"Of all the world's developing countries, Mexico was by far in the best position to exploit the neoliberal model. Its proximity to the US market and a domestic U.S. constituency of millions of Mexican American voters gave Mexico advantages under NAFTA that no other Third World nation had. The testimony of hundreds of thousands of Mexican workers each year making the hard and dangerous trip north is evidence that, after two decades, the model is not working in Mexico. If it is not working there, it is unlikely to work anywhere."
June 2003 article (Vicente Fox was president of Mexico 2000-2006. President Carlos Salinas, in office 1988-1994, negotiated NAFTA)
June 16, 2003, "How NAFTA failed Mexico," American Prospect, Jeff Faux
"For Mexico's oligarchs, the public focus on the condition of
Mexican workers in the United States has the great virtue of diverting
political attention from the condition of Mexican workers in Mexico. (Vicente) Fox
has been eloquent on the maltreatment of undocumented migrants at U.S.
farms and factories. Rightly so. But he has been silent about the harsh
and brutal conditions suffered by Mexico's own domestic migrants,
including those as young as 11 years old who were found -- after Fox's
election -- to be working in his own vegetable packing plant....
During the 1993 battle over the North American Free Trade Agreement,
the proposal's promoters' most politically effective argument was that
NAFTA would keep Mexicans out of the United States. As political writer
Elizabeth Drew later observed, "Anti-immigration was a sub-theme used,
usually sotto voce, by the treaty's supporters."
The voce was not always sotto. "We don't want a huge flow of illegal
immigrants into the United States from Mexico," said former President
Gerald Ford, speaking at one of then-President Bill Clinton's pro-NAFTA
rallies. "If you defeat NAFTA, you have to share the responsibility for
increased immigration into the United States, where they want jobs that
are presently being held by Americans."
Leaving aside the xenophobia, Ford's argument made economic sense: If
NAFTA were to create more jobs in Mexico, fewer Mexican workers would
leave. When people can earn a decent living in their own country, they
would generally rather stay put....
NAFTA proponents...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.
chief objectives was tearing up the old corporatist social contract in
which the benefits of growth were shared with workers, farmers and
small-business people through an elaborate set of institutions connected
to the PRI.
NAFTA provided no social contract. It offered neither aid for Mexico nor
labor, health or environmental standards. The agreement protected
corporate investors; everyone else was on his or her own. Indeed, NAFTA
is the nation-building template imposed on developing countries by
recent corporate-dominated U.S. administrations and their client
international finance agencies. It is the model for the proposed Free
Trade Agreement of the Americas, as well as for the Bush
administration's development plans for Iraq.
Americans' understanding of NAFTA's impact on the Mexican people is
obscured in part by the gap between what Mexican elites tell U.S. elites
and what Mexicans tell one another. Last December former Mexican
President Carlos Salinas, who negotiated NAFTA, told a Washington
conference of applauding corporate lobbyists, government officials and
free-market think tankers that NAFTA was a great success. "The level of
trade and type of products that cross the borders," he said, "silenced
even the most ardent critics."
The next day, in Mexico City, a large group of very ardent Mexican
farmers broke down the door of the lower house of the Mexican Congress to denounce NAFTA and demand that it be renegotiated. Similar
demonstrations -- joined by teachers, utility workers and others -- have
erupted throughout the country, closing bridges and highways and taking
over government offices. Polls show that most Mexicans think NAFTA was
bad for Mexico. Largely because of the agreement, Salinas is the most
unpopular ex-president in modern Mexican history.
NAFTA's critics did not doubt that it would stimulate more trade; that
was, after all, its function. Rather, they predicted that any benefits
would go largely to the rich while the middle class and the poor would
pay the costs, and that the promised growth would not materialize. They
NAFTA is not the cause of all Mexico's economic troubles,
but it has clearly made them worse. Since NAFTA's inception in 1994 --
indeed, for the 20 years of neoliberal "reform" -- the Mexican middle
class has shrunk and the number of poor has expanded. Economic growth
has been below the old corporatist economy's performance and
substantially less than what is needed to generate jobs for Mexico's
growing labor force. During his 2000 campaign, Mexican President Vicente
Fox promised that under his six-year term the country would grow 7
percent per year. Two and a half years after his inauguration, growth
has averaged less than 1 percent.
So the northward migration continues.
Between the U.S. censuses of 1990
and 2000, the number of Mexican-born residents in the United States
increased by more than 80 percent. Border-crossings diminished
temporarily after September 11, but they are now as great as ever. Some
half-million Mexicans come to the United States every year; roughly 60
percent of them are undocumented. The massive investments in both border
guards and detection equipment have not diminished the migrant flow;
they have just made it more dangerous. In the past five years, more than
1,600 Mexican migrants have died on the journey to the north, including
19 people who were found asphyxiated in a truck near Houston in May.
Still, as a neighbor of one of the 19 who left told The Washington Post, "If you're going to improve your life, you have to go to the United States."
The failure of NAFTA to deliver on its promise of a better life for
Mexicans represents more than just a misplaced faith in free trade.
Behind the laissez-faire rhetoric, Mexico's neoliberals were pursuing a
large-scale program of government social engineering aimed at forcing
Mexico's rural population off the land and into the cities, where it
could provide cheap labor for the foreign investment that the new open
economy would attract.
Salinas and the PRI reformers did not, of course, announce that they intended to depopulate rural Mexico.. The Mexican government promised
that as tariffs on U.S. agriculture products fell, generous financial
and technical assistance would enable small farms to increase their
productivity in order to meet the new competition. But, after the treaty
was signed, the reformers pulled the rug out from under the rural
peasantry. Funding for farm programs dropped from $2 billion in 1994 to
$500 million by 2000.
Meanwhile, the U.S. Congress massively increased subsidies for corn,
wheat, livestock, dairy products and other farm products exported to
Mexico. American farmers now receive 7.5 to 12 times more in government
help than Mexican farmers do. This "comparative advantage" enabled U.S.
agribusiness to blow thousands of Mexican farmers out of their own
But when the displaced campesinos arrived in nearby cities, few
jobs were waiting. NAFTA concentrated growth along Mexico's northern
border, where factories -- called maquiladoras -- processed and
assembled goods for the then-booming U.S. consumer market. Between 1994
and 2000, maquiladora employment doubled while employment in the rest of
the country stagnated.
Neoliberalism was supposed to reduce the income gap between Mexico's
relatively rich border states and the poorer ones in the country's
middle and south. Supporters claimed that privatizing banks and opening
them to foreign ownership would make more capital available for domestic
firms in domestic markets. But -- in the depressingly familiar pattern
of privatization the world over -- the PRI reformers sold off the banks
to friends, then bailed out the new owners when the peso collapsed a
year after NAFTA was passed.
Made whole with more than $60 billion of
the taxpayers' money, these crony capitalists resold their banks at a
handsome markup to foreign investors. For example, an investment group
headed by the well-connected Roberto Hernandez bought Mexico's
second-largest commercial bank for $3.2 billion and sold it to CitiGroup
for $12.5 billion. Yet, as 85 percent of the country's banking system
was being turned over to foreigners, lending to Mexican business
actually dropped from 10 percent of the country's gross domestic
product in 1994 to 0.3 percent in 2000.
The global bankers were more
interested in taking deposits and making high-interest-rate consumer
loans than in developing Mexico's internal economy.
Meanwhile, booming investment in the exporting sweatshops of the north
has created a social and ecological nightmare. Rural migrants have
overwhelmed the already inadequate housing, health and public-safety
infrastructures, spreading shantytowns, pollution and crime. Maquiladora
managers often hire large numbers of women, whom they believe are more
docile and more dexterous than men at assembly work. Earnings are
typically about $55 a week for 45 hours -- poverty wages in an area
where acute shortages of basic services have raised the cost of living.
Families break up as men cross the border in search of jobs, leaving
women vulnerable to the social chaos.
An Amnesty International report on the border town of Ciudad Juárez,
where hundreds of young women have been killed, quotes the director of
the city's only rape crisis center (annual budget: $4,500): "This city
has become a place to murder and dump women. [Authorities] are not
interested in solving these cases because these women are young and poor
As the U.S. economy slowed down after 2000, the number of jobs in the
maquiladoras stopped growing. Moreover, the privileged access that
Mexicans thought NAFTA had given them began to erode. The same global
corporate coalition that forced NAFTA through Congress later
successfully lobbied for the United States to sponsor China's full entry
into the World Trade Organization (WTO), paving the way for a huge
increase in Chinese exports to the United States. In the last two years,
an estimated 200,000 maquiladora jobs have left Mexico for China, where
workers can be had for one-eighth the Mexican wage. In a deregulated
world, there is always someone who will work for less.
Hope that NAFTA would enable Mexico to export its way to prosperity has
largely vanished. In order to relieve the pressures of unemployment, (then pres. Vicente) Fox
has been badgering George W. Bush to liberalize migration, create
guest-worker programs, and provide Mexican migrants with civil rights
and social benefits. The Mexican president regularly refers to migrants
in the United States as "heroes," and their remittances have become one
of the country's most important sources of foreign earnings....
It is an odd notion of economic development that rests on the meager
savings of low-wage Mexican workers in America while wealthy Mexicans
regularly ship their capital to New York, London and Zurich....
As in many developing countries, the largest part of Mexico's economic
problem lies not in restricted export markets but in the stifling
maldistribution of wealth and power that restricts internal growth. The
gap between Mexico's rich and poor is among the worst in the Western
Hemisphere. The rich hardly pay any taxes....Mexico -- even more than did the poorest
nations of Western Europe -- needs substantial investment in education,
health and infrastructure to create sufficient jobs for its people. A
contribution to that investment by the United States and Canada
equivalent to the EU's cohesion funds would approach $100 billion....Anything near that level would require,
among other things, a dramatic democratic reform of Mexico's corrupt and
inefficient public sector....
One lesson is already clear: Of all the world's developing countries,
Mexico was by far in the best position to exploit the neoliberal model.
Its proximity to the U.S. market and a domestic U.S. constituency of
millions of Mexican American voters gave Mexico advantages under NAFTA
that no other Third World nation had. The testimony of hundreds of
thousands of Mexican workers each year making the hard and dangerous
trip north is evidence that, after two decades, the model is not working
in Mexico. If it is not working there, it is unlikely to work anywhere."
News that doesn't receive the necessary attention.
Wednesday, December 27, 2017
Mexico's proximity to the US gave it advantages under NAFTA that no other Third World nation had. Yet after two decades the model was a failure in can't-lose Mexico, thus unlikely to work anywhere.The same global elites that forced NAFTA through Congress later successfully lobbied the US to sponsor China's full entry into the World Trade Organization (WTO), where workers could be had for 1/8 of Mexican wage-American Prospect, June 2003
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