The NAFTA Problem: Will Obama Ignore Peru?

While many Americans were caught up in the media frenzy that was the Presidential Campaign of Barack Obama, only a few were really paying attention to the actions of the man who would become President. This side of the equator actions speak louder then words and Barack Obamas support of the new North American Free Trade Agreement (NAFTA) with Peru has kicked up a hornets nest of problems. Now I do not intend this to be an anti-Obama article, just for my readers to open up their eyes and realize that the actions of men stand as their ultimate legacy, defining them throughout history.


To understand the North American Free Trade Agreement and how it has impacted Latin American Countries, we must first look to our own shores and how it has profoundly impacted Americans in the United States. In Massachusetts alone it is estimated that 100,000 manufacturing jobs have been lost in the last decade and 3 million jobs at the national level sent oversees due to NAFTA. Perhaps this “free trade” agreement can hold some responsibility for our current economic crisis, as it seeks to set up trade deals that benefit corporations and profit rather the workers and progress.

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The Birth of NAFTA

The North American Free Trade Agreement was created on December 8th, 1993 by the leaders of Canada, Mexico and the United States, it is one of the most powerful, wide-reaching treaties in the world. Its two supplements, the North American Agreement on Environmental Cooperation (NAAEC) and The North American Agreement on Labour Cooperation (NAALC) make up the bulk of the document.

What is wrong with this free trade agreement is that it hurts consumers in countries where it’s in effect and cripples the small farm or manufacturer who has to compete with monopolistic and massive corporations who sell their products cheaply. These same corporations hire cheap labor and despite all the legal paperwork that is supposed to be included in NAALC, companies would rather outsource their labor to cut costs and make more profit. All of this is at the expense of the workers from both countries in agreement, the North American Free Trade Agreement in essence is government-directed, government-negotiated trade, which is mercantilism and not free trade.

NAFTA Political Cartoon

Real free trade is as easy as cutting tariffs on imports and exports, doing away with the International Trade Commission and a host of other restrictions that seem to favor monopolistic corporations instead of the start up small business owner, manufacturer, farmer etc. In all Obamas speeches about “Joe the Plumber” and “Main Street” and how he was going to try to work on the economy, Barack Obama did not at all seem to mention his opinions on the North American Free Trade Agreement, an agreement that if dissected would reveal to be a major contributor to the United States current economic depression.

Or did he? On February 24th, 2008 while campaigning in Ohio, Obama said “I don’t think NAFTA has been good for Americans, and I never have,” So why skip a very important vote in the senate and not vote against an agreement that would damage so many economically in both the United States and Peru?

We can all hope that his skipped vote wasn’t politically motivated, after all it is Republicans who overwhelmingly vote for these trade deals to pass anyway, I am sure the trade deal had very strong support amongst liberals and Senator Obama would just vote among party lines. In fact the Peru deal was approved by an overwhelming vote of 285 in favor to 132 against. But its most striking aspect was that 109 Democrats voted yes and 116 voted no.

So what was the President-elects motivation behind skipping the vote for the North American Free Trade Agreement with Peru after publicly supporting it along with Hillary Clinton? It’s safe to assume that he didn’t want to be labeled a flip flopper and lose his support among the majority of South America that view the North American Free Trade Agreement unfavorably, however in a vote that gained very little media attention in the United States, would it really have been too much for Obama to stand by his principles and vote against the trade deal?

Would it have been too much for him to accept Peru’s invitations to the APEC Summit being hosted in Lima to discuss economic cooperation? Hey and what about the Peruvian hairless “Machu Picchu ” that was offered to him and his family as the new White House Dog?

Peruvian Hairless Dog

In a open letter to Obama from the Latin American Studies Association, they describe to the new President that “Latin Americans have often viewed the United States not as a friend but as an oppressor, the guarantor of an international economic system that works against them, rather than for them– the very antithesis of hope and change.” and that “While anti-American feelings run deep, history demonstrates that these feelings can change.

In the 1930s, after two decades of conflict with the region, the United States swore off intervention and adopted a Good Neighbor Policy. Not coincidentally, it as the most harmonious time in the history of U.S.-Latin American relations. In the 1940s, every country in the region became our ally in World War Two. It can happen again.”

Farm workers and manufacturers are bracing themselves in cities and rural communities throughout Peru. For the past couple of months Peruvians were told that the economic depression from the US would not impact them too severely, that our trade relations were deeply rooted worldwide and that our financial institutions independent. All of the rhetoric was taken lightheartedly as the reality of the signing of the new free trade agreement began to emerge.

Foremost is the unjust competition between Peruvian agricultural products and North American products which are subsidized by the US government, unlike the agricultural products of Peru. If that wasn’t enough new labor laws introduced by the agreement fail to address many key labor issues such as overtime, pay and social security.

It is expected that a privatized social security system similar to the proposal by President Bush will be implemented in Peru. The main beneficiary seems to be Citibank, the largest shareholder in ProFuturo AFP, a company authorized to compete against Peru’s national social security system.

American mining companies who have made billions in profit in the last 30 years continue to abuse worker rights and continue to offer low wages to their workers , many of whom suffer from fatigue and bronchial infections. And what’s on the horizon? What can Peruvians and Latin Americans alike look forward to in the future due to the new free trade agreement?

NAFTA Protest Peru
Protest against free trade deal in Lima

Likely more American corporations who have just been handed the paperwork to let them consume foreign resources while maneuvering around labor and environmental laws. We can only hope the new American President stops ignoring his neighbors and his own citizens and draft a new real free trade agreement.

About the Author

Founder of Karikuy, an organization in Peru that brings travelers to visit and explore the country. Julio also runs the Karikuy Volunteer program and is the editor of this blog. Julio likes to write about his adventures in Peru as well as Peruvian folklore, mysteries and secluded locations.

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