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1. Getting to “No”: Defending Against Demands in NAFTA Energy Negotiations

Author:
Antonio Ortiz Mena L.N.
Publication Date:
06-2005
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
How can a developing country defend itself against unwanted demands in international economic negotiations, especially when the demandeur is a stronger state? Such defense can be a necessary component of any strategy, not only a distributive one but also a mixed strategy aimed at a wider agreement that benefits both sides. Sometimes what looks like an unwelcome demand turns out, after exploration and exchanges of concessions, to be an acceptable element in a beneficial package deal. But some demands are unwelcome in the stronger sense that one's government places an infinite reservation value on that particular issue. The government would prefer no agreement. In the case of a deal breaker, the delegation can walk away from the entire negotiation, but this could have large costs in opportunities foregone and even possible penalties imposed. What are the alternatives short of walking away? Mexico's negotiators faced such situation in the North American Free Trade Agreement (NAFTA) negotiations with the United States and Canada (1990-1992), specifically in the energy sector. In general the three states sought a mutual-gains agreement, and in general each employed a mixed strategy. In energy, however, Washington made demands--regarding investment and supply commitments--which Mexico found unacceptable. At the end of the day the Mexican team managed to attain its main offensive negotiation aims in NAFTA (significantly improved market access, faster tariff reductions in the U.S. and Canada than in Mexico, and an effective dispute settlement mechanism), as well as the main defensive ones in energy. How did they do it? Structural conditions, such as being a neighbor of the U.S., gives Mexico certain leverage in negotiations, for the U.S. will typically take into account non-economic considerations when negotiating over economic issues. Nonetheless, many lessons derived from Mexico's negotiation strategy in energy negotiations during NAFTA can be applied across a range of cases.
Topic:
Development, Economics, Energy Policy, and Government
Political Geography:
United States, Washington, Canada, North America, and Mexico

2. The Institutional Setting of the NAFTA Debate in the United States

Author:
Miguel Ángel Valverde
Publication Date:
02-2003
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
The objective of this paper is to analyze the institutional setting of the NAFTA debate in the United States, focusing on the interaction between the Presidency and Congress, in the formulation of foreign commercial policy. A series of arrangements have tamed confrontation between the Executive and Legislative powers, reconciling their institutional biases. THese arrangements channel and contain domestic demands for protectionism, favoring international trade liberalization negotiations.
Topic:
Economics, International Trade and Finance, and Treaties and Agreements
Political Geography:
Africa, United States, Asia, and North America

3. Foreign Policy Strategies in a Globalized World: The Case of Mexico

Author:
Guadalupe González
Publication Date:
02-2003
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
This document analyses the impact of the end of the Cold-War, and the processes of economic and political liberalization on Mexico's foreign policy. The first section identifies the consequences for the so-called intermediate countries of the three most important post-Cold War trends: the emergence of hybrid structure of global power, the wave of globalization, and the growing importance of international institutions. The second section evaluates the explanatory value of three systemic approaches to the study of the foreign policy of intermediate states: systemic-structuralism, middle powers, and pivotal states. In the third section, I evaluate Kahler's alternative approach centered on the interaction between systemic and domestic variables, in particular on the foreign policy consequences of economic liberalization and democratization such as the adoption of external cooperative strategies and the deepening to engagement with international institution. The fourth section describes the main changes that have taken place in Mexico's foreign policy during the 1990s: pragmatism, primacy of economics, closer alignment with the United States, segmented multilateralism, fragmentation of the decision-making process, and new instruments. There are two arguments in this document. First, in contrast to other intermediate liberalizing countries, Mexico's efforts to adapt to the new post-Cold War international system, followed an uneven and partial pattern. While Mexican political leaders pursued the full integration of the country to the international economy, in the security realm they maintain a less than open policy based on the defense of the traditional notion of sovereignty. Mexico's partial adaptation is explained by the different pace of the raid economic reform on the one hand, and the gradual and slow opening of the post-revolutionary political regime, on the other. Second, as Kahler's model predicted, Mexico adopted strategies of cooperation and institutional engagement in order to solve credibility roblems. The need to enhance the credibility of the programs of economic reform pushed the Mexican government to engage actively with economic international institutions.
Topic:
International Relations, Economics, and International Trade and Finance
Political Geography:
Africa, United States, Middle East, North America, and Mexico

4. El TLCAN y la Inversióon Extranjera Directa: El Nuevo Escenario

Author:
Arturo Borja
Publication Date:
01-2000
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
This working paper looks at the changes that have taken place in North America in foreign direct investment (FDI) after NAFTA. The first part analyses the regime defined in the treaty. The main four principles of this regime are: "national treatment", the prohibition of performance requirements for investors, a more liberal norm for foreign ownership of firms, institutional procedures for the solution of disputes. The rule of origin is identified as the most important measure for non-North American investors. The second part offers an empirical evaluation of changes in FDI flows during the first five years of NAFTA. It compares that period with the five years previous to the implementation of the agreement. The findings show a significant increase in FDI going to Mexico, Canada and the United States. At the same time, there have been changes in the distribution of these flows within the region. More FDI is going now to the United States than to Mexico, and investments between Canada and the U.S. are growing at a higher rate than those between Mexico and the U.S. The paper also identifies different patterns between Mexico and Canada. The increases in Canadian investments suggests that Canadian multinationals are adapting their strategies to the new conditions created by NAFTA.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States, Canada, North America, and Mexico

5. The Role of the Private Sector in the Evolution of US Technology Policy

Author:
Judith Mariscal and John B. Horrigan
Publication Date:
01-1998
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
Technology policy in the United States has undergone a dramatic transformation in the past ten to twelve years, as the government has increasingly played an active role in the high-tech sector and as the sector itself has faced growing competition from foreign competitors. Truths (or apparent truths) which once were unquestioned—that the U.S. government should only intervene in technology for national security reasons, that entrepreneurial high-tech firms operate best as "lone rangers" in the marketplace—have been closely scrutinized. The result of such scrutiny is that government and industry have changed their perceptions about their roles in a world in which the economic and competitive environment shifts rapidly. Another outcome is that technology policy has taken on increasing importance in U.S. policy circles. We see in the Clinton Administration plans to promote the information superhighway, proposals to overhaul the way in which the telecommunications industry is regulated, support for government-industry research consortia, closer linkage of trade and technology policy, and in general a much closer industry government relationship with the high-tech sector.
Topic:
Economics, Government, and Science and Technology
Political Geography:
United States

6. Coping with US - Mexican Interdependence: The NAFTA Response

Author:
Miquel Ángel Valverde
Publication Date:
01-1997
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
This paper examines the theoretical discussion on interdependence, and its use for analyzing US-Mexican economic relations. It combines interdependence's premises with other perspectives on the position of North American economies in the global marketplace, arguing that NAFTA is an institutional response to these developments.
Topic:
Economics, Globalization, and International Trade and Finance
Political Geography:
United States, North America, and Mexico

7. The Politics of NAFTA: Presidential use of Side Payments

Author:
Miquel Ángel Valverde
Publication Date:
01-1997
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
In June 1990, President George Bush and Mexican President Carlos Salinas de Gortari announced their intention to begin negotiating a free trade agreement. Canada joined the negotiations the following August. The proposed North American Free Trade Agreement (NAFTA) provoked an intense lobbying campaign in the US Congress, in what became a major political battle for its congressional approval. Some economic interests would win, others would lose with NAFTA. Congress members were worried about the loss of American low-skilled jobs and environmental issues. Regional interests were voiced loudly in the House of Representatives. A loose coalition of interest groups, including the AFL-CIO, public interest groups, and environmental organizations, coordinated opposition to the agreement. On the pro-NAFTA side was an ad hoc group of corporations, labeled USA-NAFTA, which included the National Association of Manufacturers and the US Chamber of Commerce. The Mexican government mounted an extensive lobbying campaign in favor of the trade pact. After intense congressional lobbying, President Bush obtained fast-track negotiating authority for NAFTA. Negotiations concluded in August 1992, and the following December, Presidents Bush and Salinas, as well as Canada's Prime Minister Mulroney, signed the pact, Presidential candidate Bill Clinton, under intense pressure from key constituencies of the Democratic Party, supported NAFTA "in principle," but only if complementary agreements on labor and environmental issues were included. Once in the office, Clinton negotiated these "side agreements" with Mexico and Canada, but still, strong opposition to NAFTA continued. In order to win congressional votes needed for the pact's approval, President Clinton engaged in a series of political compromises or "side-payments" with legislators, being able to form a congressional bipartisan coalition that allowed NAFTA passage.
Topic:
Economics, International Trade and Finance, and Politics
Political Geography:
United States, Canada, North America, and Mexico

8. Interest Groups in American Politics: Conceptual Elements and Key Literature

Author:
Miguel Angel Valverde
Publication Date:
01-1997
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
The objective of this paper is to discuss some concepts and review relevant literature on interest groups in the United States, in order to provide a broad guide to the study of the topic. It aims to explore the main questions raised by their presence in the political arena as well as suggest some themes for future research.
Topic:
International Relations, Economics, and Politics
Political Geography:
United States and America

9. Assessing the Rules - Power Debate in Farm Trade: A Case Study of the Canadian-U.S. Free Trade Agreement

Author:
Imtiaz Hussain
Publication Date:
01-1997
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
Asking "How have trade disputes over agriculture been settled in North America?", this study examines 11 appeals made to binational panels established under Chapter 19 of the Canada-U.S. Free Trade Agreement of 1989. By disaggregating the process of dispute settlement into complaints, rulings, country responses, and overall settlement, it reassesses an old debate (whether dispute outcomes are influenced by collective rules or the pursuit of self-help) and sheds new light. Whereas extant studies make the argument, through a study of appeals to G.A.T.T., that collective rules temper the blind pursuit of self-help, this study makes the argument that self-help is equally important an explanation. Whereas the former focus on outcomes which are non-binding, this study focuses on outcomes which are binding. Implications are drawn, at a time when domestic interests, nationalistic sentiments, and supranational pursuits compete to influence policy outcomes at all levels, for agriculture, integration in North America, and dispute settlement at the multilateral level.
Topic:
Agriculture, Economics, and International Trade and Finance
Political Geography:
United States, Canada, and North America