NAFTA 12 Years Later: Free -Trade Treat, or Trans-National Trick?

John Barham
Tuesday, November 1, 2011

After its signature in 1992 by George H.W. Bush, Carlos Salinas de Gotari and Brian Mulroney, the North American Free Trade Agreement took effect on January 1, 1994. Significantly, on the same date, the anti-globalization movement was given birth with the Zapatista uprising in Chiapas.

During this year’s presidential campaign in Mexico, NAFTA is being debated from the standpoint of partisan politics. The candidate of the PRD, Andres Manuel Lopez Obrador, has been highly critical of the agreement, while questioning the benefits that Mexico has received since 1994. Even Felipe Calderon, the candidate of the pro-business PAN, has stated that a new president must press for changes within the framework of the agreement that would allow for a more favorable position for Mexico. In many ways, the 2006 election may be viewed as a referendum on NAFTA.

Originally promoted as a win/win means of boosting the US economy while providing jobs and elevating the standard of living for impoverished Mexicans, NAFTA, at this point of its existence, has failed badly in not producing the results that were originally hoped for.

Although it was maintained that consumers on both sides of the border would profit from lower prices as a result of a cross-border economy characterized by the free flow of goods and products coming from those who could supply them at the lowest cost, this has not led to the type of market access which has resulted in a subsequent rise in the standard of living for the poorest elements of Mexican society.

In the agricultural sector, income for campesinos has faltered. At the same time, the profits of multi-national agricultural conglomerates have soared. One side-effect of this trend is that millions of small farmers in Mexico, unable to compete with highly subsidized agricultural products from the US and Canada, have been displaced. Many have moved to cities, swelling the numbers of the unemployed and dispossessed, while others have sought employment with large agricultural combines that seek increased profits through low wages and scant regard for worker health and safety. As this article is being written, transnational agricultural entities are paying rural labor in Mexico barely more than $3.00 per day and exploiting loose regulations of fertilizers and pesticides that are banned in the US. Under the terms of NAFTA, these companies are allowed to transport their products duty-free into the US market. It is instructive to note that since the inception of NAFTA, the profits of Con-Agra have grown by more than 200%, and those of Archer Daniels Midland have increased three-fold.

Of the several million farm workers who have been forced out of subsistence agriculture, thousands have arrived at the conclusion that, if they are to provide for their families, they have no choice but to immigrate to the north. Thus, NAFTA is a prime factor that has driven desperate people to undertake the perilous journey to the U.S. that has resulted in hundreds of individuals perishing in the inhospitable terrain of northern Mexico and the southwestern US. A telling statistic is that as much as 1/3 of the male population of our host state of Guanajuato has forsaken hearth and home to immigrate with the hope of achieving sufficient income to support their families.

If the Bush administration is indeed serious about stemming the tide of illegal immigration, it should analyze the negative results of NAFTA and set about to assist its neighbor to the south in creating viable enterprises that would provide decent employment in Mexico. With the threat of communist expansion, the U.S. at the end of World War II, undertook the Marshall Plan to bolster the economy of Western Europe. Should not the US meet the challenge of the northward push of despairing thousands from its southern neighbor with as much resolve?

There is also ample evidence to suggest that NAFTA, while decimating the ranks of middling capitalists in Mexico, has caused the concentration of wealth to become greater on both sides of the border. Along with tax breaks in the U.S. to benefit the haves, there has been a stratospheric gain in income for the wealthiest 15% of the population. And, in Mexico, which has an inordinate number of billionaires, the rich have tended to become richer.

Meanwhile, with large retailers such as Wal-Mart, taking advantage of NAFTA rules and regulations to flood Mexico with low-cost Chinese products, thousands of small and mid-sized Mexican enterprises have gone belly-up. Ironically, accompanying this development has been the steady hemorrhaging of jobs from the maquiladoras to China and the Pacific Rim countries. Thus, the wage level along the border with the US where there is the heaviest concentration of maquiladoras has actually been driven downward. Many of the maquiladoras that may be found in locations like Matamoros, Nuevo Laredo, Juarez and Tijuana have been turned into sweatshops where workers oftentimes earn no more than $6.00 per day.

Despite NAFTA and its negative consequences, the vision of the Bush administration has been to expand the NAFTA model through free trade agreements with Latin American countries and the creation of NAFTA-like accords such as the Central American Free Trade Agreement (CAFTA). Inevitably, the five Central American countries which are signatories to CAFTA will also find that displaced agricultural workers will find little or no opportunities in places like Guatemala City, San Salvador and Tegucigalpa. They, like the displaced thousands in Mexico, will join the trek northward to provide the disposable, low-cost labor sought by the corporate moguls who have underwritten the Bush years in Washington.

Economic progress should not be solely about raising corporate profits, imparting more wealth to a small group of Mexican billionaires and sustaining ever-rising CEO compensation. Neither the erection of a massive barrier at the border nor the legislation of a guest-worker program that would simply provide more cheap and disposable labor for the lords of globalization is the answer. Human needs must be paramount. And, in that regard, NAFTA has been a resounding failure.

Byline: John Barham, who has been visiting San Miguel de Allende for more than 18 years, has had a long career in higher education as an administrator and instructor in colleges and universities in Alabama, Texas, Missouri, New York and Saudi Arabia. John, whose retirement is imminent, will soon reside in San Miguel. Until that time, he may be reached at: