Ronald W.Cox 367Since the mid-1970s, the collapse of the Bretton Woods system has been
accompanied by increased divisions among business internationalists previously
committed to multilateralism. U.S. foreign direct investors in automobiles and
electronics have moved both economically and politically to restructure their
operations in order to better compete with Japanese and Western European firms
for the triad markets of Japan, Western Europe, and the United States. At one
level, firms involved in such restructuring have integrated their North American
operations by dividing production of component parts to take advantage of cheap
labor and low-cost access to the U.S. market. The project of industrial restructuring
represents an ongoing effort by some U.S. transnational corporations to counteract
the dual trends of excess capacity and dwindling market share that characterized
the late 1970s and early 1980s.
Politically, U.S. foreign direct investors in Mexico, Canada, and the Caribbean
Basin have formed coalitions since the mid-1980s to pressure and assist U.S.
officials to pursue regional trade agreements that will give them greater protection
against foreign competition for the U.S. market. These investors are part of a
broad coalition of business groups that have come together in support of CBI
[Caribbean Basin Initiative] and NAFTA as alternatives to the multilateralism
of GATT.
For foreign direct investors facing declining rates of profit and increased foreign
competition, regional trade agreements promise numerous advantages. First, they
allow U.S.-based multinationals to increase the exploitation of workers by relocating
and reorganizing production to low-wage areas. Second, regional operations backed
up by regional trade agreements allow U.S. firms proximity to the U.S. market to
better compete with foreign rivals. Third, as we will see, regional trade agreements
discriminate in several ways against foreign competitors by extending preferential
treatment to regionally based firms.
However, it is important to note that not all corporate supporters of CBI and
NAFTA view the agreements as a preferable alternative to the multilateralism
of GATT. Some firms see these regional agreements as a necessary transition to
the renewed promotion of multilateralism on a global scale. For the purposes of
brevity and precision, the corporate coalitions behind CBI and NAFTA can be
divided into two categories, each of which supports the agreements for different
reasons.
The first group can be labeled “multilateralists” or “anti-protectionist” due to
their political propensity to support free trade in a variety of different contexts.
This group includes retailing, banking and service industries, pharmaceutical
companies, and agricultural exporters (especially of grains and oilseeds). Many
of the leading Fortune 500 firms in these sectors are heavily dependent on
international transactions for their profitability and tend to be highly competitive
in global markets. They have been frustrated with the slow progress of GATT and
see regional trade agreements as a short-term route to securing important export
markets. However, they do not see the regional trade agreements as a substitute
for multilateralism. They view the agreements as a first step toward rebuilding
the multilateral trading system, and they see CBI and NAFTA as compatible with
pursuing free trade agreements through GATT.