The North American Free Trade Act was unique in that it provided for the free trade of professional services such as financial services and engineering services. Unfortunately, international trade in financial services was accomplished without also achieving international trade in engineering. This created a vacuum on productivity (The actual giant sucking sound). Most trade agreements that followed NAFTA were modeled after NAFTA. As such, this flaw was inherited by modern globalization worldwide. To correct the flaw could reverse much of the misalignment between money and the fact of productivity.
Here is how NAFTA Failed. This diagram comes from an obscure paper that I published in 1996.
From prior posts on this topic, The US PE is a function of education which defines Quantity of the asset, Experience which defines quality of the asset, and Examination which reduces variance of the asset. Education is defined and standardized by ABET, the examination is defined by NCEES, and the experience is defined by an adjustable peer review standard. There is some flexibility such that little more or a little less of one factor can be absorbed by a little more or less of the other factors. This is rational.
Each of the NAFTA countries has their own rendition of this. In the case of Canada – the education is equivalent to the US due to an accord between accreditation agencies. The Canadian exam is different, however, the experience component is mutually recognized across jurisdictions. Since 2 out of 3 factors are reciprocated, then the difference can be made up with minor adjustments.
However when you get to Mexico, both the exam and the education were substantially different with no accords with either of the other countries. Since only 1 of the 3 factors (experience) were reciprocated, an extreme adjustment to the experience standard needed to carry all the weight. In fact 15-19 years of experience was the only way that an engineer from Mexico could participate in NAFTA
So when you try to get a combined standard, we see that there is no way to assess the Quantity and Quality of the NAFTA Engineer. This is where the negotiations where breaking down when someone said, hey there are hundreds of Mexican Engineers passing the EIT. This is how I got dragged into NAFTA.
Our proposal was that all three countries accept each other’s experience requirement – they were already willing to do this. Then we suggested that everyone take the same examination – assuming it could be published in Spanish. Then, the feedback of the exam can be fed back into the education system so that they can be reconciled over time.
The purpose of this solution was not to toss a political hot-potato. It was to preserve the formulation of the asset. In doing so, insurance companies would be willing to insure the asset and banks would be willing capitalize the asset. As such, the flow of financial instruments could be applied to infrastructure and the process of economic development could begin for all participants.
Unfortunately, this proposal was rejected for reasons far too trivial and irrational to dwell upon here. The bottom line is that on a planet where the laws of physics are nearly identical at single every point, there is no Global engineering profession.
This is, and continues to be, an utterly tragic outcome.
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