Interpreting NAFTA : The Science and Art of Political Analysis, by Frederick W. Mayer

 

6. Making Side Issues Central: The Labor and Environment Negotiations

With Bill Clinton's election in November, the side issues—environment and labor—became central. Candidate Clinton, pressed by George Bush to take a stand on NAFTA, had come down in favor of the agreement, but to soften the blow to Democratic supporters, he had promised to supplement it with additional agreements on labor and environment before he would submit it to Congress for approval. Now in office, he made good on his campaign pledge, demanding new negotiations with Mexico and Canada. The United States's international negotiating partners grudgingly acceded.

At the Office of the United States Trade Representative (USTR), the hope initially was to complete the talks in the spring, so that NAFTA could be submitted to Congress in the summer, but the task proved too difficult to complete so quickly. The United States took most of the spring to decide what it wanted, in part because this was new territory for international trade negotiators, in part because sharp internal differences made establishing a national negotiating position a matter of intense political conflict, and in part because the first months of the Clinton administration were so chaotic. Clinton's new trade representative, Mickey Kantor, found himself trying to navigate through the narrowest of openings, even before formally engaging with Mexico and Canada. In May, the United States tabled its first negotiating position, a position calculated to satisfy enough Democrats sympathetic to labor and environmental interests to win Congressional approval. But the U.S. position met with strong opposition from Mexico and Canada and at home from U.S. business interests and Republican members of Congress whose support would be needed.

As spring turned to summer, the broader political context became increasingly charged, further imperiling NAFTA. In contrast to the relatively insulated negotiations of the main agreement, the side negotiations were conducted in the spotlight of attention from interest groups, the public, and ever more, members of Congress. By summer's end, the vast majority of Democrats in Congress were ready to oppose the agreement, including the influential House majority leader, Richard Gephardt. Some of the president's political advisors urged him to use failure to reach agreement in the side negotiations as an excuse to pull the plug on NAFTA and avoid a bloody fight in Congress.

The president decided otherwise and directed Mickey Kantor to close the deal. Prodded by the prospects of failure, negotiators for all three countries found ways to make painful compromises. Finally, on August 13, 1993, a week after the U.S. Congress had recessed and well after they had originally intended to conclude the negotiations, the United States, Mexico, and Canada reached a final agreement. The accords established modest new international institutions, intended both to facilitate cooperation and to promote enforcement of national labor and environmental laws. The labor institutions had less independence and more limited powers than the environmental institutions. The United States and Mexico agreed that in extreme cases of failure to enforce national law, an international dispute panel could authorize trade sanctions. Canada, unwilling to allow the possibility, however remote, that international trade sanctions might be used against them (a sensitive matter in Canadian politics), agreed instead to make the decisions of the international dispute panel enforceable in Canadian courts.

Why side negotiations? Why did the United States, having agreed to terms in August 1992, change its mind and insist on additional talks in 1993? And why these side agreements? Why different institutions for labor and environment? Why did the United States demand, Mexico accept, and Canada reject the right to use trade sanctions to ensure enforcement of domestic environmental and labor laws?

 

Making Side Issues Central

At the Republican National Convention in August 1992, Carla Hills spoke to the gathered delegates. By then, Bill Clinton was well ahead in the polls, and there was a note of urgency in the Republican campaign. NAFTA was a good issue for Bush, his advisors thought. It showed Bush as decisive and effective, a leader on the international stage. Moreover, it put Bill Clinton in an awkward position, forced to decide whether to stick with his previously declared general support for NAFTA and go against the wishes of the Democrats' core constituency, particularly the labor unions, or to oppose NAFTA and risk being seen as caving to special interests.

For several weeks after the NAFTA talks concluded, Clinton delayed taking a stand, saying that he had not yet had a chance to read the agreement and would remain undecided until he did. The claim was plausible, since the text had not been made public and since, in truth, parts of it were still being drafted, but by mid September, Clinton felt pressure to announce a decision. In addition to being pressed by Bush, Clinton was hearing from Ross Perot, back in the race for president after a short hiatus, who had seized on opposition to NAFTA as a good vehicle for his populist candidacy. In one of the more memorable soundbites of the campaign, Perot had asserted that NAFTA would create a “sucking sound” as jobs went south to Mexico.

At campaign headquarters in Little Rock, establishing a stance on NAFTA became an important strategic issue for the Clinton campaign. Clinton and his advisors conferred with dozens of people. Most of the traditional Democratic party was opposed to the agreement. The labor unions and their friends on Capitol Hill strongly urged Clinton to reject the “Bush NAFTA” and promise to renegotiate the whole agreement. Elements of the centrist “New Democrat” coalition, particularly in the business community, urged him to support the agreement. Clinton's campaign advisors were split. On the one hand, supporting NAFTA might cost him votes in key states such as Michigan and California. On the other hand, given his earlier general support of NAFTA, opposing it now might look like he was capitulating to special interests, a charge that had dogged him on the campaign trail.

Several conferees pushed a middle course, in which Clinton would support NAFTA but promise to strengthen its labor and environmental provisions. In late September Bill Bradley talked with Clinton by phone. Bradley argued that NAFTA was a historic opportunity to transform U.S.-Mexican relations. Supporting NAFTA was good policy, but it was also good politics. It would take a campaign issue away from Bush. To deal with the labor and environmental issues, Bradley argued that Clinton should promise to negotiate supplemental agreements on labor and environmental issues. This middle course was supported by environmental groups and other centrist Democrats such as Lloyd Bentsen.

The “yes, but” position proved persuasive with Clinton's campaign strategists, many of whom were personally opposed to the agreement. Although there might be political costs, particularly in Michigan, a key primary state, backing NAFTA would signify that Clinton was tough enough to stand up to interest groups. To be perceived as backing away from his previous position in the face of political pressure—certainly the way that a stance in opposition would be interpreted—was to open himself to criticism on a dimension of character that was Clinton's greatest vulnerability. In a speech in Raleigh, North Carolina, given on October 4, 1992, Bill Clinton announced that he was supporting NAFTA. He said that the agreement Bush had negotiated had problems, but they could be fixed without starting over. If elected, however, he would not sign a bill implementing NAFTA unless it included additional agreements on labor and environment. The side issues were now central.

 

Initiating Negotiations

After his election, having promised in the campaign to negotiate the supplemental agreements, President-elect Clinton and his transition team now had to decide how serious they were about making good on that promise and had to persuade the Mexicans and the Canadians to talk. The Mexicans initially hoped that the proposed supplemental talks were an empty campaign pledge. They took the position that they had already concluded an agreement and that they had no intention of renegotiating its terms. However, they could also see that they would have to grant Clinton's request if legislation implementing NAFTA were to have any chance of passing in Congress. Grudgingly, the Mexicans agreed to negotiate, but laid down three “noes”: no reopening of the NAFTA text, no hidden protectionism, and no compromise of Mexican sovereignty. The Canadians were a good deal more positive than the Mexicans about the prospect of supplemental negotiations. They well understood that Canada was not the object of concern. But like the Mexicans, they made clear that these must be supplemental negotiations, not a reopening of the NAFTA, and that they would oppose any measures that might be used to limit free trade.

The prospect of side agreements raised hope among some U.S. labor and environmental activists that Clinton might push for new international standards in these areas, something of a “social charter” along the lines of standards established by the European Union. The Clinton transition team for trade matters quickly squashed this hope. International standards could be used against the United States, they thought. Moreover, they were unnecessary. Mexico's environmental and labor laws were strong enough. What was needed, they decided, was a means to ensure “national enforcement of national laws,” a phrase that would become a virtual mantra in the first months of the Clinton Administration.

Two weeks before his inauguration, Clinton met with Mexican President Carlos Salinas in San Antonio, Texas, Clinton's first meeting as president-elect with a foreign head of state. Clinton reaffirmed his insistence on new negotiations but agreed to the Mexican conditions, saying “I don't believe the negotiation needs to be reopened.” He promised Salinas that he had no intention of using the supplemental negotiations to undermine free trade or Mexican sovereignty. Salinas agreed to negotiate.

 

A New Trade Representative

In late December, after much speculation in the Washington trade community, Bill Clinton announced Mickey Kantor as his nominee for the position of United States Trade Representative. The announcement caught most observers by surprise. Kantor had been Clinton's campaign manager and he was thought of as a tough negotiator, but he had no experience with trade issues. True, having a trade background had never been a prerequisite for the position. Carla Hills knew little about trade when she started, nor for that matter had the majority of U.S. Trade Representatives since the creation of the office. However, no trade representative had ever taken over with so many trade balls in the air. On its own, NAFTA would be a huge challenge, but Kantor would also have to close the enormously complicated the General Agreement on Tariffs and Trade (GATT) negotiations, something none of his predecessors had been able to do; tackle the increasingly acrimonious trade relationship with Japan; and decide on an approach to handling the U.S.-China trade relationship that balanced economic and human rights considerations.

On NAFTA, Kantor's first impressions were negative. He had gone along with the decision to support NAFTA during the campaign, and now that Clinton had decided in favor, Kantor's job would be to serve the president, but as he made his courtesy visits to Senators who would vote on his confirmation, he left little doubt that he was skeptical about the agreement. In his mind, the “Bush NAFTA” was deeply flawed and would need to be fixed with supplemental agreements before it could be pronounced good for the United States.

Kantor's political instincts meshed with his policy inclinations. NAFTA was very unpopular with key Democratic labor and environmental constituencies. But NAFTA couldn't pass without Democratic votes in the Congress. Congressional Democrats were understandably nervous about voting for the agreement. Strong side agreements might win them over, might even win union support. “Mickey had strong union ties, and he harbored the view that he could get unions to come along,” recalled an official at the USTR.

The truth was that Kantor did not yet know how to proceed, nor had he grasped how difficult a task completing the NAFTA process would be. When he came before the Senate Finance Committee on January 19 for his confirmation hearing, his prepared statement barely addressed the side agreements. Most of the Senators offered questions on the trade conflict with Japan or narrow issues of particular concern to their constituents. Finance Committee member Bill Bradley, however, made what seemed a startling statement. “I believe [NAFTA] is the most important foreign policy decision that President Clinton will make in his first six to eight months,” said Bradley. “I think it is enormously important for the future of this country. It offers a promise that might not come again. And I urge you to seize it, to conclude quickly any side agreements that you've obligated yourself to negotiate with Mexico, to quickly submit to us the Administration's adjustment package that will facilitate this agreement, and to push it forward with great energy.” ₁

 

The Nature of the Problem

Whether he recognized it or not, the challenge facing Mickey Kantor was formidable. To negotiate side agreements with Mexico and Canada, the United States would first have to decide what it wanted. In some ways this was a more difficult policy design problem than crafting the NAFTA agreement itself, which followed the existing template, the Canada-U.S. Free Trade Agreement (CUFTA). Here there was no precedent, and Clinton's campaign promises gave very limited guidance. Kantor had to find solutions that were acceptable not only to the Mexicans and the Canadians, but also to enough domestic interests to make ultimate passage of NAFTA possible. Moreover, he had to do this quickly if he wanted Congress to consider NAFTA before the end of the year, when the agreement was scheduled to go into effect.

A first obstacle was simply disorganization. The first months of the Clinton administration was extremely chaotic. For the first time in 12 years, the Democrats were in power, and the transition was moving very slowly. At the USTR, Kantor's top deputies did not even come on board until the second week of February. Moreover, many of the Clinton appointees were inexperienced and would need time to get up to speed. “We were asking guys in the fifth grade to perform brain surgery,” recalled one career official at the USTR.

The new National Economic Council (NEC) in the White House, intended to streamline interagency economic policy making, was operating more as a bottleneck. “It was a crazy lifestyle,” recalled an official at the NEC. “We would spend all day in meetings. Then we'd spend all night to do the work.” And NAFTA was far from the only item on the agenda for the White House. “It was hard to get serious attention to NAFTA at high levels,” the same official recalled. “Remember that the new Administration was dealing with gays in the military, the budget, and a lot of other stuff. We had to deal with China MFN [Most Favored Nation], with GATT, with our Japan policy. Everyone is saying you have to focus on one thing, but it should be my thing. The Administration was like a car starting from a dead stop. Once the car got going, and the Administration had been thinking about all these things, then we could take on more than one thing at a time.”

The administrative confusion made it impossible for Kantor to move on the supplemental negotiations as quickly as first intended. When Kantor, Jaime Serra, and Michael Wilson met for the first time in mid February, Kantor could offer little more than generalities about U.S. intentions.

In February, Kantor finally assembled his new staff. Rufus Yerxa, a former Rostenkowski aide who had been negotiating the Uruguay Round of the GATT, took over from Jules Katz as deputy USTR and chief negotiator for the side negotiations. Tom Nides, a former Gephardt aide, would be chief of staff. Ira Shapiro, former top aide to Senator Jay Rockefeller (Democrat, W.V.), would be the new general counsel, and Nancy Leamond, president of the Congressional Economic Leadership Institute, would handle congressional relations.

In September, as part of its effort to secure support for NAFTA, the Bush Administration had tried to cut a deal with some of the mainstream environmental groups to secure their support. Over the opposition of the State Department, the USTR had agreed to support the creation of a trinational North American Commission on the Environment (NACE), an idea pushed by a coalition of the World Wildlife Fund (WWF), the National Wildlife Federation (NWF), the Environmental Defense Fund (EDF), and the Natural Resources Defense Council (NRDC) in testimony before the Senate Finance Committee. The election had overtaken the negotiations, but the promise of a trinational commission, albeit with limited powers, established a base for negotiating the supplemental agreements in the Clinton Administration. Now the issue was what kind of commission, not whether there would be one.

No such template existed for the labor negotiations. What Bush had negotiated in parallel to NAFTA on labor issues amounted to little more than a promise to consult with Mexico annually on these issues. Clinton had promised something as substantial as the environmental accord, which meant starting from scratch.

For trade officials at the USTR, finding ways to accomplish environmental and labor objectives without undermining the goal of free trade was a paramount concern. Always for the USTR, however, the policy design challenge included an essentially political objective: to find a solution that would be simultaneously acceptable in the U.S. domestic arena and negotiable with the Mexicans and Canadians. This was a formidable political problem. First, it was unclear what, if anything, would win enough votes to pass NAFTA in the Congress. After the 1992 election, Democrats had large majorities in both houses. To win, therefore, NAFTA needed the support of a significant number of Democrats. But most Democrats had criticized the “Bush NAFTA” during the campaign, citing in particular their concerns about labor and the environment. The large incoming freshman class had been particularly critical. On the other hand, the agreements could not be so strong as to lose business backing and Republican votes. With a Democrat in the White House, Republican members of Congress, who had little reason to help a Democratic president, might find it politically attractive to use the side agreements as an excuse to back out of their earlier support.

Looming large in the strategic thinking of Kantor was the pursuit of Richard Gephardt. Based on the evidence of the fast track vote in 1991, NAFTA would probably have an easier time in the Senate than in the House. As House majority leader and perhaps the most outspoken member of Congress on trade issues, Gephardt was thought to have considerable influence over other House Democrats who might constitute the swing votes. On the other hand, Gephardt's strong ties to organized labor meant winning his support would probably not be easy and might be impossible without losing Republican support. At the USTR, there were strong differences of view about how far the Administration should go to accommodate Gephardt. Deputy USTR Rufus Yerxa, brought back from his labors on GATT to be chief negotiator for the supplemental talks, had seen Gephardt in action when Yerxa had worked for House Ways and Means Chairman Dan Rostenkowski. Yerxa was skeptical about whether Gephardt would ever support NAFTA and worried that pursuing him risked losing Republican votes. Others at the USTR, most importantly Mickey Kantor, felt differently. “Mickey thought that we could get the lunchbucket Democrats epitomized by Gephardt,” recalled one of his senior aides. For the next few months, the USTR would negotiate with Representative Gephardt almost as much as it did with the Mexicans and the Canadians.

At the beginning of the year, of course, Kantor could not know just how big a problem he really faced. He knew from the campaign that the labor unions were unhappy and many environmental groups were discontent. He did not know whether Ross Perot would continue to be a player on the national scene. Moreover, Kantor was on somewhat unfamiliar territory and could not see how his efforts to court NAFTA's critics might complicate his task. Early in the Clinton Administration, all things seemed possible, and it was difficult to imagine just how treacherous the political landscape for NAFTA would prove to be.

 

Defining the Negotiation: Issues and Players on Two Levels

By the end of February, two sets of core issues began to crystallize. The first concerned how much power the international environmental and labor commissions would have. How accountable would they be to national governments? Would they have single, permanent staffs? What investigatory powers would they have? The second concerned the mechanisms for ensuring national enforcement of national laws. Under what circumstances might a claim of failure to enforce national law be submitted to a panel for adjudication? What process and what standard would be used to judge the claim? And, perhaps the most sharply defined issue and one that would garner the most public attention, what penalties could be imposed if a country failed to respond to the findings of a dispute settlement panel?

As demandeur in the negotiations, the United States had first to decide what it wanted on these issues. Even more than in the commercial negotiations, this was not a matter of the trade negotiators' preferences. The U.S. negotiating position would need to be established through consultation and negotiation with interest groups—environmental, business, and labor—and, given the proximity of these negotiations to the eventual vote in Congress, with key members of Congress responsive to these interests. This process, more than in the commercial negotiations, would need to take place outside of the existing consultative structure, which was designed for trade issues, not for labor and environmental issues that engaged a much wider circle of actors. Before he could engage with Mexico and Canada, therefore, Kantor would need to navigate through the domestic political landscape.

Environmental Interests

Veteran trade officials at the USTR understood that they would need some environmental support for the side agreement. A supplemental agreement universally opposed by the environmental community would never make it through Congress. The lesson of the fast track fight, however, was that a split vote of environmental organizations would neutralize the issue. The Bush administration had been very close to gaining the blessing of several environmental organizations in the fall of 1992 when it promised to create a NACE—indeed the WWF had announced its support—but now the political context had changed and even the moderate groups were demanding more.

The number of environmental organizations involved in NAFTA had grown steadily. Now virtually the entire environmental community was plugged into the debate, including numerous smaller organizations that rarely played in the national policy arena. Officials of these organizations discovered that NAFTA was becoming a hot issue with their members. The groups shared some objectives: All wanted better enforcement of Mexican environmental laws, guarantees of the sanctity of U.S. environmental laws, greater environmental cooperation between Mexico and the United States, and more money for cleaning up the U.S.-Mexico border. But the community was far from homogenous, with organizations differing on how much they needed done on these issues to support NAFTA.

On one end of a spectrum were the large, well-financed Washington- or New York-based institutions such as the World Wildlife Fund, the National Wildlife Federation, the Audubon Society, the Environmental Defense Fund, and the Natural Resources Defense Council. These organizations were generally more accepting of the coexistence of economic growth and environmental goals, more familiar with the corridors of power in Washington, and less alarmed about the environmental implications of NAFTA. To them NAFTA was more an opportunity to accomplish environmental objectives than a threat.

At the other end of the spectrum were more grassroots groups such as the Sierra Club, Friends of the Earth, Greenpeace, Defenders of Wildlife, and dozens of other smaller environmental and advocacy organizations. These groups were more skeptical about the relationship between economic growth and the environment, less comfortable with the Washington scene, and a good deal more critical of NAFTA. Joining them was Public Citizen, an advisory group founded by populist crusader Ralph Nader. To the leaders of these organizations, NAFTA represented a grave threat to the environment and to the ability of citizens to have a say in environmental policy decisions. ₂

The NWF had come close to announcing its support for NAFTA in the fall when Bush agreed to create a North American Commission on the Environment, but now it saw an opportunity to go well beyond the limited commission envisioned by Bush. The NWF expected it would support the agreement in the end, but it intended to bargain for more. “We felt at the end of the day we would get more if there is a quid pro quo,” recalled the NWF's Stewart Hudson, the staffer who had been instrumental in organizing the environmental community during the fast track effort. In February, the NWF issued a report identifying “essential elements of the supplemental agreements”: more funding for environmental cleanup, a package of “technical amendments” to the NAFTA, and “mechanisms for enhancing the adoption and more effective enforcement of national environmental laws. ” The report projected flexibility on the enforcement question, asking only that the commission “have the authority to make recommendations for fines and other trade remedies.” ₃ Importantly, it did not call for renegotiation of the NAFTA itself.

Shortly afterward, two other moderate groups—the NRDC and the EDF—joined with three groups generally more critical of NAFTA—the Border Ecology Project, the Texas Center for Policy Studies, and Arizona Toxics Information—to issue their recommendations. They took a harder line than the NWF on the enforcement question. “Enforcement failures that persist after full warnings and consultations could lead to NAFTA dispute proceedings and imposition of import restrictions, duties or other trade penalties,” testified the NRDC's Justin Ward to the Senate Environment and Public Works Committee a few weeks later. For the NRDC and EDF, however, enforcement was not the top priority. “The primary rationale for a new commission is to provide a mechanism to enhance North American regional cooperation on environmental policies and programs,” Ward testified. ₄

The Sierra Club report issued in February viewed NAFTA's environmental problems with more alarm and took an even harder line. Rather than urging clarification of ambiguities in the text, it stated that “[t]he United States must attempt to re-negotiate the words which give rise to these problems.” Its called for a much stronger and more independent institution than that envisioned by the NWF, EDF, and NRDC “with the power to investigate claims of environmental wrong-doing.” On enforcement the Sierra Club insisted that “citizens of each country should be provided the right to seek damages for lax environmental protection within courts of law of any party,” and, even stronger, it called for amending U.S. trade law to make lax enforcement of environmental law “actionable,” i.e., grounds for unilateral trade sanctions, and to require U.S. corporations operating outside the United States to adhere to U.S. regulations. ₅

Of these reports, that of the Sierra Club was least influential with the Clinton administration, since few at the USTR expected that this organization's support could be bought. Its new executive director, Carl Pope, was personally opposed NAFTA. Perhaps more significantly, with the majority of its grassroots membership strongly opposed to NAFTA, Sierra Club's elected leadership had an incentive to take a strong stance.

On Capitol Hill, Senator Max Baucus (Democrat, Mont.), new Chairman of the Committee on Environment and Public Works as well as Chairman of the Trade Subcommittee of the Finance Committee, saw an opportunity to seize leadership on the trade and environment issue. At a speech to the American Bar Association January 29, 1993, Baucus called for “something with teeth but which recognized national sensitivities.” ₆ He proposed making noncompliance with local environmental regulations a violation of NAFTA and thus subject to trade sanctions; giving the NACE authority to investigate complaints; and establishing a border fee to pay for the NACE, border cleanup, and worker retraining.

The cross-border fee was quickly rejected by the Canadians and Mexicans and was received coolly by the trade staff of the USTR, but Baucus's speech influenced the thinking of Mickey Kantor. Kantor viewed Baucus as the key to brokering a deal with the environmentalists. “Max's speech on how the side agreements should be structured made a big difference,” recalled Mickey Kantor later. Others at the USTR were less sanguine at the time, fearing that Baucus was pushing the United States into too confrontational a negotiating position. Privately, some in the mainstream environmental community felt the same way.

For the first few months of 1993, in meetings organized by the NWF's Stewart Hudson, all segments of the environmental community attempted to work together. They met as a group with the Administration officials charged with putting together a negotiating position. The large group meetings, however, proved unsatisfactory for all concerned. For the USTR it was hard to sort through the cacophony of voices to discern what the groups really wanted and how their support could be won. Environmental groups on both ends of the spectrum felt that their message was muddied by the attempt to maintain consensus in the community.

In early March, a group of the critics, including Defenders of Wildlife, the Center for International Environmental Law, Friends of the Earth, the Sierra Club, Public Citizen, and sixteen other grassroots organizations, sent Mickey Kantor a letter with a sharper point. “We support a NACE that will possess investigative, monitoring, and enforcement powers as well as serve as a mechanism for meaningful public participation,” it stated. “Enforcement is a crucial issue. We should not subject U.S. citizens to economic, health, safety, or environmental injury as a result of weak enforcement of standards elsewhere.Sanctions, including both trade and nontrade measures, must be available to ensure compliance.” ₇ Notably absent from the signatories were any of the moderates. “We thought the letter was headed toward a cumbersome and contentious process,” recalled the NRDC's Justin Ward. “That letter focused on supernational enforcement and dispute settlement, not on trinational cooperation.” The environmental community was beginning to split.

Labor Interests

Although the environment and labor issues were often lumped together, the politics of labor differed widely from the politics of the environment. Unlike environmental groups that were prepared to set a price for their support, labor unions were not in a position to offer a deal. The unions could never promise that particular side agreements would win them over. NAFTA's problems, in their view, were too profound to be handled with the kind of supplemental agreements that seemed plausible. In his testimony to the Senate Finance Committee in September, Tom Donahue, chair of the Labor Advisory Committee on International Trade, said,

the North American Free Trade Agreement from start to finish is nothing more than the latest version of Reagan-Bush trickle-down economics and an enlargement of the interests of U.S. and Canada-based multinational corporations, to the detriment of U.S. workers. The Congress should reject the agreement and send a new set of U.S. negotiators back to the table. ₈

Immediately after Clinton's election, some union strategists had hoped that the promised side agreements might create an opportunity for fundamental changes in the nature of the agreement. The unions wanted a social charter for labor—common international rights and standards—enforceable through domestic courts and if needed through international sanctions. At the very top of the union list of rights was the right to free association. “For us, in any labor side agreement the major uncompromisable issue is freedom of association, the right to organize and bargain collectively,” said the Mark Anderson of the AFL-CIO (American Federation of Labor and Congress of Industrial Organizations). “Without that, it is nothing.” Other standards of interest covered workplace health and safety, child labor, and the minimum wage. Of course, even if the side agreements met these goals, there was no guarantee that the unions would support NAFTA.

Before Clinton even took office, however, it became evident that the side agreements would not come close to meeting union demands. When Clinton promised Salinas that there would be no reopening of the NAFTA and that the United States would respect Mexican sovereignty, the international standards were out, replaced by an emphasis on national enforcement of national laws. “It was fairly clear early on that the USTR was just going through the motions,” recalled Bill Cunningham, the AFL-CIO's director of Congressional relations. “We were up front with the Administration, we didn't think this was a fixable agreement.”

The recognition that no plausible resolution of the side agreements would win union support put union leaders in an awkward position as they tried to influence the content of the agreements. On the one hand, all the alternatives looked bad in union eyes; on the other hand, some outcomes were worse than others. Steve Beckman of the United Auto Workers (UAW) and Mark Anderson of the AFL-CIO continued to meet with USTR officials, and with Larry Katz, chief economist at the Labor Department, who was taking the lead on the side negotiation at the department. In contrast to the dialogue with the environmental community, the talks with Beckman and Anderson were quiet and largely invisible to the public and the union rank and file. Moreover, these were not negotiations in the same way as the talks between the USTR and the environmentalists. “There was never much give and take going on. It was more them listening to us, and later being presented with what they were doing,” recalled Mark Anderson.

The key strategic decision facing the unions was how to position themselves publicly. Many in the union movement wanted to abandon all pretense of working with the Administration to fix the agreement, declare it beyond remedy, and take a firm stance in opposition. Others argued that they should wait until the side agreements were completed, so as to continue to influence their content, to give the president a chance to make good on his promises, and to do nothing to weaken the first Democratic president in 12 years. “We tried to hold off our more active sisters and brothers,” recalled Mark Anderson. “Our argument to the Hill and to our affiliates was: It's only fair to wait and see what happens. President Clinton had promised to fix the agreement. We were trying to keep the door open. We were happy about the election of Clinton, and we were trying not to say ‘welcome to Washington’ and then kick him in the teeth.”

The issue was debated within the Executive Council of the AFL-CIO in February at the annual meeting in Bal Harbour, Florida. The Council decided to wait to launch a political campaign against NAFTA. But the tensions were evident in the Executive Council's public statement: “[NAFTA] would be a disaster for millions of working people in the United States, Canada and Mexico. As drafted, NAFTA is an agreement based solely on exploitation. It should be rejected and renegotiated to advance the overall public interest.” ₉

Some union leaders were not prepared to wait. William Bywater, president of the Electrical Workers Union, from the outset one of the more vociferous opponents of NAFTA, was clear about his intentions, “I am trying my best to fight NAFTA. We'll get out in the streets if we have to.” ₁₀

If the labor unions were in a poor position to advocate a labor agenda in the side agreements, Richard Gephardt was not. As House majority leader and as perhaps the most vocal trade skeptic among Democrats, Gephardt's support could give other Democrats with strong union ties the political cover they needed to go along. Mickey Kantor viewed Gephardt as a crucial player, and he thought he could get him. As USTR General Counsel Ira Shapiro recalled, “there was a time when Mickey thought that the supplemental agreements would transform the NAFTA from a bad deal into a good deal, and that they would gain Democrats' support. If the supplemental agreements were strong enough we would get Gephardt, and that would be a signal to other Democrats that the deal was a good one.”

Gephardt was sounding very moderate. In testimony before a House Foreign Affairs subcommittee in late February, Gephardt stated, “I'm prepared to vote for the agreement if these other matters are successfully concluded. I intend to be a partner in this process and to work toward successfully concluding a NAFTA agreement this year.” ₁₁ Gephardt called for a strong labor side agreement that would improve Mexican labor standards, a “code of conduct” governing business practices in Mexico, strong worker retraining provisions in the implementing bill, and adequate funding for infrastructure improvements in the border region.

Yet despite these soothing words, some in the Administration were not so sure about what Gephardt was doing. On February 17, the first day the trade ministers met to begin discussions about the side agreements, Gephardt held a press conference to release information on an investment fund, partially financed by the Mexican government, whose purpose was to lure American businesses to Mexico. Gephardt accused Mexican officials of “stealing American jobs.” The Mexicans were furious at what they viewed as an attempt to poison the atmosphere. The Washington Post quoted an unnamed senior Mexican official as saying “we don't believe in coincidences.” President Salinas, clearly irked, urged Congress to conduct an “informed debate.” “I hope that good faith will prevail, and that the aim is to improve relations between Mexico and the United States and not to wreck them,” he said. ₁₂

At the USTR, reactions to the flap over the Mexican investment fund differed. Those sympathetic to Gephardt, including his former staff member Tom Nides and Kantor himself, were more angry with Mexico than with Gephardt. But for Rufus Yerxa and the trade veterans, the episode raised suspicions that Gephardt was doing little to position himself to support the agreement in the end. Suspicions might have been even greater had anyone known that the source of the material was actually Pat Choate, Ross Perot's principle advisor on NAFTA and other trade matters. Choate had received the “gift” by fax from a New York Perot supporter, but as he recalled later, he knew that “if it comes from us it only causes a ripple. But Gephardt was sitting on the fence.” Whatever the reality of Gephardt's true intentions, over the next few months the Administration would spend more time with Gephardt than with any other member of Congress.

Business

At the beginning of the Clinton Administration, the concerns of the business community were not nearly as salient to Mickey Kantor as were the concerns of the unions and the environmentalists. Business support for NAFTA was without doubt necessary for eventual success, but Kantor could see little reason to believe there was any problem in getting it. In his mind, business had gotten a great deal in NAFTA, and nothing that the USTR was contemplating in the way of side agreements would change that.

The business community was not particularly attuned to the labor and environmental issues. Business was happy with things as they were. Bush's parallel negotiations in 1992 had not unduly worried them; they trusted a Republican administration to look after their interests. Clinton's election changed things, but until business knew where the new Administration was headed, they could not know how active they would need to be. Was Clinton serious about these side agreements or was he merely looking for political cover when he promised them?

Early in February, however, business leaders began to detect Kantor's receptivity to the proposals being advanced by the environmental community and championed by Baucus. The idea that trade sanctions might be connected to labor and environmental issues particularly caught their attention. Chuck Levy, a prominent Washington trade lawyer retained by the Business Roundtable, argued that business needed to get engaged. He and others created a “blue” and a “green” team to deal with the labor and environmental negotiations, respectively. The teams included representatives from the Business Roundtable, the Chamber of Commerce, the National Association of Manufacturers (NAM), the Emergency Committee on American Trade (ECAT), the U.S. Council of International Business, the Council of the Americas, and others. The idea, recalled Levy, “was to approach this in a totally unified fashion. Otherwise we [would] get picked off one by one.”

Business had not opposed the creation of consultative commissions composed of representatives of national governments. The idea of international organizations independent of national control, with investigative and enforcement powers, particularly if they might involve trade sanctions, was another matter. A March letter from the Chamber of Commerce to Mickey Kantor stated the common view. “Authority to impose sanctions against private interests in any of the signatory states should remain with the signatory states, and not reside in a supranational commission.” The Chamber was “concerned that use of trade sanctions as a remedy for environmental violations could evolve into a new set of non-tariff barriers.” ₁₃ Moreover, business leaders not only disliked what was being proposed on policy grounds, they also feared that the more ambitious the U.S. negotiating position, the longer the talks would take, and the dimmer the prospects for NAFTA's passage would be.

Having heard from labor and environment's allies in Congress, in February Kantor began hearing quiet warnings from business's supporters on the Hill. Unlike the unions and the environmentalists, business's primary allies were Republicans, who had less access to the president. In the House, Jim Kolbe (Republican, Ariz.) emerged as the leading spokesperson. Kolbe worried that the Administration was taking Republicans for granted. He warned that Republican support was not automatic and that an agreement that made trade sanctions available for a labor or environmental dispute risked losing Republican votes. In the Senate, John Chafee (Republican, R.I.) and Jack Danforth (Republican, Mo.) sent Kantor the same message.

Bill Bradley had been closely monitoring the progress of the side negotiations, talking with environmental, labor, and business groups; with Kantor and other administration officials; and with contacts in Mexico and Canada. Bradley was sympathetic to the environmental and labor concerns, but he believed they would be best advanced in the long run by passing NAFTA. He worried that Kantor was risking the whole agreement by going too far in trying to meet the demands of labor and environmental groups. The way to lose NAFTA was to lose the Republicans, he warned Kantor.

 

Negotiating the U.S. Position

It was in this political context that the Clinton Administration moved to establish its negotiating position for the talks with Mexico and Canada. Central to the thinking at the USTR was the proposition that the environment and labor opening positions needed to be identical. “Clinton couldn't be accused of loving trees more than workers,” recalled Chip Roh. “We thought, let's make the constituencies ask for differences.” Because the dialogue about the provisions of the environmental side agreement was so much further advanced, environment became the template for labor.

At the Department of Labor, the strategy created frustration. As Larry Katz recalled,

The USTR thought there was a political imperative for having identical side agreements. Given that the USTR knew environment, our position was more appropriate for environmental issues. There were provisions in there that didn't make sense for labor. Environmentalists cared about sunshine components, advisory groups, international organizations. Labor people don't care about international organizations. Their experience with the ILO [International Labor Organization] has left them skeptical about international institutions.

The USTR intended to lay out the basic U.S. position at talks scheduled for March 17 and 18. As the date approached, the Clinton Administration tried to decide what stance to take. Some pieces of the position were settled. The United States would not seek new North American standards, as advocated by the labor unions, but would instead encourage enforcement of national standards, which was the preference of many environmentalists who feared that North American standards might actually limit U.S. standards. The United States would also insist on single, permanent staffs for the commissions, not three national staffs, to give the commissions a measure of real independence. The remaining questions were what powers to grant the commissions and what sanctions to make available for ensuring enforcement should consultation fail.

In the early days of 1993, the dividing lines within the Administration were sharpest on the issue of sanctions, as they were on the Hill and in the communities of interest. The difference of position reflected differences in beliefs about NAFTA, judgments about what the Mexicans and Canadians could accept, and assessments of Congressional politics. One wing of the Administration, led by Treasury Secretary Lloyd Bentsen, the former Finance Committee chairman, viewed NAFTA as good on its own terms and the side agreements as bonuses. Bentsen worried that there were limits beyond which the Mexicans and Canadians would not go, and doubted the wisdom of a strategy aimed at winning Dick Gephardt's support. An insistence on trade sanctions in the side agreement, he felt, risked losing NAFTA.

The contending wing, led by Kantor, tended to think of the NAFTA as a flawed agreement and the side agreements as necessary fixes. Kantor was convinced that the Mexicans wanted NAFTA badly enough to accept whatever the United States demanded and that Congressional approval would require side agreements strong enough to sell to Democrats like Gephardt. Strong enough meant sanctions.

Bentsen won the first round. At an NEC meeting the first week of March, Bentsen spoke forcefully about the virtues of NAFTA and opposed the use of trade sanctions to enforce environment and labor laws. EPA Administrator Carol Browner, having been convinced in her conversations with the Mexicans that they would not accept sanctions, concurred with Bentsen. Despite his views, Kantor agreed to hold off on sanctions. Only Labor Secretary Reich openly questioned the approach. “He asked, ‘What happens if they still don't enforce their laws, and after everything it [the agreement] doesn't work?’” recalled one participant.

In Washington, word gets out quickly. Within days, rumors of the meeting passed among the trade insiders. The rumored decision not to insist on trade sanctions was greeted with relief by the business community, by NAFTA's core supporters on the Hill, and by the Mexicans and Canadians. Many of the mainstream environmental groups were also satisfied; for them sanctions had never been the key issue. But the game was far from over. A vocal part of the environmental community and the unions fought back, and Kantor remained unconvinced.

Appearing before the Senate Finance Committee on March 9, Kantor's testimony reflected the NEC decision. The labor and environment commissions would be forums for discussion and analysis; their authority would be to “review,” not to “investigate.” The commissions “will not have power to enforce laws in the United States or enforce laws in Mexico or Canada,” ₁₄ he said. Two days later, however, Dick Gephardt issued a public warning. “I can't bring myself to vote for a treaty or agreements that simply are setting up a commission to kind of review the bidding and to complain to somebody that's not going to be able to do anything if the problems aren't being resolved,” he said. “I will not support NAFTA on a leap of faith.” ₁₅ Behind the scenes, Max Baucus pushed Kantor to take a more aggressive posture. Baucus sent Kantor a letter stating that “Congress will not accept an agreement in which NACE is a toothless tiger relegated to environmental research and education.” ₁₆ Baucus insisted that the commissions have investigative powers and that trade sanctions be available to deal with persistent problems.

On March 16, the day before the opening of negotiations, Kantor was back on the Hill, this time testifying before Baucus's Environment and Public Works Committee. Kantor took pains to flatter the chairman, calling his proposal for a NACE “very impressive.” There was a sharper tone to his testimony. The commissions “would be able to request information from environmental enforcement agencies in the three countries and pursue effective follow-up actions to ensure compliance,” Kantor told the committee. “The process must result in decisions that have real teeth and meaningful results.” ₁₇ The meaning of “teeth” seemed pretty clear to some committee members. When questioned by Senator Barbara Boxer (Democrat, Calif.), a NAFTA critic, Kantor tried not to commit himself. Boxer replied, “To me that [teeth] equals trade sanctions. Anything less than that isn't going to work,” she said. “We need to be tough.” The staff at the USTR could see where this was heading. A call went out to the Mexicans and Canadians warning them not to lock themselves in on the sanctions question.

On March 17, the three delegations finally met. None of the parties tabled a position. The U.S. team described its conception of the commissions, that they be independent entities with permanent staffs capable of investigating complaints. It deferred the issue of sanctions but intimated that the issue would be raised in subsequent meetings. The Mexicans and Canadians presented no positions; they had primarily come to hear what the United States had in mind. The Mexicans, however, made clear that they would resist independent labor commissions with inspection power. Both the Mexicans and Canadians warned that they would oppose the use of trade sanctions. To underscore the point, chief Canadian negotiator John Weekes told reporters that Canada would view the use of trade sanctions to enforce such agreements as a “mistake.” ₁₈

 

Renegotiating the U.S. Position

The next international meeting was scheduled for April 15. By that time, the U.S. negotiating team intended to table a written position. Time was passing, and there was a new sense of urgency about the international negotiation. But the battle to decide on an opening position was not over.

With the issue of whether the United States should insist upon sanctions still unresolved, NAFTA's critics redoubled their efforts to pressure the Administration. The Citizen's Trade Campaign (CTC), by now a coalition of 70 consumer, environmental, agriculture, labor, and citizens' groups critical of NAFTA, rallied in the Capitol on March 25. Dick Gephardt addressed the rally: “There's got to be ultimate teeth—teeth, teeth [Laughter]—at the end of the day that cause the laws to be enforced.” He also clarified another demand—that there be a secure source of funding for enforcement, environmental cleanup, and worker retraining—saying there must be an

adequate, guaranteed, constant—these are all important words, you should pay particular attention to them—adequate, guaranteed, constant stream of revenues that will allow us to carry out these activities, that is, enforcement and remediation of environmental problems; that is, the building of infrastructure on both sides of the border; that is, training and job placement programs that are adequate to dealing with the structural adjustment problems in all three countries. ₁₉

By this time, the environmental community had split into two camps, with the Sierra Club, Greenpeace, and Friends of the Earth now participating actively with Public Citizen in the CTC. These groups issued a statement April 13 that said “NAFTA needs a dramatic recasting by the Clinton Administration if it is to promote and protect the environment, workers, consumer health and safety, agricultural and rural communities, as well as reflect democratic decision-making.” ₂₀ Friends of the Earth spokesman Brent Blackwelder gave a sense of the general CTC outlook at the press conference: “Any trade agreement which does not embody these principles paves the way for social disruption and environmental decline.” ₂₁

Meanwhile, the more moderate environmental groups began meeting separately to put together a coherent set of demands that would be the price for their support. In March, Kathryn Fuller, president of the World Wildlife Fund, hosted a meeting of the WWF, NWF, NRDC, Audubon Society, Nature Conservancy, and the EDF. As a strategist with this group recalled, the six groups “decided that what was needed was input into U.S. negotiating position. They decided it was imperative to play the game, put down what they wanted, and work to get it incorporated in the negotiating position.” The two wings of the environmental community were now playing very different games.

The USTR had hoped to be in a position to table a written position at the April 15 meetings in Mexico, but the internal debate over what position to take made it impossible to meet the deadline. The United States could do little more than elaborate on the proposals it had made verbally at the first meeting and continue to duck the sanctions question. The U.S. delay worried the Mexicans. “The Mexicans were very nervous,” recalled Chip Roh. “There were two dominant notes for the Mexicans: When are you going to move this thing? And how much do you really need? It was always very puzzling for them what we needed to get this through.”

A front-page Washington Post headline on April 27 heightened Mexican anxieties. It read “Panetta: President in Trouble on Hill; Agenda at Risk, Trade Pact Dead.” Leon Panetta, Clinton's head of the Office of Management and Budget, and a former House member, had spoken candidly with reporters the day before about the status of the president's budget and of NAFTA. He said what insiders already knew, that NAFTA would not win a vote in the House if it were held then.

Senator Bill Bradley was in Mexico City that morning, conferring with the Mexican Trade Minster, Jaime Serra, and his chief negotiator, Herminio Blanco, as part of his effort to prevent miscalculations from derailing NAFTA. Serra was very upset about Panetta's comments: Was NAFTA really dead? he asked. Bradley attempted to put the comments into context: Panetta was only saying that NAFTA would lose if the vote were held today, but the vote wouldn't come until the late summer, at the earliest. Bradley assured Serra that NAFTA could pass if the president put his full effort into lobbying for its passage. But first the side negotiations needed to be completed.

The Panetta comment caused a stir in Washington as well. To some it appeared to signal that the Administration was preparing to throw in the towel on NAFTA, confirming a persistent rumor that the White House was not really committed to the agreement. The rumor, spread in part as a matter of strategy by NAFTA's opponents, frustrated Kantor. “There was never, never a serious discussion in this Administration where the question was whether or not to do NAFTA,” he said later. “The only question was how to do NAFTA. The president was committed to it. The president was emotionally and politically committed to it. And intellectually committed to it.” The White House mobilized to put out the Panetta fire. The president suggested at a press conference that Panetta had just had a bad day. He remained committed to NAFTA and expected to win. Labor Secretary Bob Reich wrote a ringing endorsement of NAFTA for the Wall Street Journal.

The Panetta flap shifted the balance of power in the supplemental negotiations, giving the upper hand to those who favored a stronger negotiating position in the talks with Mexico, particularly the use of trade sanctions. Congressional Republicans began to get nervous. The day after the Panetta article, Senator Danforth garnered 27 Republican signatures on a letter to the president warning the Administration not to go too far with the side agreements. The letter stated, “We are concerned that the supplemental agreements may undermine the benefits of the NAFTA if they place significant new regulatory burdens on the U.S. economy. NAFTA is first and foremost a trade agreement. It cannot and should not be viewed as a means of solving all environmental and labor problems in North America.” ₂₂ The same day, the two most powerful Republicans on the Ways and Means Committee, Bill Archer and Bob Crane, sent the president an even more pointed letter, which said, “Unfortunately, the debate surrounding the side deals and the options now being discussed [have] raised our concern that there are possible outcomes in the side-deal negotiations that will render the main text unsupportable.” ₂₃ In particular, Archer and Crane warned, the commissions should not be empowered to impose sanctions or conduct independent investigations. Minority leader Bob Michel, his chief whip Newt Gingrich, and sixteen other Republicans echoed the Archer-Crane letter with a letter of their own: “We believe the side agreements should neither infringe on U.S. sovereignty nor create trade sanctions for supposed environmental or labor non-compliance.” ₂₄

But the winds were blowing against the Republicans. On May 4, Mickey Kantor received another letter, this one from the moderate environmental organizations—WWF, EDF, NWF, Nature Conservancy, Audubon Society, NRDC, and Defenders of Wildlife—who had taken to calling themselves the “Group of Seven.” These groups' support was critical for NAFTA's prospects, and both they and Kantor knew it. The letter established what it would take for them to support NAFTA. It called for an independent environmental commission with the power to self-initiate investigations and make recommendations regarding enforcement. The commission would not itself have the power to impose sanctions, but should it find a “pattern of a signatory failing to comply with NACE recommendations,” governments could initiate dispute settlement proceedings, with the possibility of imposing trade sanctions. The interposition of national governments in the dispute settlement process represented a softer position than the environmentalists had previously demanded, but the Group of Seven was now committed to trade sanctions.

The environmentalists' letter represented the culmination of a negotiation among themselves: a collective judgment both about what was desirable and what was feasible. For nearly two months, these organizations had worked to establish a common position to present to the Administration as the price for their support. Their position was a compromise between those groups such as the WWF, for whom sanctions were not necessary, and others, such as the NRDC, who needed sanctions to support the agreement. For the NRDC, in particular, the decision to sign had not been easy. Its leadership prided itself on being an aggressive player in the environmental community, often working closely with the Sierra Club and Friends of the Earth. Moreover, its membership was strongly anti-NAFTA. To support NAFTA, therefore, NRDC's leadership needed to be able to point to teeth in the side agreement. However, NRDC's leadership recognized that there were limits to how much they could get. In the end, recalled the NRDC's Justin Ward, “We signed because it was consistent with our basic recommendation and because we agreed with the perceived need to make a clear statement and remove doubt that we might just be along for the ride.” As an indication of how close the NRDC came to not signing, after the letter was printed a line had to be added at the bottom for NRDC president John Adams's signature.

The environmentalists' letter publicly committed them. Their cards were on the table: If we get this, we will support NAFTA. Max Baucus immediately endorsed their position: “The proposal is substantive but reasonable—it offers a good road map for American negotiators. [If the position is adopted], I, and many environmental groups, will strongly support NAFTA.” ₂₅ Baucus's endorsement both gave more weight to the environmentalists' position and more firmly committed them.

The moderates' tactic infuriated the more critical groups in the environmental community, who felt that it was too soft a position. “The letter caused all hell to break loose,” recalled one staffer involved with drafting of the letter. Greenpeace, Friends of the Earth, the Sierra Club, and Public Citizen questioned the legitimacy of environmentalists they derided as “Bush advisors.” Privately, they felt betrayed. For public consumption, the Sierra Club would say only that it had declined to sign the letter because it “fell short” of what was needed.

The May 4 letter and the Baucus endorsement did not come as any surprise to Mickey Kantor. He and his staff had been in close consultation with the moderate environmental organizations and with Max Baucus for most of April. Not surprisingly, then, the position was very close to where Kantor wanted to be. Now Kantor had more ammunition in his dealings with the Bentsen wing. In early May the NEC met again to consider the U.S. negotiating position. Kantor described how his consultations on the Hill had led him to conclude that there had to be teeth in the agreement, and that teeth meant sanctions. As Kantor later recalled,

it was clear what we had to do. We couldn't have credible labor and environmental side agreements without sanctions. It just wouldn't work. How far we could go, how far the Mexican government would allow us to go, we didn't know, but that was a part of the negotiation. We had to have something at the end of the day that both Congress and the American people and the press would see had some teeth in it.

This time, Kantor carried the day. Lloyd Bentsen could see that the Administration was now boxed in and reluctantly conceded the issue. Bentsen had the last word, though. At the end of the meeting, recalled one participant, Bentsen said to Kantor, “Just don't lose NAFTA, Mickey.”

The U.S. positions for the labor and environment side negotiations, virtually identical, came very close to the stance advocated by the moderate environmentalists. The commissions were to be reasonably independent and powerful, capable of investigating allegations of nonenforcement made by governments, by individuals, or by the secretariat of the commission. The commissions would not have subpoena power (as the environmentalists had requested) but could request information from governments. Most important politically, if the commission found a “persistent and unjustifiable pattern” of nonenforcement, a national government could request an international dispute panel to adjudicate the matter, and should a majority of the panel concur with the commission finding, it could authorize the complaining country to impose trade sanctions.

The labor unions and their allies on the Hill were somewhat pleased with the tougher U.S. bargaining position. “[The position] tabled in May was not that terrible,” conceded Steve Beckman later. The Executive Council of the AFL-CIO decided once again to hold off on its campaign against NAFTA, once again over the strong objections of some of its members. On the Hill, Sander Levin (Democrat, Mich.) one of the leading Democrats critical of NAFTA, sent a letter to his colleagues urging them to delay taking a position in opposition. Dick Gephardt said he was asking members to avoid taking sides.

Republicans on the Hill were a good deal less happy. In an executive session of the Finance Committee on May 11, Republican Senators Bob Packwood, Jack Danforth, and John Chafee—the core of the Senate Republican support for NAFTA—expressed grave concerns to Mickey Kantor. All left the strong impression that their support for NAFTA was imperiled by what they saw. House Republicans reacted the same way. A staffer to Jim Kolbe, NAFTA's most vocal supporter in the House, recalled being “amazed” and “dumbfounded” by the text of the U.S. position. This was “social charter stuff,” he said. Kolbe went to the floor of the House to deliver a public warning:

I fear the new administration is about to make a major mistake on this vital trade agreement. The administration is pursuing a side agreement strategy based on appeasing interest groups while sacrificing broad support of the agreement. If adopted, the President's side agreement position would infringe on U.S. sovereignty and create a large supranational bureaucracy with broad investigatory powers. ₂₆

On May 14, the day before the international meeting, the USTR faxed copies of the U.S. negotiating position to the Mexicans and Canadians. Now the question was whether the negotiating partners could accept what the U.S. demanded, and if not, whether the USTR had much room to compromise. NAFTA's supporters were worried. The internal negotiations to establish the U.S. negotiating position had been so intense that there was now little flexibility. As Chip Roh later said, the concern was whether in the “interagency process we had gotten ourselves in a position that left us insufficient room to maneuver on either side.”

 

Gridlock

The chief negotiators—Yerxa, Blanco, and Weekes—met May 17 in Hull, Canada, just outside of Ottawa. All three tabled a written position. It was quickly evident that although there was some overlap—all three agreed there should be international commissions of some sort—there was sharp disagreement about how independent and how powerful they should be, and, of course, about the question of enforcement.

The Mexican negotiators most strongly opposed the U.S. labor position. “The Mexicans opposed trade sanctions and opposed independent secretariats on both labor and environment,” recalled Chip Roh. “‘All of this is impossible,’ they said. But it was obvious to us that the Mexicans had a much more serious problem on labor than on the environment.” The issues at stake in the labor side agreement cut to the heart of the Mexican political system—the dominance of business interests in the ruling coalition and the cozy relationship between the national unions and the ruling Partido Revolucionario Institucional (PRI). The U.S. proposal would make such sensitive matters as the minimum wage, child labor regulations, and especially, the right to organize subject to international scrutiny and possibly even sanctions. The Mexican opening position on labor, therefore, was that they would only agree to consultation and only on issues involving health and safety standards.

The Canadian delegation was less strongly opposed to international institutions, but they wanted to make sure that those institutions were firmly under national government control. As chief negotiator John Weekes later described it, the principle was that “the secretariat of an international organization should be accountable to national governments. The political ministerial should manage the secretariat.” Weekes also made clear Canada's strong opposition to trade sanctions. “By the time we got to this point in NAFTA, we had a constituency in Canada who strongly opposed giving another trade remedy to the Americans,” he recalled. He was not moved by arguments that the standard the U.S. proposed of a “persistent and unjustifiable pattern” made it unlikely that trade sanctions would ever be used. “The feeling was that if something was there that could be tested and tried, people will try to use it.”

At a press conference after the meeting, Weekes went public with his opposition. “We have encountered some serious difficulties, particularly regarding the manner in which the secretariat might operate,” Weekes said. “We have difficulties as well in the area of dispute settlement, including the use of trade sanctions.” ₂₇ Privately, Blanco shared Weekes's views and threatened to go public too, but U.S. chief negotiator Rufus Yerxa persuaded him not to voice his opposition. As one participant in the talks recalled, Yerxa said, “If you want to blow up the negotiations, go ahead.” At the press conference Blanco merely observed that “differences are only natural” at this stage of negotiations. For his part, Yerxa defended the American approach as “practical, reasonable and prudent.” ₂₈

Yerxa's assessment of the U.S. negotiating position was not shared by the U.S. business community. The proposal was “outrageous” said one advisor close to the business effort. “The business community decided that the Administration had been very disingenuous in terms of cooperation. We decided it was all out war.” Up to that point, the business community had not put its position in writing. Now the strategy changed. On June 4, a coalition of every major business organization in the United States sent Mickey Kantor a letter. The letter was an unmistakable warning:

We are concerned that the U.S. draft negotiating texts for the supplemental agreements have flaws that could undermine the agreements' potential to improve environmental and labor conditions.The Secretariat is too independent of the Council and enjoys overly broad powers. [The proposal] threatens to create a new, politically unaccountable bureaucracy. [Trade sanctions are] unnecessary [and] counterproductive [and would] set a perilous precedent for imposition of trade sanctions by or against the United States to address such issues as human rights, civil rights, and any other type of disfavored noncommercial behavior. ₂₉

At the USTR, Mickey Kantor was livid. To him the debate over the U.S. negotiating position was over. The U.S. had a position. American business should get in line and support it. “[The letter] slapped us right in the face,” he later recalled. “It undercut what we were trying to achieve. It gave aid and comfort to those who say you shouldn't have teeth in the side agreements, and it threatened the coalition we were building.”

On the Hill, Max Baucus was equally furious. He had firmly staked himself to the USTR position on trade sanctions with a floor speech in late May. “Without trade sanctions as a last resort,” he said, “NAFTA is not in this country's best interest. Simply put: No teeth, no NAFTA. The threat of sanctions is a necessary deterrent.” Baucus seemed to take the business letter personally. He issued an extraordinarily sharp press release charging that business “is more interested in its profits—and in embarrassing Clinton in the international sphere—than about the basic enforcement of laws that stand to better the lives of every person in the North America.” ₃₀ The pattern of increasingly definitive and public commitments on the sanctions issue—by Kantor, Baucus, and Gephardt on one side and by Danforth and Kolbe on the other; by the U.S. environmental and business communities; and by the Canadians and the Mexicans—left very little space for agreement. Less public, but equally difficult, was the fundamental incompatibility between the U.S. commitment to a labor agreement equivalent to the environmental accord and the Mexican refusal to consider anything of the kind. The negotiations were gridlocked. As Rufus Yerxa put it at the time, “We are between a rock and a hard place.”

 

Breaking the Impasse

NAFTA's supporters were now in a state of high anxiety. With the talks stalled, NAFTA's political opponents in the United States had seized the upper hand. Ross Perot had now launched an all out assault on the agreement, beginning with a half-hour “infomercial” he paid CNN to broadcast on May 30. In response to Perot's appeal to stop NAFTA, opponents flooded Capitol Hill offices with thousands of “NAFTA NO!” postcards. It began to appear that NAFTA might be swept away by the rush of events. The negotiations are “not going well,” conceded Kantor's chief of staff. Behind the scenes, in the Administration, on Capitol Hill, in the business and environment communities, in Mexico City and Ottawa, NAFTA supporters scrambled to find a way to unlock the negotiations. The goal was to calm things down and search for creative ways to break the impasse.

The United States took a new approach to the labor negotiations, which clearly were not going anywhere. The position tabled in May had mirrored the environmental position, much to the frustration of the U.S. Department of Labor. Now, the ball was handed back to that agency. Larry Katz, chief economist at the Labor Department, believed a different approach was necessary. “[The Mexicans] wouldn't play ball until we came up with a different structure,” he recalled later. Katz took another approach. “We believed that the U.S. government should have more control over it,” he recalled.

In the new U.S. proposal complaints by private citizens would go to “national administrative offices” instead of to the international institutions themselves. National governments could then decide whether the claims had sufficient merit to begin international consultation. Should consultation break down, a vote of two out of three countries could convene an “evaluation committee of experts” to look into the matter and report to the ministers. Should that leave the issue unsettled, a government could initiate dispute settlement procedures as in the environmental accord. Although the approach sacrificed independence, in Katz's view it “would be more effective and less likely to go off half-baked.” U.S. labor unions, while still far from supporting NAFTA, were also more comfortable with an approach that gave political control to national political institutions rather than international entities.

On the issue of whether trade sanctions might serve as the ultimate tool for enforcement of labor and environmental laws, Kantor urged the business community to relent. He argued that the standard of “persistent and unjustifiable pattern” and the involved process leading up to trade sanctions made it highly unlikely that they would ever be used. Quietly, other officials at the USTR pointed out to business leaders that the powers and degree of independence of the commissions should be more important issues to the business community. The USTR also had similar conversations with business's Republican allies on the Hill, urging them not to stake out a position in absolute opposition to sanctions.

Several players began looking for a middle ground. Lobbyists for the business community quietly floated the idea of fines as an alternative to sanctions, sending this suggestion to officials at the USTR and friendly staffers on the Hill. On the other side of the conflict, Bill Bradley met with officials from the seven moderate environmental organizations that had signed the May 4 letter to Kantor to get a clearer idea of their priorities and to urge them not to lock themselves into a fixed position. The environmentalists were more interested in a strong and independent commission than trade sanctions, and they also wanted more progress on the parallel matter of funding for border cleanup. Bradley conveyed the groups' concerns to Kantor, along with his sense of what it would take to win their support. At the USTR, the idea of fines found some sympathy.

Despite the flexibility in both the environment and business communities that might have allowed some softening of the U.S. position, Kantor remained committed to trade sanctions. The hint of compromise in the air triggered an effort by Baucus and Gephardt to shore up the Administration's position on the issue. Both let it be known that they believed only trade sanctions were sufficiently strong to win their support.

The chief negotiators met July 8 in Cocoyoc, Mexico, to try to restart negotiations. The negotiators presented no new papers, but they each floated some new ideas. The United States described its new thinking for the labor negotiation. The Mexicans were considerably more receptive to the idea of administrative offices under firm national control. For environment, the Mexicans and Canadians both indicated that they could accept more autonomy for the international commissions than they had before. On the question of sanctions there was little progress, although Weekes indicated that Canada would soon propose an option involving fines instead of trade sanctions, a prospect that the United States did not reject outright.

The talks renewed optimism. “I think this has been a very good two days of meetings,” said Rufus Yerxa. “I believe we are on a very clear path toward success.” ₃₁ Nevertheless, tough issues remained. On the enforcement question, although new ideas were in the air, the U.S. remained committed to trade sanctions, and the Mexicans and Canadians remained opposed. Rumors that the United States had backed away from the insistence on sanctions forced Kantor to reiterate his stance publicly, further cementing the U.S. position. “We have not changed our position at all. We want real teeth, real enforcement,” he told a press conference. ₃₂ And on the labor negotiations, although agreement on structure constituted a breakthrough, the Mexicans were insisting on covering only worker health and safety—not minimum wage, child labor, or industrial relations—the other issues the United States and Canada wanted to include.

The chief negotiators met again two weeks later in Ottawa, this time with written positions spelling out the understandings of the previous meeting. The idea was to put together a bracketed single text for the first time. The parties were largely in agreement on the basic administrative structure and on several other points. But the exercise of combining texts also made clear that significant differences remained. The information gathering powers of the commissions remained in contention. The Mexican position on labor seemed to have hardened, with the positions still very far apart. And, of course, there remained the vexing enforcement issue.

The three negotiators decided they needed to draw attention to the difficulties they were encountering. Normally, they hid whatever differences they had when talking with the press. This time they decided to make public their differences. Said John Weekes later, “The three of us agreed we were at a serious impasse. We thought it was important for people in all three countries who had a stake in managing it to understand what was going on at the negotiating table.” At the press conference, Yerxa acknowledged that “there are a number of areas in the agreement that seem to be close to finalizing. But there are some other areas that, quite frankly, we're still at some odds [about].” Said Weekes, “Sometimes the nuts that are the hardest to crack are the ones that are left to the end.” ₃₃

Canada's situation was now complicated by changes on the home front. Prime Minister Brian Mulroney, deeply unpopular largely because of his handling of Canada's ongoing Constitutional crisis related to the status of Quebec, stepped down and handed over his office to Kim Campbell, a young and politically untried Conservative member of Parliament. Campbell faced a daunting political challenge of reviving her party in time for the general election, now scheduled for October 25. Campbell's political situation made compromise difficult. In an interview published shortly after taking office, Campbell let it be known that she was determined not to let the United States dominate Canada. She drew an analogy to the battle of the sexes. “I think the same thing holds between women and men because males' life experience, reality, tends to dominate society,” she told the interviewer; this was hardly the language of someone laying the groundwork for compromise. ₃₄

When Mickey Kantor, Herminio Blanco, and Tom Hockin, Kim Campbell's new trade minister, met the last week of July in Washington, they hoped they might be able to wrap up the talks. But the two days of meetings were largely a chance to gauge how much progress had been made by their negotiators in Cocoyoc and Ottawa. The list of issues still to be decided was now considerably shorter, but they were tough issues. Time, too, was running short. If the talks did not conclude in the next two weeks, they would almost certainly spill over to the fall, making it all but impossible for the U.S. Congress to act in 1993. They agreed to meet again the next week, at the Madison Hotel in Washington, and continue meeting until they finished.

 

Endgame at the Madison

Now the pressure to reach agreement grew even greater. The Clinton Administration had intended that the side agreements be completed after the president's budget passed Congress but before the members left Washington for the traditional August recess. As the budget vote was pushed later and later in the summer, the window for completing the agreements got smaller and smaller. Congress was now scheduled to go into recess on Friday, August 6. That left one week to bridge the still considerable gaps between positions. By now the Mexicans were extremely nervous about NAFTA's prospects. Support for NAFTA was beginning to erode in Mexico. If the side agreements were not completed very soon, NAFTA would not pass Congress in the fall, with the likely consequence that it would begin to complicate the Mexican presidential election of 1994.

The negotiating teams met through the weekend and into the beginning of the week. Their charge was to clear away the lesser issues so that the trade ministers could resolve the final issues on Wednesday and Thursday. Canadian trade minister Tom Hockin, however, served notice that resolving the enforcement issues would not be easy. Before leaving Ottawa for Washington, he told reporters, “I am against trade sanctions and I will continue to carry that message to Washington. I am not changing my position. We do not want the side agreements to be a back-door which allows protectionists to have a new game they can play to be protectionist,” he added. ₃₅ Lest this be misunderstood, at a formal dinner at Blair House on Wednesday, hosted by Mickey Kantor, he said Canada would “never, never agree to sanctions,” a phrase he subsequently repeated for the press.

Meanwhile, on the U.S. side, Baucus and Gephardt moved to shore up what they perceived to be a faltering U.S. position. The week before, Baucus had sent Kantor a letter warning that fines alone would not be enough: “You have said many times that the administration will not send NAFTA to Congress for a vote unless these side agreements have teeth. Even dentures will not do. I urge you to remind Canada and Mexico this week of the importance of these side agreements to NAFTA's passage in the Congress.” ₃₆ On Tuesday, Gephardt joined Baucus in writing a letter urging Kantor not to bow to pressure from business and “our trading partners” on sanctions. ₃₇

On Wednesday, the ministerial talks appeared to be going well. Jaime Serra told the press that “we are working and we are making progress.” The ministers settled the remaining issues concerning the structure and functions of the commissions. Most importantly, the Mexicans finally agreed to accept the U.S. proposal on enforcement, a scheme in which fines of up to $20 million could be assessed for failures to enforce national laws and in which trade sanctions would be used only if a country failed to pay the fines. This solution allowed the Mexicans to assert that sanctions would never be used, because each country could be counted on to pay any fines, and the Americans to say that the agreement allowed the use of trade sanctions. The word in Washington was that the talks would end Friday, Saturday at the latest. But the talks bogged down after all, dragging through Friday and into the weekend.

Mexico simply refused to accept the fines-sanctions enforcement scheme for anything other than environment and worker health and safety issues. On enforcement of minimum wage and child labor laws, they would accept only that disputes could be referred to a committee of experts for a recommendation. And for industrial relations laws—the right to organize and to strike—they refused anything other than consultations. U.S. labor leaders blamed the Mexican unions for Mexico's intransigence. Recalled the AFL-CIO's Mark Anderson, “Mexico tentatively agreed to keep industrial relations in, but our CTM [Confederacion de Trabajadores de Mexico, the Confederation of Mexican Workers] brothers didn't want competition in Mexico.” Even more problematic, the Canadians balked at even the remote possibility of trade sanctions for any disputes.

On Monday, August 9, Kantor decided he simply had to finish, and he agreed to the Mexican limitations on the labor agreement. Now the only remaining issue was Canadian acceptance of trade sanctions. If Canada agreed, they were done. If not, things might completely fall apart. Minister Hockin left for Canada to discuss the issue with Prime Minister Campbell and the cabinet. Although they had been warned otherwise, U.S. and Mexican officials believed that in the end Canada would swallow hard and agree. “We thought we had given enough,” recalled USTR General Counsel Ira Shapiro. Kantor scheduled a press conference Tuesday morning to announce the agreement. Chief Negotiator Rufus Yerxa left with his family for a well-deserved vacation.

But on Tuesday morning, instead of announcing a deal, Kantor read a short written statement from Hockin, Serra, and himself that said that they had not reached agreement. To the consternation of the United States and Mexico, Kim Campbell and her cabinet had decided to say “no.” Campbell issued a statement saying that she was “not satisfied that Canada would not ultimately be exposed to trade sanctions.”

Canadian chief negotiation John Weekes later expressed puzzlement that the decision came as a surprise: “We said we weren't prepared to accept it. I don't know how our position could be misinterpreted. It was clear from the position that [Hockin] was taking at the bargaining table that he wasn't going to recommend sanctions.” Moreover, Campbell was down in the polls, facing an election in the fall and had made a public commitment on the issue. Standing up to the Americans was good politics. Caving in would not play well.

In Washington, the Canadian decision touched off a mad scramble. Kantor's first reaction to the news was that the USTR had lost the most important piece in terms of symbolism. As Kantor recalled later, “There was some disappointment in the Canadians' position because we all had agreed and they had backtracked. On the other hand, they had their own problems; they were going through an election, and you know, in Canada, trade is a major issue.” (In fact, Canadian negotiators never actually agreed, although the U.S. and Mexican negotiators expected them to.) Kantor worried about the reaction on the Hill if he let Canada off the sanctions hook. In Mexico, officials did considerable soul searching. “The process came close to becoming unmanageable,” recalled Weekes. The negotiators fell out of touch for a couple days.

The Clinton Administration now faced a choice. Having failed to complete the supplemental negotiations before Congress left town for the August recess, should they reach agreement as quickly as possible or should the negotiators take a break and aim to finish late in the month or early in September, when the White House would be better able to mount a campaign for it? A group at the NEC favored waiting, as did many of NAFTA's supporters on the Hill. But at the USTR, Ira Shapiro disagreed. “I was of the view that we had to finish,” he recalled. “The Mexicans were saying that if we didn't finish, support would erode in Mexico. I knew the opposition was out there [in the United States] and that we would get beaten up in August, but when Jaime was saying that support was eroding in Mexico I believed him. There was a limit beyond which the Mexicans could not be pushed.” And they were running out of time. “There was no way for us to come back, finish the supplementals in September, and get legislation through in the fall,” recalled Shapiro. Kantor agreed with Shapiro and decided to try to find a way to finish. Kantor had a long talk with the president. Kantor argued against delay. We should finish now while we have the momentum, he asserted. The president agreed. Now Kantor just had to find a way to do it.

Lurking behind the dispute over strategy was a question of Clinton Administration priorities. The budget battle had not only pushed NAFTA back, it had also delayed the centerpiece of the Clinton presidency, the health care reform effort run by First Lady Hillary Clinton. At a meeting in the White House solarium on Wednesday night, the president's cabinet and staff debated which issue should now come first, health care or NAFTA. The health care team argued that they had waited long enough. They should concentrate on pushing health care now. If NAFTA needed to wait until spring, so be it, they argued. The meeting resolved nothing. ₃₈

Kantor's problem was compounded by the fact that the Canadians were not the only ones unhappy with the terms of the proposal that had been nearly accepted on Monday. Officials at the Department of Labor were outraged that he had accepted the limitations demanded by the Mexicans. “We went berserk,” recalled Larry Katz. The feeling at the Department of Labor was that Kantor had not pushed hard enough on the labor front and that he had stopped much too soon. Moreover, a labor agreement perceived as weaker than the environmental accord would create problems on the Hill. Dick Gephardt stepped in to reinforce the point, asserting that this agreement was not acceptable to him and the Administration would need to get more concessions to gain his support.

The USTR tried to pin Gephardt down. What did he need? Gephardt's trade assistant, Mike Wessell, represented his boss. Wessell gave a list of demands: Trade sanctions needed to apply to the full range of environment and labor issues. There needed to be a secure source of funding for border cleanup. And there needed to be a guarantee that Mexican wages would rise with productivity. None of these were altogether new demands, but it wasn't clear how much was enough. Recalled Larry Katz later, “Mike Wessell and Gephardt set out so many conditions.It was never clear which one mattered most. They never said, if you do these three things then we will support [NAFTA].”

Some at the USTR also felt that Gephardt was raising the bar. “For example, Gephardt and Wessell always said there had to be dedicated funding,” recalled a senior official at the USTR. “At first, this meant we had to find ways to pay for it. Then it meant that it couldn't be paid for out of existing revenues. Then it meant not out of appropriated revenues. By the end it had to be a cross-border fee.” On the issue of linking wages with productivity, the Mexicans were prepared to promise a link to minimum wage, but Gephardt insisted that average wage be linked to productivity gains, an idea being pushed by political economist Harley Shaiken, but a kind of government intervention in the market that few economists endorse. Recalled Katz, “There was no way we could do what Harley Shaiken wanted, but there was no way we could pull Gephardt away from this.”

Whatever the suspicions at the USTR, Kantor decided that he needed to make one more effort to get Gephardt's support. “We were counting Democratic votes, potential votes, and kept going back to those who were critical, including the majority leader,” he recalled. “[We were] trying to satisfy them that there was enough there.” On Wednesday, he reopened the talks with the Mexicans on the labor issues. No one at the USTR was too pleased with this development. “It is a miserable experience when you have to go back to the well,” recalled Chip Roh.

The Mexicans were furious. They thought they had an agreement. Now the Americans were back for more. The sense was, if we agree to this now, what will the United States want next? On Thursday morning, Jaime Serra called Bill Bradley at home in New Jersey. Serra explained the situation. The United States now was insisting that enforcement of minimum wage, child labor, and industrial relations laws be subject to the same dispute settlement procedures as worker health and safety. The United States also wanted some promise that wages would be linked to productivity. Serra was very reluctant to reopen negotiations, but he wanted to know what the United States really needed and wanted some assurance that if Mexico made additional concessions, the United States would not come back for more. Could Bradley find out for him? Bradley agreed to talk to Kantor.

Kantor confirmed Serra's story and explained to Bradley that it was political necessity. Unless he could get more from the Mexicans, Gephardt and other Democrats would not support the agreement. Bradley called Serra back. Kantor really did have to get more, he explained. Where can you give? he asked. Serra intimated that he might be able to broaden the scope of the dispute settlement procedures to cover minimum wage and child labor laws, but that industrial relations was politically impossible for him. Mexico could also promise a link between minimum wage and productivity, but not between average wage and productivity, as Gephardt demanded. Bradley conveyed the information back to Kantor. Over the course of the day, Bradley played the role of mediator, carrying information back and forth between Kantor and Serra, and eventually between the two chiefs of staff, Mack McLarty and Pepe Cordoba.

Kantor and Gephardt spoke during the morning. Kantor sketched out where things were heading and what he thought he could get from the Mexicans. Gephardt was noncommittal. At that point Kantor recognized that Gephardt would probably never accede. Now he had to decide whether to conclude the agreements without Gephardt's support. Kantor called President Clinton, who was aboard Air Force One en route to Denver, and explained the situation. They agreed that they had to finish the talks, even without Gephardt's support. There was no more time to negotiate. Clinton tried to reach Gephardt by phone in the St. Louis airport, but they missed each other.

At days end, a conversation between Clinton and Salinas sealed the deal. Mexico would accept the full dispute resolution process on enforcement of child labor and minimum wage laws. Salinas promised a letter guaranteeing that the minimum wage would be pegged to manufacturing productivity. Clinton agreed to exempt industrial relations from dispute settlement and promised Salinas that there would be no further demands.

Kantor recognized later the importance of Bradley's role in brokering the endgame with Mexico. “He really understood that we had to get this done, and even though he didn't like some of what we were trying to do because he thought it was going too far, he understood the political necessity. Senator Bradley was an incredible help.”

The Mexican problem, however, was not the only holdup; there was still the matter of how to handle Canada's refusal to accept trade sanctions. Canada was proposing to allow dispute settlement discussions to be enforced in Canadian courts, a concession the trade negotiators understood to be more effective than trade sanctions. For the United States, the issue was whether lack of sanctions for Canada affected how the agreements would be perceived on the Hill. After the initial moment of near panic, consultations with Congress members revealed that handling Canada differently did very little political damage. NAFTA's critics weren't worried about Canada. For the Mexicans, the issue was whether by accepting something that the Canadians had refused they would be vulnerable to charges that Mexico had sold out. Late Thursday the Mexicans decided it was a risk they would have to take. Recalled Canadian negotiator Weekes, “the Mexicans were the most eager to have the impasse unblocked.”

Mexican negotiator Herminio Blanco called John Weekes around 6 o'clock Thursday evening and told him he was faxing a Mexican proposal, already cleared with the United States. Mexico could accept a different process for Canada. Weekes called his staff back into the office. Over the next few hours, the details were worked out in conference calls and faxes. Canada would not be subject to any trade sanctions. At around 3:00 a.m. Friday, August 13, 1993, the supplemental negotiations were over.

 

Reactions

On the morning of Friday, August 13, an exhausted Mickey Kantor announced the completion of the supplemental negotiations. He depicted the agreement as a promise fulfilled. “[President Clinton] made a promise to the American people which he has now kept, that he would make sure economic growth of Mexico and Canada does not come at the expense of the environment, and that the trade agreement addresses issues of basic worker rights, protection against child labor, health and safety, minimum wage, and industrial relation concerns.” ₃₉ The agreements, said Kantor, fixed the “major flaws” in the NAFTA that Clinton had inherited from Bush.

Not everyone in the United States agreed. Dick Gephardt issued a statement. “The agreements fall short in important aspects,” he said. “I cannot support the agreement as it stands.” ₄₀ Kantor was later philosophical about Gephardt's decision to oppose. “He was serious, and studied, and he understood every detail of this, and he worked with it, and finally just couldn't bring himself to do it,” Kantor said. The Mexicans were less philosophical. “We got the additional concessions because Serra was led to believe we would get Gephardt,” recalled Ira Shapiro. “The Mexicans were frustrated and bitter.”

At the National Press Club, the Citizen's Trade Campaign put its own spin on the agreements. Flanking CTC chair Jim Jontz at the conference were officials Willie Baker of the United Food and Commercial Workers Union, Bill Bywater of the International Union of Electronic, Electrical Salaried Machine and Furniture Workers (IUE), Ron Carey of the Teamsters Union, Evie Dubros of the International Ladies Garment Workers Union, and Bill Lucy of the American Federation of State, County, and Municipal Employees (AFSCME), along with Lori Wallach of Public Citizen, Jane Perkins of Friends of the Earth, and Mike Dunn of the National Farmers Union. Jontz summarized the coalition's views on the supplemental accords:

These side deals aren't half a loaf. In fact, they aren't even half a slice. NAFTA is fundamentally an agreement to protect investors, to encourage them to go to Mexico to take advantage of low wages and lax environmental standards and enforcement. And nothing in the side agreements announced this morning will fundamentally change that. NAFTA is still a bad agreement for workers. It's still a bad agreement for the environment, it's still a bad agreement for family farmers, it's still a bad agreement for consumers. ₄₁

Bywater was even more blunt. “It's a sellout, and we're not going to stand for it,” he said. ₄₂ Lest there be any mistaking his meaning, Bywater made it even clearer later, when he spoke on CNN, “Anybody who votes for this agreement, we're going to defeat.” ₄₃

Mickey Kantor left for a vacation in Europe. The next evening, while watching a fireworks display from the roof of a building in Geneva, Kantor stepped into an open airshaft, fell 12 feet and broke several vertebrae in his back. The accident seemed an omen of what was in store for NAFTA during August. Around Washington, there was talk of the curse of NAFTA.

 

Interpreting the Side Negotiations: Issue Linkage, Deep Nesting, and the Political Context

This chapter began with two basic questions. First, why side negotiations? Why did the United States, having agreed to terms in August 1992, change its mind and insist on reopening negotiations in January 1993? Second, why these side agreements? Why did the United States demand, Mexico accept, and Canada reject the use of international trade sanctions to ensure enforcement of domestic environmental and labor laws? Why did these countries create different institutions for labor and environment?

Through what analytic lens should we view these questions? For the question of why side negotiations, international-level theory is unlikely to be satisfactory. Nothing much changed in the international arena between August 1992 and January 1993. Rather, the demand for side negotiations arose out of the need to solve a domestic political problem in the heat of a U.S. presidential campaign. For the question of why these particular agreements, the stances taken in the negotiations and the pattern of international bargaining are difficult to explain as manifestations of national interests interacting in the international arena. The bargaining positions of the United States in these talks was quite obviously established only through an intense internal negotiation. Thus, these questions can be more usefully interpreted in terms of a two-level bargain in which contending interests at the domestic level determine the behavior of national negotiators at the international level, as was the case in interpreting the NAFTA negotiations themselves.

The two-level approach, however, has its limitations. First, by treating interest groups (or other aggregates) as the basic units in the model, two-level theory ignores any intragroup dynamics, much as international-level theories ignore domestic politics. This flattening may cost little in analytic precision when the groups in question have relatively homogeneous members and few internal collective-action problems, as is likely to be the case with a large business, such as GM. For other groups, however, particularly voluntary membership associations, trade unions, and political parties, intragroup dynamics may play important roles in determining the behavior of the group.

Second, by abstracting away the broader political context in which domestic-level bargains take place, two-level bargaining theory cannot explain who gets to play and who doesn't and why the rules of the game are as they are. As with any bargaining model, these characteristics are exogenously determined. In some cases this information may not be a significant problem, when, for instance, the puzzle is why a certain configuration of players and rules led to a particular outcome. But in other circumstances, it may be important to understand the focus that determines these parameters.

In the case of the NAFTA negotiations, a two-level bargaining approach can help explain why the side negotiations became necessary and much about the conduct and conclusion of those negotiations. However, it fails to explain adequately the bargaining behavior of key groups in the U.S. domestic negotiation, in particular why and how the mainstream environmental groups committed to trade sanctions and why the more politically powerful labor unions committed to positions that weakened their ability to influence the course of the international negotiations.

To explain these stances, we must extend negotiation theory in two ways. First, the two-level approach must be deepened to a third level, that of intragroup bargaining among individuals. In the side negotiations, bargaining processes were deeply nested, that is, bargaining among individuals within groups affected the bargaining behavior of groups at the domestic level and, therefore, ultimately of the nation at the international level. Second, we must widen the approach to consider the broader political landscape in which the domestic-level bargaining was embedded, which in the United States was determined largely by anticipation of the upcoming Congressional implementation process.

 

Issue Linkage: Adding the Side Negotiations

The U.S. decision to demand side agreements on environment and labor cannot easily be explained on the basis of national interests. If it was in the U.S. interest in 1993, why wasn't it before? The decision is better understood in terms of both the configuration of interests and the operation of political institutions in the U.S. domestic arena.

The Bush parallel accords on environment and labor, and the promise of an expanded labor-retraining program, was judged by the Bush administration to be an adequate side payment to win Congressional approval of NAFTA. This may have been a miscalculation, but the evidence suggests that the mainstream environmental groups were prepared to accept the deal in September 1992. (Labor unions were not, of course, but labor support was not judged to be politically necessary.) Less than a month later, the deal was off.

The reason for the change is obvious in one sense: Candidate Clinton promised labor and the environmentalists more. As the likelihood increased that Clinton would win the presidency, environmental groups saw that it was to their advantage to wait. Then the question becomes, why did Clinton make this promise? To understand this, we must understand how the context in which Clinton formulated his position gave the environmental and labor groups greater leverage.

In the campaign context, the political problem had less to do with assembling a coalition to win eventual approval of NAFTA than it did with assembling a coalition to win the election in November. This gave both labor and environmental groups much greater leverage than they had enjoyed throughout the Bush administration (and for labor, a good deal more leverage than it had later, when passing NAFTA was the issue). Clinton needed their support. Business interests, on the other hand, had somewhat less leverage than before (or after the election), because the game was more public and because many business interests were more closely aligned with the Republicans anyway. Clinton's stance as announced in early October represented a compromise among these contending interests. Clinton would stick with NAFTA, but to mollify labor and to solidify environmental support, he promised to deliver more for them.

Once publicly committed, no way was left open for Clinton to back down after he won election. Moreover, the problem of Congressional ratification became more salient in 1993, and with a Democrat in the White House, the coalition needed to pass NAFTA had to include more Democrats than it would with a Republican president. This meant that side agreements were now a political imperative for Congressional approval. Mexico and Canada, recognizing that Clinton was committed and that Congress would insist, agreed to talk.

The decision to negotiate side agreements reflects both institutions and interests. The institution of the Bush Action Plan established the dimensions along which the side negotiations would be conducted. The balance of interests for and against NAFTA kept the issues alive and compelled Bush to try to make good on his pledges in the fall of 1992. That might have been the end of the matter, but the domestic institutional context changed: The United States held a presidential election. That context empowered labor and environmental interests, weakened business interests, and compelled a commitment from candidate Clinton that would endure beyond the election and into his presidency.

 

Deep Nesting: Multilevel Bargaining in the Side Negotiations

Why did the side agreements take the form they did? For instance, why did the mechanism for ensuring enforcement of national laws allow the possibility that trade sanctions could be imposed on the United States and Mexico but not on Canada? Why did the labor agreement exempt some key issues from sanctions altogether and establish a less independent international institution than the environmental agreement?

An international-level interpretation of the side negotiations would explain the international outcome on the basis of national preferences. On the question of enforcement mechanism, the United States strongly favored a particular approach, one that involved trade sanctions but placed numerous procedural obstacles in the way of actually ever using them. Mexico preferred nothing and wanted enforcement as weak as possible, but it was willing to move toward the U.S. position because it was so eager to enter into the NAFTA. Canada was happy with some degree of enforcement on labor and environment, but it was less willing than Mexico to accept trade sanctions as the mechanism for enforcement. Given the strong U.S. attachment to trade sanctions and Canada's unwillingness to accept them, a three-way agreement was impossible. Mexico and the United States had a very small zone of possible agreement close to the U.S. optimum and agreed to a point in that zone. Canada opted out and settled separately with the United States and Mexico.

The differences between the environmental and labor accords, viewed through this lens, reflected national interests as well. In the labor talks, Mexico wanted as weak an agreement as possible and strongly resisted establishing an independent international institution and subjecting domestic labor relations practices to international review. The United States also wanted a weaker international institution and was more willing to exempt labor relations practices from the enforcement provisions because it was concerned they might be used against the United States. Canada had interests similar to those of the United States (but balked at trade sanctions).

This interpretation describes what happened, but it does not really explain it. In particular, it provides little basis for understanding the apparent U.S. preferences: for trade sanctions as the ultimate enforcement mechanism and for stronger, more independent institutions for the environment than for labor. Nor does the international-level analysis explain why Canada should be so adamant about trade sanctions or Mexico more willing to concede on environment than on labor.

Here a consideration of domestic-level bargaining among contending interests in all three countries is more helpful. With respect to the enforcement issue, the apparent U.S. interest in a particular enforcement mechanism can be explained as the outcome of a fiercely contested battle between two factions crucial to NAFTA's ultimate success: business and mainstream environment. The mainstream environmental groups committed in May to a position that included trade sanctions, thus compelling the United States to adopt them in the international negotiation. The business community, while opposed to sanctions, could not so credibly commit to abandoning NAFTA and conceded on sanctions. So did Mexico, but Canada, reflecting the opposition from domestic constituencies to the prospects of trade sanctions, refused to accept them and had to be exempted from the provision. (Canada's constraint had less to do with opposition by particular groups than with the symbolic significance of trade sanctions in the Canadian political context, a point discussed later in this chapter.)

With respect to the question of why the environmental accord was stronger than the labor accord, consideration of domestic-level bargaining can help explain both the U.S. and Mexican stance. The United States did not push as strongly on labor because labor interests had less leverage in the domestic-level bargain. Usually labor unions are a potent political force, but because labor had committed so firmly to a position that was nonnegotiable, either domestically with U.S. business interests (which were more opposed to a strong labor agreement than a strong environmental one) or internationally with the Mexicans, they lost much of the their ability to influence the international negotiation. In contrast, Mexican business interests, with the complicity of the unions, were considerably more resistant to concessions on labor than on environment, particularly on the critical issues of workplace governance.

Thinking on two levels goes a long way toward explaining the outcome of the negotiations. Some questions remain, however. First, why and how did the mainstream environmental organizations commit to a position on sanctions in May upon which their leaders had not previously insisted? Second, why did labor unions commit so firmly to a position that limited their ability to influence the course of the side negotiations? To answer these questions, we must examine a yet deeper level of negotiation, that within these groups at the individual level.

We have seen how bargaining processes among groups in the domestic arena can constrain the behavior of nations in international negotiations. By the same logic, bargaining processes within groups can constrain the behavior of those groups in domestic negotiations and, by extension, the behavior of nations in international negotiations. ₄₄

Consider the enforcement issue in the context of the environmental side negotiation. The commitment to trade sanctions by the mainstream environmentalists is better explained if we recognize that environmental groups are membership organizations, with their own internal bargaining processes. Representatives of these groups in the domestic-level bargain must balance personal policy preferences with the political imperative of attending to their members' concerns. Like the national negotiator at the next higher level, interest-group negotiators must be partly politicians. Under some circumstances, they may have considerable slack before encountering political constraints, particularly if group membership is inattentive, presumably the norm on many issues. On high-profile issues such as NAFTA, however, member preferences may be quite constraining. In this case, the evidence indicates that rank-and-file environmentalists were much more attached to enforcement mechanisms with “teeth” than were the professional staff members who represented them. As a result, the leadership of the mainstream groups had difficulty accepting anything less than trade sanctions.

Business interests, although themselves complex consortia of firms and trade associations, did not really have the same constituency problem as the environmental (or other membership) groups. Stockholders are too far removed from firm policy making to have much of an impact. Thus the absence of an individual layer of bargaining may actually have made it more difficult for business to credibly oppose sanctions.

Figure 6.1 provides a highly stylized graphical treatment of this interpretation. It depicts the negotiation over the enforcement mechanism in the environmental side negotiation as a three-level bargain in which intragroup bargaining defines the preferences of the group, which in turn defines the preferences of the nation in international bargaining. The issue is simplified to “teeth,” a measure of the toughness of the enforcement mechanism, and ranges from “gums” to “fangs,” in the language that defined the debate in Washington. As already discussed, at the international level, Mexico preferred no enforcement, but was willing to move part of the way toward fangs; Canada preferred some enforcement, but was unwilling to go as far as Mexico; and the United States had a distinct preference for moderately sharp teeth. These preferences leave no three-way zone of possible agreement (ZOPA), and the two-way ZOPA between the United States and Mexico is quite small and very close to the U.S. optimum.

As illustrated, the U.S. preferences revealed in the international-level bargain reflect the domestic-level bargain between the two factions whose support is crucial for NAFTA—business and the mainstream environmental groups. Business interests are similar to those of Mexico's in the international-level bargain—minimal sanctions. The mainstream environmental groups have a fairly narrow set of acceptable agreements that range between sharp teeth and fangs. The ZOPA between the two is quite small and effectively defines the U.S. negotiating stance at the international level.

Mainstream environment's preferences at the domestic level reflect the individual-level bargain between members and staff. Staff are willing to accept more moderate sanctions while members insist that sanctions be as strong as possible. The ZOPA between the two defines the range of outcomes acceptable to the organization in the domestic-level bargain. Note that in this interpretation of the bargain, the ultimate constraint on the U.S. position in the international negotiation is imposed by the preferences of the memberships of key environmental organizations.

This model explains how environmental groups could commit to a point that staff would in all likelihood not have insisted upon, but it does not explain why the environmental organizations committed strongly in the summer of 1993 to a position that they did not insist upon earlier. Why did the leaders think they could agree to no sanctions earlier if their membership felt differently? The three possible explanations are not mutually exclusive. The first is that the position of the rank and file changed as members became convinced that there was problem that needed strong remedies. The second is that staff were constrained in the spring of 1993 by a third level of negotiation that did not really exist until the side issues became so salient for rank-and-file environmentalists. The third is that leaders of these environmental organizations behaved strategically, using their internal negotiations to help them commit to a position they liked but would not otherwise be able to credibly put forward.

Both the decision of rank-and-file environmentalists to engage on the side issues and the positions that they took were partially determined by the tactics of environmental leaders. Through internal newsletters and public pronouncements, environmental leaders helped to mobilize interest among their members and helped define what should be acceptable to them. Through this effort, environmental leaders could commit credibly to positions they might otherwise have had to abandon. Having told their members that NAFTA created environmental problems that could only be fixed by a side agreement with teeth, environmental leaders were implicitly contracted to pursue that end on their members' behalf and thus could not back down.

A three-level approach can also explain why labor unions adopted what seems a counterproductive strategy of committing to a nonnegotiable position. Labor unions are democratic institutions in which the positions of union members count. Union leaders who represent their constituencies in negotiations must cater to the preferences of union members. In the NAFTA side negotiation on labor, the very strong feelings of union members made it all but impossible for labor leaders to engage in a meaningful negotiation without paying a severe political penalty. Whether any side deal would have been acceptable to labor leaders on policy grounds is unknown, but in any event the leaders were far too constrained by internal union politics to explore the possibility.

The deeply nested nature of international negotiations raises the issue of how deeply the analyst needs to probe. One is tempted to answer: deep enough. In some circumstances, strong institutions, charismatic leadership, or internal consensus may make it unnecessary to consider intragroup dynamics to explain international outcomes. In other circumstances, however, the solution to puzzles about the behavior of nations in international bargaining may lie several levels below the international.

 

Embeddedness: The Side Negotiations in Political Context

Complex as it is, the multilevel bargaining approach abstracts negotiations away from much of the context in which they take place. Every negotiation is embedded in a broader political context of interests, institutions, and symbolic constructs that determine in large measure the overall structure of the negotiation: the configuration of levels, the key players at each level, and the rules by which they play. To the extent one is interested in the factors that determine these parameters and, therefore, the existence, location, and shape of constraints, one needs to consider the larger political context.

For example, implicit in the model of the environmental supplemental negotiation illustrated in Figure 6.1 was a decision rule in the U.S. domestic bargaining that required the support of certain “mainstream” environmental organizations. This rule gave those organizations considerable power. To explain why they had that power, however, one needs to consider the larger political context in which the environmental side negotiation was embedded.

Environmental groups had leverage in the NAFTA supplemental negotiations because of their location in the political landscape confronting the Clinton administration, a landscape that included key opinion leaders such as Max Baucus, grassroots environmental organizations, the press, the general public, and ultimately and most importantly a group of Democratic representatives sensitive to voters' concerns about the environmental effects of NAFTA. Because the side negotiations were conducted in the shadow of the eventual vote in the United States Congress, whatever the policy problem, the USTR's political problem was to win a majority in both houses of Congress. Already it was clear that the House of Representatives posed the greater difficulty. One group of swing voters was composed of House Democrats who would otherwise be disposed to support NAFTA but who needed “cover” in dealing with constituents concerned that NAFTA was bad for the environment. Mickey Kantor and others in the administration could talk directly to these Congress members, but that approach would and did have little effect on the negotiation of greatest concern to the members, i.e., the negotiation with their constituents. Kantor, therefore, needed an indirect approach to influence House Democrats. The strategy was to map backward from the swing votes in the House to identify a path to them. As it happened, the mainstream environmentalists lay squarely on the only available path.

The problem for these Democrats was the widespread belief among voters with environmental concerns that NAFTA would be bad for the environment: that it would cause an environmental disaster on the border, that it would make Mexico a pollution haven, that it would undermine U.S. environmental laws, and the like. These beliefs had been fueled by press accounts of the horrors of the border region, by the Clinton campaign rhetoric, and by the tactical acquiescence of the mainstream groups who did not share these beliefs but who were in no hurry to refute the ideas. Members of Congress needed the press to say that the problems had been fixed by the supplemental agreements or at least to report that the environmental community was divided on the subject, thereby neutralizing the issue. The press would tell this story if and only if the mainstream groups blessed the supplemental agreement.

The grassroots environmental organizations played an important role in enhancing the leverage of the mainstream groups. In coordination with their union allies, grassroots environmentalists had been instrumental in creating the negative public impressions of the relationship between NAFTA and the environment. Without these attitudes, there would have been no problem that could only be solved by the support of the mainstream groups. Moreover, the grassroots organizations, directly and through the press, had an influence on the membership (and potential membership) of the mainstream groups, which in turn affected what members of those groups were willing to accept, thus constraining the domestic-level ZOPA in ways that worked to the mainstream groups' advantage (see Figure 6.1).

Thinking in these terms helps explain the surprisingly significant role played by Max Baucus in the environmental side negotiation. His vote did not matter directly; NAFTA appeared to have a comfortable margin in the Senate. Yet he emerged a player because of his standing with the press and with the mainstream environmentalists (and also because he was aggressive about using this position). As a consequence, a triangular negotiation among Mickey Kantor, the mainstream environmentalists, and Max Baucus ensued in which each party needed something from the other. Kantor needed the support of the environmentalists to help give House members political cover. The environmentalists needed Baucus because he helped them sell their position in their internal negotiations with members. Baucus wanted credit with his constituents and with the environmental community for advancing the environmental agenda. In this triangular negotiation, Baucus's insistence that trade sanctions be a central part of the U.S. negotiating position helped force both Kantor and the mainstream organizations into taking the same position.

This network of negotiations is only a subset of the still larger landscape in which it, too, was embedded. House Democrats, for instance, were obviously a subset of the whole House body and would not be a swing group but for the balance of support and opposition among other subsets of that body. Without the opposition of Congress members with strong labor ties, there would not have been such a large core of Democratic opponents in the House, and the environmentalists would have had less leverage. Similarly, without the opposition of a smaller group of conservative Republicans, the environmentalists' support would have been less critical.

The political analyst must exercise much judgment in deciding how broad the field of vision should be. There is no logical limit to the horizon: Every negotiation is embedded in a network of other negotiations, each of which is embedded in others, and so on. Deciding where to draw the boundary depends on the relative benefits of broadening compared with the costs of greater complexity. Sometimes much of the broader landscape can be safely suppressed, as in the commercial negotiations conducted largely out of the glare of public scrutiny and relatively far from the prospects of legislative action. In other circumstances—such as the side negotiations—elections, legislative processes, public opinion, and other features of the political landscape may need to be more explicitly considered.

 

Conclusions

This analytic commentary has built upon approaches developed in previous chapters. To explain why the United States demanded the side negotiations requires an examination of both domestic interests and institutions, in particular how the operation of a purely domestic institution—a presidential election—shifted power in the contest of domestic interests. To explain why the side agreements took the form they did requires extending the two-level bargaining approach developed in the previous chapter to include deeper-level bargaining processes and the larger political context in which the negotiations were embedded.

These extensions yield a rich understanding of the history of the side negotiations. That they were demanded by the United States reflects the confluence of a national election and opportunistic behavior by interest groups empowered by that context. That the negotiators concluded with these agreements reflects the complex interplay of interests at multiple levels, which together constrained the domain of the possible to the particular and peculiar outcomes observed. Some puzzles, however, remain to be explained. The nature of public attitudes that required a campaign commitment from candidate Clinton, the beliefs of individual members of environmental groups and labor unions that constrained the behavior of those institutions, and more generally the nature of the larger political environment in which the side negotiations took place all require thinking in terms other than interests and institutions. As the politics of NAFTA became more public in the United States, spilling out of the traditional institutions and beyond the normal trade interests to engage the larger polity, what the side agreements were became less important than what they meant, and symbolic constructions became more central. To fully understand this we will need a theory of the politics of meaning, to which we will turn in the next chapter.

Figure 6.1. The negotiation over the strength of sanctions as a three-level bargain. Top: the international-level negotiation among the United States, Mexico, and Canada. Middle: the U.S. domestic-level negotiation between business and environment. Bottom: the individual-level negotiation between staff and rank-and-file members of a mainstream environmental group. The horizontal axis depicts the strength of possible sanctions from weak to strong using the dental metaphor so prominent in the debate. The thick line indicates the zone of possible agreement (ZOPA).

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Endnotes

Note 1: Senate Finance Committee Hearing to Consider the Nomination of Mickey Kantor to be United States Trade Representative, 19 January 1993.  Back.

Note 2: For an overview of the environmental community landscape, see Daniel Esty, Greening the GATT.  Back.

Note 3: Stewart J. Hudson and Rodrigo J. Prudencio, “The North American Commission on Environment and Other Supplemental Environmental Agreements: Part Two of the NAFTA Package,” National Wildlife Federation Report, 4 February 1993, 2, 15.  Back.

Note 4: Justin Ward and Jacob Scherr, “Testimony of the Natural Resource Defense Council before the Committee on Environment and Public Works,” U.S. Senate, 16 March 1993.  Back.

Note 5: Sierra Club, “Environmental Concerns Regarding the North American Free Trade Agreement,” February 1993.  Back.

Note 6: Laura Viani, “Free-Trade Pact Seen Ruled by Consultation,” American Metal Market, 9 February 1993, 4.  Back.

Note 7: Letter to Mickey Kantor from Defenders of Wildlife, et al., 4 March 1993.  Back.

Note 8: Testimony of Thomas R. Donahue, Secretary-Treasury, AFL-CIO, and Chair Labor Advisory Committee on Trade Negotiations and Trade Policy, before the Senate Finance Committee on the North American Free Trade Agreement,” 22 September 1992. (Prepared remarks.)  Back.

Note 9: Statement by the AFL-CIO Executive Council on the North American Free Trade Agreement, 17 February 1993.  Back.

Note 10: Stephen Franklin, “Unions Urge Clinton to Renegotiate Trade Pact,” Chicago Tribune, 18 February 1993, N3.  Back.

Note 11: “Gephardt Says He Will Vote Against Pact If Environmental Side Deal Not in Place,” BNA National Environment Daily, 26 February 1993.  Back.

Note 12: Tod Robberson and Jackson Diehl, “U.S. Urged to Act on Trade Pact: Mexican Leader Warns of Delay,” Washington Post, 23 February 1993, A12.  Back.

Note 13: Letter from Willard A. Workman, Vice President of the Chamber of Commerce of the United States, to Mickey Kantor, 8 March 1993.  Back.

Note 14: Mickey Kantor, Testimony before the Senate Finance Committee, 9 March 1993.  Back.

Note 15: Richard Gephardt, Statement to the House Ways and Means Committee, 11 March 1993.  Back.

Note 16: Letter from Max Baucus to Mickey Kantor, 4 March 1993.  Back.

Note 17: Mickey Kantor, Testimony before the Senate Environment and Public Works Committee, 16 March 1993.  Back.

Note 18: “Canada Opposes Trade Sanctions,” BNA International Environment Daily, 22 March 1993.  Back.

Note 19: “Address by House Majority Leader Richard Gephardt Before the Citizen's Trade Campaign,” Federal News Service, 25 March 1993.  Back.

Note 20: Statement by the Citizen's Trade Campaign, issued 13 April 1992.  Back.

Note 21: “Citizen's Trade Campaign Releases Policy Statement for NAFTA Supplements,” BNA International Environment Daily, 15 April 1993.  Back.

Note 22: Letter to President Bill Clinton from Senator John Danforth et al., 28 April 1993.  Back.

Note 23: Letter to President Bill Clinton from William Archer and Robert Crane, 28 April 1993.  Back.

Note 24: Letter to President Clinton from Bob Michel, Newt Gingrich, and sixteen other Republican representatives supportive of NAFTA, 28 April 1993.  Back.

Note 25: “NAFTA: Enviro Groups Set to Back Pact if Arbitration Ok'd,” Greenwire, 4 May 1993.  Back.

Note 26: Jim Kolbe, Congressional Record, 20 May 1993.  Back.

Note 27: Clyde H. Farnsworth, “3 Nations Disagree on Trade,” New York Times, 22 May 1993, A33.  Back.

Note 28: Ibid.  Back.

Note 29: Letter to Mickey Kantor from the Business Roundtable, Council of the Americas, Emergency Committee for American Trade, National Association of Manufacturers, U.S. Chamber of Commerce, U.S. Council of the Mexico–U.S. Business Committee, U.S. Council for International Business, and USA*NAFTA, 4 June 1993.  Back.

Note 30: John Maggs, “Senator Baucus Hits Businesses for Opposing NAFTA Side Deals,” Journal of Commerce, 10 June 1993, 2A.  Back.

Note 31: “Negotiators Report Progress on NAFTA Side Accords,” United Press International, 9 July 1993.  Back.

Note 32: David Haskel, “U.S. Insists NAFTA Side Deals Must Have Teeth,” Reuters Business Report, 12 July 1993.  Back.

Note 33: “Negotiators Still at Odds Over Some Trade Issues,” The Vancouver Sun, 24 July 1993, 1.  Back.

Note 34: The remarks were first reported in Katharine Seelye, “Canadian Prime Minister Is Challenging Convention,” Philadelphia Inquirer, 25 July 1993, 1. They were reported in Canada over the next week. The interview took place on 13 July 1993.  Back.

Note 35: “Canada Firmly Opposed to NAFTA Sanctions—Hockin,” Reuters, 4 August 1993.  Back.

Note 36: Letter from Max Baucus to Mickey Kantor, 28 July 1993.  Back.

Note 37: Letter from Richard Gephardt to Mickey Kantor, 3 August 1993.  Back.

Note 38: For a description of this meeting, see Robert Woodward, The Agenda, 314.  Back.

Note 39: “Press Conference on the Topic of the North American Free Trade Agreement,” Federal News Service, 13 August 1993.  Back.

Note 40: Office of Representative Richard Gephardt, Press Release, 13 August 1993.  Back.

Note 41: “News Conference With Labor, Environmental, Consumer Groups in Response to the NAFTA Accord,” Federal News Service, 13 August 1993.  Back.

Note 42: Edmund L. Andrews, “Accord Fails to Redraw Battle Lines Over Pact,” New York Times, 14 August 1993, A45.  Back.

Note 43: Transcript, “Inside Politics,” Cable News Network, 13 August 1993.  Back.

Note 44: This should not be surprising, since the original work on multilevel bargaining concerned labor negotiations. See Richard E. Walton and Robert D. McKersie, A Behavioral Theory of Labor Negotiations.  Back.

 

Interpreting NAFTA : The Science and Art of Political Analysis