While President Trump – during his campaign – was a vocal opponent of the North American Free Trade Agreement (NAFTA), it is important to look at his reasoning. They didn’t include the exploitation of Mexican workers, the devaluation of Peso and the diminished purchasing power for the Mexican proletariat, and environmental degradation that comes with the intense wave of economic liberalization. To understand the harsh effects NAFTA is inflicting on the mexican working class, it is important to go back to the beginning and see what the intended results were.
NAFTA was set up as a way to increase trade and international market access for the three North American countries, Canada, United States, and Mexico. What it did was ensure the continued financial success of the national elites while creating an increased instability for the most vulnerable populations these countries had. The state of the environment has been greatly hurt throughout North America, and it is within this era that environmental refugees have begun to be a common thing.
The relationship between the United States and Mexico, within the framework of NAFTA, is what needs greater inspection, and this is due to the fact that the Mexican economy is so export oriented. Not that Canada is not an important player in the agreement. As reported at the time in the Canadian paper The Green Left Weekly, “The FTA (Free Trade Agreement) has already compelled Canada to weaken its pesticide, recycling and other environmental protection laws to harmonise them with weaker US standards; the fear is that NAFTA will reduce these standards to the Mexican level.” (NAFTA: A New Kind of Protectionism. November 23rd, 1993) Canada’s role in NAFTA is a topic for another article. The relationship between the Mexican ruling class and American finance went about creating a wealth of interdependence based on a bloc like relationship. This covers both the political and economic scopes of the nations, both of which were rapidly changing for Mexico at the time the NAFTA agreement was being formulated.
The 1980s saw a rise in the privatization and neoliberalization of the Mexican economy. The effect that this had was that it led to increased integration into the world market economy. These major economic reforms towards market capitalism started under the Presidency of Miguel de la Madrid, between 1982 and 1988, and then under Carlos Salinas de Gortari from 1988 to 1994.
The economic policy that was enacted was continuous, as seen in the fact that de la Madrid stayed on in the next regime as the economic minister. In the political side of the debate, the situation is much more complicated and complex than the simple economic programs of the time. Mexico, politically at the time, could best be described as ‘competitive authoritarian’ in the sense that electoral practices took place but one party did rule with a constant majority.
The Institutional Revolutionary Party (PRI) ruled the country unanimously from 1929 until the year 2000, and during this time the PRI ruled like a dictatorship. By the time the 90s were beginning, the PRI was losing its grip on power and the forces of democracy were rising. The unstable economy, national debt, and above average poverty were the reasons for the rising opposition forces against the PRI.
As stated by Pamela K. Starr “Put simply, the perpetuation of the economic policy status quo reflects an unstated and often unacknowledged agreement evident in the Mexican political and economic elite during the past quarter century to ensure the “survival of the Institutional Revolutionary Party (PRI)”–the political party at the heart of Mexico’s long-standing twentieth century authoritarian regime–regardless of the economic costs.” (The Two Politics of NAFTA in Mexico. 2010) Mexican authorities thought that NAFTA may be the type of agreement that to save the PRIs rule, while in the US many economists saw the threat of Bastille style democratic passions of the Mexican populus working against such an economic system in the future. As described by Noam Chomsky, “NAFTA is what they did about it. The point of NAFTA was to lock in the so-called reforms by treaty, so that even if there is a democracy opening — that hated danger — they won’t be able to do much about it, because they’re locked into these arrangements.” (Rogue States. 2000)
NAFTA was predicted to have great results on the Mexican economy, creating more jobs and wealth while setting the country on a path of rapid economic growth. Unfortunately, this hasn’t been successful. As the Center for Economic and Policy Research Reported in 2014, the performance of the Mexican economy since the agreement is leaving them behind in a region that is rapidly advancing.
In GDP growth per person, Mexico ranks 18th out of the 20 Latin countries. Between 1960 and 1980, the real GDP growth per person increased by a statistic of 98.7%, and yet in the last 20 years it has only increased by 19.7%. This is only half of the level of growth that is the current average that the Latin American countries are currently experiencing. To make matters worse, since the introduction of NAFTA in 1994 the level of poverty hasn’t dropped but slightly increased within Mexico. (Did NAFTA Help Mexico: An Assessment After 20 Years. February 2014.) So why all of this damage when NAFTAs intention was to help Mexico develop? What all went wrong?
The sector of agriculture was greatly affected, now without any trade barriers American subsidized agribusiness sold on the Mexican market cheaper than native products. The effect was disastrous for native farmers. As reported by the Council on Foreign Relations, the effects of the agreement have put more than 2 million Mexican framers out of work. (NAFTAs Economic Impact, January 2017.) Because agribusiness from the United States is subsidized by the government, and therefore is sold at a drastically lower price. As was reported in 2004 by Gisele Henriques and Raj Patel, “the withdrawal of government support programs, and the private sector’s inability to or lack of interest in filling these roles, has left small agricultural producers out in the cold.” These farmers who have been hurt by NAFTA, they are not the large scale farmers from the north they are competing against. They are the poorest of the poor, living in harsh poverty.
“As of 2001, 81.5% of people in rural areas were living in poverty. For the economically active population in agriculture the incidence of poverty increased from 54% in 1989 to 64% in 1998.” (NAFTA, Corn, and Mexico’s Agricultural Trade Liberalization. February, 2004) But the problems that NAFTA has caused Mexico, unfortunately, don’t start and end with the near destruction of the agricultural industry. The shift towards a commodity exports driven economy has led to an increase in manufacturing. This has, in turn, led to increased environmental degradation.
The intended effect of the agreement was supposed to assist Mexico in making a rapid transition from a third world nation to a first world nation. If we look at this through the lens of the Marxist dialectical process, it is clear that this is an impossible jump to make from a backwards agriculture based society to an advanced industrial producer without creating massive gaps in the social structure. According to this theory, development is a natural line of progression.
The reason that the most powerful nations remain the most powerful nations is that they have learned the best ways to exercise power through their development. The problem with giving a nation like Mexico the easy option to go from third world to first world is that they didn’t know how to operate in such a capacity. Inequality and environmental degradation are just two concepts that sprang up when development was sped up. This was recognized by Barbara Hogenboom in her study of the environmental complications caused by NAFTA, she writes “Mexico’s weak environmental policy enforcement turned into a major issue. The excessive ecological degradation and health hazards caused by rapid industrialization in Mexico’s border region with the US proved to be the Achilles’ heel of the Mexican government.” NAFTA has facilitated more production, but this has put a strain on its environment. (Mexico and the NAFTA Environment Debate. 1998.)
To revert to basics, the level of CO2 emissions rose at a level of 49% between 1990 and 2012. (Greenhouse gas Emissions in Mexico. 2012.) NAFTA has been specifically set up to allow corporate supremacy over state and national institutions. “One of the most controversial aspects of NAFTA is found in Chapter 11 – its investor rights chapter. Under Chapter 11, foreign investors who believe their profits are being harmed by environmental or public health regulations can sue governments for cash damages within a secretive trade tribunal system.” (NAFTA’s Impact on Mexico.)
With the emphasis on manufacturing, large amounts of the rural populations migrated into urban centers. This mass emigration put tremendous strains on the infrastructure, especially in the rates of those with access to adequate sanitation. As was reported by PAHO, the numbers of those who had this access did increase in the first years of NAFTA, but it was not the kind of rise you would expect from a nation in the process of development. In 1995, 80.8% of the urban population had access to adequate sewage facilities, after 5 more years of development, this number had only risen to 82.7%. But the social crisis that has been created can really be linked into the rise of manufacturing for foreign companies.
The majority of the companies that came from the agreement were manufacturing, many in the garment sector. Many were American companies that had come to take advantage of cheap cost of labor. “NAFTA proponents, on the other hand, claimed that merely opening Mexico to free trade and unregulated foreign investment would produce the job growth and rising incomes needed to create a stay-at-home middle class. It was the capstone on an effort begun in the early 1980s by a group of U.S.-educated economists and businesspeople who took over the ruling Partido Revolucionario Institucional (PRI) in order to build a privatized, deregulated and globalized Mexican economy.” (The American Prospect) This is not what happened, the agreement gave multinational corporations the freedom to come in and squeeze Mexican laborers for all they could get. The whole plan of economic prosperity to the whole nation, that never exactly panned out. “The average manufacturing worker earns only 28.6% of what a family of four needs to cover basic necessities – a violation of the Mexican constitution that guarantees a living wage.” (NAFTA’s Impact on Mexico.)
This trade agreement hasn’t helped Mexico ascend to first world status, it has merely created a larger range of inequality within its population. Its GINI index has been rising, according to the American Program Special Report, in 1994 its level of inequality was a 47.7 and by 2000, it had raised to 48.1. This may not seem like a massive number, but NAFTA was intended to alleviate these problems, not contribute to them.
So when we hear President Trump talking about how bad NAFTA is, technically he is right, but not because of how much damage it has done to America. It is the Mexican working class that has had the worst experience with the agreement. He talks about how immigration is so terrible for America, but the agreement itself has locked Mexico into a position where it must keep working standards and wages low, or face losing the jobs that have come to the country. Is it hard to understand why anyone would want to cross the border for better pay and better working conditions? In 1998, the US minimum wage stood at 5.15$ per hour, meanwhile the Mexican wage stood at 3.40$ per day. (Maquiladoras at a Glance. 1999.) For a concept like free trade to really develop into reality, the playing field for workers must be leveled. There is absolutely nothing free or fair about exploiting a workforce and working them to death. NAFTA needs to be replaced by an open market that guarantees the same level of workers rights and environmental protections for all that are involved.