Monday, March 31, 2008

What the EU has done right

It was a redeeming week for me as a student of European studies and follower of the European Union. I was presented with two rather compelling examples of how the Europeans are not only doing things right, but should be emulated. And they didn't come from Europeans. The EU is not without its downfalls and failures, but it is also not without its enourmous successes in the face of interminable challenges. The Union is in all senses radical and revolutionary. Nothing like it existed in the world prior to its formation, and nothing has yet to come close to resembling its supranational structure. And as it gains influence it will gain an ability to shape the world in such ways as presented here.

So what has me so giddy about Europe?

John Judis wrote a brilliant article in this past issue of The New Republic on NAFTA. The genesis of the article was the scapegoating of the trade agreement by the Democratic presidential candidates when campaigning in Texas and Ohio. In pandering for votes, both Clinton and Obama were rather quick to blame NAFTA for the current economic woes and more specifically for the death of the manufacturing industry in Ohio. But the real trouble with NAFTA is that it has hurt Mexico WAY more than it hurt the U.S. or Canada, particularly Mexico's agricultural sector (the U.S. and Canada have actually done just fine under the agreement). And the real threat to the U.S. economy is not from Mexico, but from Southeast Asia and China. I wholeheartedly thank Mr. Judis for injecting some truth into the misinformed debate that goes on in the U.S. about NAFTA.

But NAFTA does in fact need improvement and renegotiation, just not on the terms suggested by either candidate (this is where I get excited). Instead of using the free trade model, the U.S. and Canada should do what the early EU did for Spain, Portugal, and Greece. Namely, employ a more developmental model that provides structural funds to Mexico and temporarily protects Mexican industry to upgrade its economy and infrastructure. After that, you can consider full liberalization. But as of now, the playing field is so incredibly uneven that any free trade agreement is inherently unfree. Judis quotes Princeton sociologist Doug Massey, which I will reiterate because the implication are so profound - "If the money devoted to U.S. border enforcement were instead channeled into structural adjustment in Mexico, as was done by the EU for Spain, unauthorized migration would likely disappear as a significant demographic and political issue in North America."

It should also be pointed out that this is the model that the EU is using for North Africa and the Middle East to decrease illegal immigration. The MENA presents a whole other dynamic of issues, so the jury is still out on whether this will work for the source of almost all of the EU's immigrants, legal and illegal.

The other source of praise for the EU came from former Canadian Prime Minister Paul Martin. He was the chair of a high level panel commissioned by the African Development Bank to set a strategic vision for the bank's future. I saw him present the findings of his report at a conference sponsored by the Center for Global Development . Amongst his findings, he spoke of the need for Africa to integrate in the same way that Europe integrated after WWII. The EU is a unique creature born out of a specific time, place, and set of circumstances. So in a policy sense, there have always been questions of transferability of the EU model. But PM Martin was correct to point out that the EU started with an economic union between France and Germany, which was later turned into an economic union, and much later still a political and social union. The foundation was economic interdependence, which Africa can and should emulate.

1 comment:

Me said...

US Policy with Mexico: Militarize the border and free trade. Hmmm, how's that working out? The NAFTA policy must be renegotiated to move away from exploitation to assistance and cooperation. Who ever thought free trade could work fairly between two developed countries and a developing country anyways? Silly economists.