WI: Bill Clinton doesn't ratify NAFTA

I know that he was noncommittal on it on the campaign trail. What if he decided not to send it to Congress or sign it? Does this help or hurt him in the 1994 midterms?
 

kernals12

Banned
It probably has no noticeable impact. The effects of these trade deals are marginal, despite the hysteria.
 
Large agribusiness doesn’t outcompete the average Mexican farmer to the same extent. Fewer unemployed young men coming to the cities. Slower rise of drug cartels.

Big changes.

Including immigration as U.S. political issue. And maybe chance to do it again and get trade right as it pertains to the average farmer.
 
Massive changes not just to US Agriculture, but industries like textiles, that, already on the ropes by China, where knocked out by NAFTA.

Without NAFTA, maybe they have time to recover.
 
Without NAFTA, it's entirely possible the Tequila Crisis could collapse the Mexican economy.

The tequila crisis was perfectly avoidable with or without NAFTA; it just requires Carlos Salinas to not spend as heavy on "the goods" (or at least reduce the scope of the vote-buying scheme) as PRI Presidents had a tendency of doing in this period during the election campaign that in OTL Zedillo won - oh, and speaking of the campaign, ensuring that Salinas' dauphin, Luis Donaldo Colosio, does not get assassinated. So it was perfectly possible that Mexico could avoid the tequila crisis altogether once inflation is under control - as it already was before the crisis hit. All of this, by the way, does not require a no-NAFTA POD, but what would happen if Clinton doesn't ratify it is that it gives Mexican businesses some breathing space to properly prepare for the transition once the US does eventually ratify it, and with Colosio as President of Mexico would certainly to help address the concerns that IOTL gave rise to the EZLN since the whole point of Colosio's campaign was to address the negative impacts of Salinas' economic reforms.
 
In terms of future political campaigns, quite a lot will change—especially if say Bush passes it in '01 or Bush in '91-'92 finishes it up knowing Clinton will try and stop it in the ATL. There's been hundreds of winning and losing campaigns where NAFTA was a major issue, primarily but not only in the Rust Belt, and either no NAFTA or Republican NAFTA will drastically change things.

It probably has no noticeable impact. The effects of these trade deals are marginal, despite the hysteria.

Congressional Research [PDF] agrees:
The overall net effect of NAFTA on the U.S. economy has been relatively small, primarily because total trade with both Mexico and Canada was equal to less than 5% of U.S. GDP at the time NAFTA went into effect. Because many, if not most, of the economic effects came as a result of U.S.-Mexico trade liberalization, it is also important to take into account that two-way trade with Mexico was equal to an even smaller percentage of GDP (1.4%) in 1994. Thus, any changes in trade patterns would not be expected to be significant in relation to the overall U.S. economy. A major challenge in assessing NAFTA is separating the effects that came as a result of the agreement from other factors. U.S. trade with Mexico and Canada was already growing prior to NAFTA and it likely would have continued to do so without an agreement. A 2003 report by the Congressional Budget Office observed that it was difficult to precisely measure the effects of NAFTA. It estimated that NAFTA likely increased annual U.S. GDP, but by a very small amount—“probably no more than a few billion dollars, or a few hundredths of a percent.”

Most post-NAFTA studies on economic effects have found that the net overall effects on the Mexican economy tended to be positive but modest. While there have been periods of positive and negative economic growth in Mexico after the agreement was implemented, it is difficult to measure precisely how much of these economic changes was attributed to NAFTA. A World Bank study assessing some of the economic impacts from NAFTA on Mexico concluded that NAFTA helped Mexico get closer to the levels of development in the United States and Canada. The study states that NAFTA helped Mexican manufacturers adapt to U.S. technological innovations more quickly; likely had positive impacts on the number and quality of jobs; reduced macroeconomic volatility, or wide variations in the GDP growth rate, in Mexico; increased the levels of synchronicity in business cycles in Mexico, the United States, and Canada; and reinforced the high sensitivity of Mexican economic sectors to economic developments in the United States.

Other studies suggest that NAFTA has been disappointing in that it failed to significantly improve the Mexican economy or lower income disparities between Mexico and its northern neighbors. Some argue that the success of NAFTA in Mexico was probably limited by the fact that NAFTA was not supplemented by complementary policies that could have promoted a deeper regional integration effort. These policies could have included improvements in education, industrial policies, and/or investment in infrastructure.

Even pro-NAFTA Americans who blame Mexico for all the problems and give America all the credit for improvement admit Canada wound up screwed lol. But I'm just grabbing some fun highlights, the whole paper is interesting.
The composition of trade has also changed. Canada initially entered a manufacturing recession after the FTA entered into force as branch plants of U.S. companies set up behind the Canadian tariff wall were abandoned. However, more internationally competitive manufacturing sectors thrived as long as the Canadian dollar (nicknamed the loonie for the soaring loon pictured on its reverse) was relatively cheap. From a low point of a Canadian dollar worth US$0.65 in 2002, the loonie reached parity in 2007, and has hovered around the parity point until 2013 before sliding to a recent US$ 0.75 at the end of 2016. The appreciation was attributed to the boom in Canada’s natural resources—oil and gas displaced motor vehicles as Canada’s largest export to the United States in 2005. The value of Canadian dollar is dependent on its commodity exports, and the depreciation resulted from the end of the boom that accompanied China’s slowdown.

The “great recession” resulting from the 2008 financial crisis took a toll on Canadian manufacturing, which was exacerbated by the strong loonie in the 2010-2013 period. However, the recovery of the North American economy and the fall of the loonie after 2013 has not significantly improved the fortunes of some sectors of Canadian manufacturing. The Canadian auto sector is a case in point. Despite contributing C$12 billion to the bailout of General Motors and Chrysler, no new auto assembly plant in Canada has opened since 2009, model lines have been shifted to Mexico or the United States,78 and by 2014, Canada’s share of North American vehicle output fell to 14%. According to the Royal Bank of Canada, “Planned capacity expansion in Mexico, including several new plants in the next few years, as well as stronger investment in the United States, could result in further erosion of Canadian producers’ market share ... the same is true for Canadian parts manufacturers, who have lost a significant share of the US import market.”
 
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Massive changes not just to US Agriculture, but industries like textiles, that, already on the ropes by China, where knocked out by NAFTA.

Without NAFTA, maybe they have time to recover.

I don't think that in the long run NAFTA either did much good to Mexico's textile industry or much harm to that of the US:

"NAFTA and Trade Diversion: Textiles and Apparel

"Textiles and apparel provide an example of trade diversion resulting from NAFTA. Although the NAFTA-created trade diversion initially aided Mexico's textile industry, the benefits were not permanent. When U.S. barriers on imports of Mexican textiles were eliminated under NAFTA, Mexican producers could compete in the U.S. market, even though other nonmember countries could produce textiles more cheaply. By the late 1990s Mexico increased market share so rapidly against China that it briefly became the dominant textile supplier to the United States. Meanwhile, China had developed a highly competitive textile export industry, helping it become the world's low-cost producer. Also, barriers to China's textile exports were reduced when it joined the World Trade Organization in 2001. As the playing field leveled, China increased U.S. sales at Mexico's expense. Simply put, the early trade diversion resulting from NAFTA revitalized Mexico's textile industry, but the gains could not be sustained. As subsequent trade agreements eroded Mexico's preferred position, NAFTA no longer provided Mexican textile producers much benefit..." https://books.google.com/books?id=gAbHdR8MafQC&pg=PA290 https://books.google.com/books?id=gAbHdR8MafQC&pg=PA291

Had there been no NAFTA, US companies might not have to worry about Mexican competition for a few years, but then Chinese competition--especially after China joined the WTO--would destroy any benefit they got out of that.
 
The tequila crisis was perfectly avoidable with or without NAFTA; it just requires Carlos Salinas to not spend as heavy on "the goods" (or at least reduce the scope of the vote-buying scheme) as PRI Presidents had a tendency of doing in this period during the election campaign that in OTL Zedillo won - oh, and speaking of the campaign, ensuring that Salinas' dauphin, Luis Donaldo Colosio, does not get assassinated. So it was perfectly possible that Mexico could avoid the tequila crisis altogether once inflation is under control - as it already was before the crisis hit. All of this, by the way, does not require a no-NAFTA POD, but what would happen if Clinton doesn't ratify it is that it gives Mexican businesses some breathing space to properly prepare for the transition once the US does eventually ratify it, and with Colosio as President of Mexico would certainly to help address the concerns that IOTL gave rise to the EZLN since the whole point of Colosio's campaign was to address the negative impacts of Salinas' economic reforms.

Sure, but I'm operating under the assumption the only real change is Clinton vetoes NAFTA in 1993. The loss of NAFTA might trigger a greater loss of confidence than IOTL on the part of foreign investors and thus triggering an earlier, worse Crisis or perhaps we could see the same OTL timetable play out but you'd have a U.S. even less interested in bailing out Mexico than IOTL; Republicans and some Democrats were pretty skeptical of doing so historically.
 
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