336 CHAPTER NiNE ■ InternatIonal Po lItI cal economy
Yet the economic controversies generated by NAFTA continue to be profound, illus-
trating that the state is not a unitary actor. Labor unions in the United States estimate
that hundreds of thousands of workers have lost their jobs to Mexico. Environmental
groups point to firms in the United States relocating to Mexico to take advantage of
weak environmental regulations. Canadian labor contends that the country is becom-
ing too dependent on natu ral resources exports, while manufacturing has lagged. Mex-
ican supporters point to major increases in labor productivity and growth of exports,
while critics point to the slide in real manufacturing wages with lower- skilled jobs
moving to China. And as Jorge Castañeda, Mexico’s former foreign minister reports,
“If the purpose of the agreement was to spur economic growth, create jobs, boost
productivity, lift wages, and discourage emigration, then the results have been less clear-
cut.”^7 Mexico has failed to develop backward linkages in its export sector, namely
because of foreigners’ unwillingness to invest in Mexico. Foreign investment in Mexico
has increased from $4.4 billion in 1993 before NAFTA to about $22 billion annually.
But that is well below foreign investment in such countries as Brazil, Chile, and
Colombia, among others— not members of NAFTA. To radical opponents, NAFTA
is yet another example of U.S. expansionism and exploitation of the Mexican work-
force.
The NAFTA case illustrates that, as in all regional economic arrangements, there
will be winners and losers. In NAFTA, agriculture and manufacturing in general may
well be the winners. Agricultural markets are better integrated, and consumers enjoy
lower prices with virtually all tariffs eliminated. Both Canada and Mexico are now
large markets for U.S. agricultural exports. The share of Canadian exports absorbed
by the United States has expanded, and agricultural exports from Mexico have boomed.
Tariffs on manufactured goods have been almost entirely eliminated. But some manu-
facturers and some groups of individuals have also been losers in all countries, just as
the critics argued. Both radicals and economic nationalists have ample evidence to sup-
port their analyses.
Believing that there will be more winners than losers, other regions have developed
regional trading arrangements. Asia is a relative newcomer.
a sIa: asean Free trade area
Individual East Asian countries have experienced phenomenal economic growth
through competitive exports; prior to the 1990s, most of the exports went to either the
United States or Eu ro pean countries. In 1992, the Association of Southeast Asian
Nations (ASEAN) established the ASEAN Free Trade Area (AFTA). Its goal is twofold:
to attract foreign investment to the region, taking advantage of economies of scale,
and to increase members’ competitive edge in the global market by eliminating tariff
and nontariff barriers within ASEAN. The exception to these reductions is rice— the