shipping containers are loaded onto the Mexico–U.S. rail line operated by Kansas City Southern Railroad de Mexico. The containers do not clear U.S. Customs until they reach San Antonio. On October 24, 2005, the San Antonio Business Journal reported on a new agreement signed by U.S. and Mexican officials to allow for the movement of air, rail and ground cargo, through Mexico into the United States via KellyUSA – the industrial park created at the former Kelly Air Force Base in San Antonio, Texas. The report noted that the cargo would originate “principally from Asia and South America” – not Mexico.

Another deep water port just north of Lazaro Cardenas is Manzanillo. Situated between Acapulco and Puerto Vallarta, it caters primarily to cruise ships and tourists. But NASCO includes it in its future plans to expand trade shipments.

While American-based manufacturers will continue to suffer under the barrage of Chinese goods,Mexican industry and the hope of economic development south of the border will be smashed flat by what should be called a new Chinese Silk Road rather than a NAFTA highway. The goals of NAFTA for North American economic integration and development are being abandoned. The effect of expanded and modernized Mexican ports linked to the U. S. Midwest by new express routes is to allow China to jump over Mexico, kicking it in the face as it passes by.

Over 600 maquiladora’s, the assembly plants that sprang up along the U.S. -Mexican border to take advantage of NAFTA, have relocated to China, leaving 250,000 unemployed Mexican workers behind. Chinese interests also own factories in Mexico, which assemble imported components, rather than locally sourced parts, into products than are then exported to the United States. The new trade routes will allow these plants to expand at the expense of their competitors. In 2003, China passed Japan as the second largest exporter of goods, primarily components, to Mexico, behind the United States.

Chinese consumer goods also fill Mexican stores. The traffic in Mexican ports are as one-way as in American ports. In 2004, Mexico imported $9.1 billion worth of good from China, but sold China good worth only $1.9 billion in return. This deficit is similar to the U.S. trade ratio with China, which saw only $41.5 billion in exports against $244.6 billion in imports last year.

A fatalism has crept into Mexico, paving the way for acceptance of the new Chinese-focused investment in infrastructure. “Mexico had been the Number Two supplier to the U.S. [after Canada] within the context of the North American Free Trade Agreement” recalls Raul Rodriguez Barocio, manager of the North American Development Bank (NADB) in Mexico. “However, in 2003, Mexico was displaced by China and seems to have lost that position forever,” he laments. For Mexican industrialists, the Chinese invasion has been devastating, particularly for labor intensive industries such as footwear, toys, and garments. There is little chance for Mexican wages to rise if at $1.50 an hour they can be undercut by Chinese labor at 50 cents an hour, with the products rushed from Asia into the North American market.

Mexico has filed over 90 complaints against China at the World Trade Organization and has imposed anti-dumping duties. Mexico was the last country to approve Beijing’s membership in the WTO, fearing what China would do if given a “level playing field” subject only to its own mercantilist devices. But these efforts have been to no avail. Simon Levy-Dabbah, a foreign trade professor at the National Autonomous University of Mexico, epitomizes the defeatest attitude south of the border when he says that Mexican industrialists must get over their hatred and accept that China is “the factory for the world.” He suggests that Mexican firms form joint venture’s with Chinese business, “The Chinese only care about having their goods arrive into the United States. So what is needed now is for products from China and other Asian countries that do not have the required free trade agreements, to be able to use Mexican preferential tariffs to enter these markets.” In other words, if you can’t beat ‘em, join ‘em and hope for some small share of the spoils.

Charlie Banks, president of R. L. Banks & Associates, a transportation consulting company in Washington, told the L. A. Times (June 20) that Mexico is repositioning itself in a world in which its manufacturing base is eroding and its labor is considered relatively expensive by Asian standards. Part of that repositioning, Banks said, is as a logistics and supply chain corridor for goods heading to the United States. But “lift that bale, tote that barge” labor moving Chinese goods to Kansas will not enrich either Mexico or the United States, as real national wealth comes from production, not mere transport.

NAFTA was sold not just on the basis of trade, but as a means to lift Mexico out of poverty and to help establish democracy by creating a more affluent, optimistic polity. Such a development would improve U.S. security by fending off political radicalism and lessening the exodus of illegal immigrants. The same arguments were made last year during the debate over CAFTA, with the added note that an expanded trade bloc could protect regional industry from Chinese competition. As Rep. Bob Inglis (R-SC) said on the House floor during the CAFTA debate, “I stand here convinced that it is the best strategy available to combine with our neighbors to the south to compete with the Chinese.”

The new transport plans make a mockery of these arguments, as they are being constructed purely to help China improve its competitive advantage over all North and Central American commercial rivals. It is well past time to rethink the sophistry of “free trade” with China. Instead of spending billions of private and public funds aiding Chinese traders, a major effort should be launched to rebuild and expand the production base of North America. A key part of that effort would be to renegotiate NAFTA to create a true trade bloc that would drive Chinese goods off the continent, rather than into its heartland.

Bosque County Says ‘NO!’ To Corridor

By David Anderson
ASSOCIATE EDITOR
Clifton Record
July 21, 2006
CLIFTON — An estimated 400-plus packed the Clifton High School cafetorium Wednesday evening to issue a resounding “no thanks” to the Trans-Texas Corridor 35 running through Bosque County. An open house and public hearing hosted by the Texas Department of Transportation and the Texas Transportation Commission ran into the court still opposes the project, whether it comes through the county or not.
Verlie Edwards, chief of staff for District 58 State Rep. Rob Orr, spoke for the legislator, urging TxDOT to “listen closely, and slow down the process so all options are explored.” From there, the elected officials gave way to speakers from the general public, who one by one pled for the project’s elimination.
“No one has been able to give me a list of benefits of the corridor to Bosque County. I don’t believe it exists,” John Faubion said to applause from the crowd.
John Campbell asked anyone in the crowd of over 400 who supports the project to identify themselves, if they weren’t too afraid to.
No one stood, to laughter from the crowd.
As to the alternative route that could slice Bosque County in half, many pointed to the effects it would have on the landscape.
“Our rolling wooded hills, valleys, the abundant wildlife, the fertile soils. The attractions that brought the settlers here in 1854 remain the very essence of the county today,” Walt Lewis said.
“We’re known as the Top of the Hill Country,” Morgan Mayor Pro-Tem Keith Vandiver said. “Bringing the corridor through here would mean blasting the tops of many of our mesas. We don’t want to become known as the Flat-Top of the Hill Country.”
Jamie Finstad wanted to know what the state believes is “just compensation” for taking land and memories that has been in his family for 150 years.
“I wonder where all the wildlife that’s being displaced will go, and I wonder why we’re all in such a hurry,” Finstad continued.
“If we give it up (the land) now, it’s gone forever, and they’ll just want more later on,” Carl Aspen said.
“We haven’t adjusted yet to the second stop light in our county,” Judge Word jokingly remarked. “We’re not for one inch of the Trans-Texas Corridor in Bosque County. If we wanted to live in the Metroplex, we’d move there. We don’t want the Metroplex brought here.”
Several spoke to the corruption they believe underlies the Trans-Texas Corridor, and the lack of legislative action to end the project.
“Do you believe in communism or dictatorships? That’s what we appear to be headed for,” Sam Wells told the panel receiving the comments. “I hope TxDOT feels like General Custer, because the public is like Sitting Bull’s tribe, and we’ll do what we need to stop this. We won’t stand for somebody taking our land.”
“I’m appalled the state legislature has not stopped this. Our legislators have yet again turned a blind eye to the needs of this district,” said former Clifton Mayor W. Leon Smith.
“It gives me heartburn to think we’ll build a toll road and send the money to a company in Spain,” said David Pieper, adding that the state is diverting billions of dollars that should be earmarked for transportation improvements to other uses.
“This is not progress,” said Martha West. “It’s prostitution of our great state, and with filthy money.”
Aspen, who said he spoke with a TxDOT official before the public hearing, was not surprised at a comment he received.
“He told me, ‘We don’t want to hear, “Not in my back yard.”’
“Of course, he also told me the corridor won’t affect him where he lives,” Aspen added.
Many testifying suggested that, if the infrastructure is built, the name should be changed. Suggestions ranged from “The Corridor of Regret,” to the “Trans-Texas Horror-Door,” to “Ben Dover.”
Other concerns centered on the facilities being outdated before they are finished, especially considering quantum leaps in technology from year to year.
“It’s like trying to build a better manual typewriter,” Smith told the commission.
While many of those who spoke addressed generations of families that have lived in the county who will lose land should the corridor be brought through, others told of being proud transplants to the county, including Ron Harmon, Les Bowers, and David Anderson.
One by one, most of those testifying put the onus on the state’s legislators. Many said it was past time to send them comments. Most said it was time to send them home by voting them out in the next election.
“House Bill 3588 passed, effectively, unanimously, so they all need to go,” said Linda Curtis, founder of Independent Texans. “We need to get organized, and tell them where to put this corridor.”
Harmon agreed, saying Texas needs to get rid of any politician who supports or does not specifically oppose the TTC.
TxDOT’s officials remained after the public hearing to answer questions, but most of the crowd began filing out of the cafetorium as the public testimonies came to end, apparently having heard enough.

Link to article here.

CFR’s Plan to Integrate the U.S., Mexico and Canada

——————
by Phyllis Schlafly
Eagle Forum
July 13, 2005
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The Council on Foreign Relations (CFR) has just let the cat out of the bag about what’s really behind our trade agreements and security partnerships with the other North American countries. A 59-page CFR document spells out a five-year plan for the “establishment by 2010 of a North American economic and security community” with a common “outer security perimeter.”

“Community” means integrating the United States with the corruption, socialism, poverty and population of Mexico and Canada. “Common perimeter” means wide-open U.S. borders between the U.S., Mexico and Canada.”Community” is sometimes called “space” but the CFR goal is clear: “a common economic space … for all people in the region, a space in which trade, capital, and people flow freely.

“The CFR’s “integrated” strategy calls for “a more open border for the movement of goods and people.” The CFR document lays “the groundwork for the freer flow of people within North America.” The “common security perimeter” will require us to “harmonize visa and asylum regulations” with Mexico and Canada, “harmonize entry screening,” and “fully share data about the exit and entry of foreign nationals.”

This CFR document, called “Building a North American Community,” asserts that George W. Bush, Mexican President Vicente Fox, and Canadian Prime Minister Paul Martin “committed their governments” to this goal when they met at Bush’s ranch and at Waco, Texas on March 23, 2005.

The three adopted the “Security and Prosperity Partnership of North America” and assigned “working groups” to fill in the details.It was at this same meeting, grandly called the North American summit, that President Bush pinned the epithet “vigilantes” on the volunteers guarding our border in Arizona.

A follow-up meeting was held in Ottawa on June 27, where the U.S. representative, Homeland Security Secretary Michael Chertoff, told a news conference that “we want to facilitate the flow of traffic across our borders.” The White House issued a statement that the Ottawa report “represents an important first step in achieving the goals of the Security and Prosperity Partnership.”

The CFR document calls for creating a “North American preference” so that employers can recruit low-paid workers from anywhere in North America. No longer will illegal aliens have to be smuggled across the border;employers can openly recruit foreigners willing to work for a fraction of U.S. wages.Just to make sure that bringing cheap labor from Mexico is an essential part of the plan, the CFR document calls for “a seamless North American market” and for “the extension of full labor mobility to Mexico.”

The document’s frequent references to “security” are just a cover for the real objectives. The document’s “security cooperation” includes the registration of ballistics and explosives, while Canada specifically refused to cooperate with our Strategic Defense Initiative (SDI).

To no one’s surprise, the CFR plan calls for massive U.S. foreign aid to the other countries. The burden on the U.S. taxpayers will include so-called “multilateral development” from the World Bank and the Inter-American Development Bank, “long-term loans in pesos,” and a North American Investment Fund to send U.S. private capital to Mexico.

The experience of the European Union and the World Trade Organization makes it clear that a common market requires a court system, so the CFR document calls for “a permanent tribunal for North American dispute resolution.” Get ready for decisions from non-American judges who make up their rules ad hoc and probably hate the United States anyway.

The CFR document calls for allowing Mexican trucks “unlimited access” to the United States, including the hauling of local loads between U.S. cities. The CFR document calls for adopting a “tested once” principle for pharmaceuticals, by which a product tested in Mexico will automatically be considered to have met U.S. standards.

The CFR document demands that we implement “the Social Security Totalization Agreement negotiated between the United States and Mexico.” That’s code language for putting illegal aliens into the U.S. Social Security system, which is bound to bankrupt the system.

Here’s another handout included in the plan. U.S. taxpayers are supposed to create a major fund to finance 60,000 Mexican students to study in U.S. colleges.

To ensure that the U.S. government carries out this plan so that it is “achievable” within five years, the CFR calls for supervision by a North American Advisory Council of “eminent persons from outside government . . . along the lines of the Bilderberg” conferences.

The best known Americans who participated in the CFR Task Force that wrote this document are former Massachusetts Governor William Weld and Bill Clinton’s immigration chief Doris Meissner. Another participant, American University Professor Robert Pastor, presented the CFR plan at a friendly hearing of Senator Richard Lugar’s Foreign Relations Committee on June 9.

Ask your Senators and Representatives which side they are on: the CFR’s integrated North American Community or U.S. sovereignty guarded by our own borders.

Think the merging of North America is all hype? Feast your eyes on this!

As published in this week’s Plain Talk from the Texas Hill Country newsletter by Jim McGrody

Overview of SB 3622
On June 29, 2006, Sen. John Cornyn (R-TX) introduced SB 3622 – a bill to authorize the creation of the North American Investment Fund between the governments of Canada, Mexico, and the United States to increase the economic competitiveness of North America in a global economy.

The purpose of the bill shall be:

• to increase the economic competitiveness of North America in a global economy
• to reduce the income gap between Mexico and Canada, and between Mexico and the United States
• to promote economic development in Mexico in the areas of infrastructure, education, technology, and job training
In general, grants shall be awarded from the Fund for projects to carry out the purposes of the Bill, including projects-
• to construct roads in Mexico to facilitate trade between Mexico and Canada, and Mexico and the United States
• to encourage the development and improve the quality of primary, secondary, and post-secondary education throughout Mexico
• to expand the deployment of communications and broadband infrastructure throughout Mexico, with emphasis on rural and underserved areas and, to expand job training and workforce development for high-growth industries in Mexico.

The agreement shall require the governments of Canada, of Mexico, and of the United States to contribute to the Fund. Canada and the United States will contribute to the Fund if the Government of Mexico – increases the tax revenue collected by such Government, with the goal of annually collecting an amount of such revenue that is equal to 18 percent of the annual gross domestic product of Mexico; and carries out a program of reforms to increase private investment and economic growth, reduce poverty, and maintain economic stability in Mexico.
You can read the complete bill by clicking here…

Background Reading – The Council On Foreign Relations
North America is vulnerable on several fronts: the region faces terrorist and criminal security threats, increased economic competition from abroad, and uneven economic development at home. In response to these challenges, a trinational, Independent Task Force on the Future of North America has developed a roadmap to promote North American security and advance the well-being of citizens of all three countries.

When the leaders of Canada, Mexico, and the United States met in Texas recently they underscored the deep ties and shared principles of the three countries. The Council-sponsored Task Force applauds the announced “Security and Prosperity Partnership of North America,” but proposes a more ambitious vision of a new community by 2010 and specific recommendations on how to achieve it.

Read the complete background on the Council on Foreign Relations.

Read Eagle Forum’s dissenting opinion here.

This information is taken from a news release in 2000 when Cintra-Macquarie acquired an airport in Bristol, England. This information was compiled prior to Cintra-Macquarie acquiring the Chicago Skyway toll road (January 2005), the Indiana Toll Road (Spring 2006), before they gained the development rights for the Trans Texas Corridor (2005), and before becoming the only bidders for the San Antonio toll starter system (2005). Do we really want America to come under the control of multi-national corporations (perhaps more accurately, quasi-governments)?

About Cintra
Cintra is an international infrastructure company based in Spain which develops, owns and operates transport assets worldwide. Cintra is currently ranked as the world’s largest infrastructure developer by value of investment and, over the last three years it has been ranked as the second largest developer of transport based infrastructure in the world by number of concessions. It is a subsidiary of Grupo Ferrovial, one of the leading industrial groups in Spain and listed on the Spanish Stock Exchange.

Cintra owns and operates transport based assets on a world-wide basis. It has three primary businesses; airports, toll-roads and car parks. Cintra currently has eleven airports in Southern Mexico, the Antofagasta airport in Chile and Niagara Falls airport in New York State, handling over 12 million passengers. In addition to being an investor in those airports, Cintra provides an extensive range of operational and management support to them.

Cintra also owns and operates toll roads in Spain, Canada, Portugal, Chile and Colombia and manages over 130,000 car parking spaces in Spain, Portugal and Puerto Rico.

Then here’s more info about the majority owner of Cintra, Grupo Ferrovial, from the Hoover’s financial web site:

When in Spain, trains, planes, and automobiles travel by Grupo Ferrovial. One of Spain’s largest engineering and construction firms, Ferrovial also provides housing and community development, toll road and car park management, and environmental and telecommunications services. Ferrovial Agromán is the group’s main construction unit. Projects include commercial and residential construction to road, rail, energy, and airport infrastructure development. Through its Cintra stake Ferrovial has concessions interests in toll roads, car parks, and airports. It has taken over UK services group Amey and owns more than 28% of British airports operator BAA. Founder Rafael del Pino y Moreno and his family control Ferrovial.

About Macquarie
Macquarie is Australia’s leading investment bank, with total assets in excess of £9.4 billion, and a further £14.9 billion in funds under management and administration. It is listed on the Australian Stock Exchange and ranks as one of Australia’s largest 30 companies by market capitalisation.

Macquarie has over 4,000 staff in offices throughout Australia and in 22 locations throughout the world, including the United Kingdom. Macquarie’s second largest office outside Australia is located in London.

Macquarie is at the forefront of the infrastructure sector, both in Australia and internationally, and has one of the largest and most successful infrastructure businesses in the world. Macquarie manages infrastructure funds and investments in projects in the UK and Europe valued at nearly £3 billion.

Macquarie has a unique combination of strategic, commercial and financial expertise in the airport sector.

As part of a long-term strategy to build a significant global airport business, Macquarie strengthened its airport business expertise through the acquisition in October, 2000 of The Portland Group, the UK’s leading airport management consultancy.