Up for Grabs

[Mexico & 10 years of NAFTA]

by David Bacon

New Internationalist magazine, December 2004

The North American Free Trade Agreement between the US, Canada and Mexico is 10 years old. President Bush calls it a great success and vows to extend it to the rest of Latin America. Bill Clinton before him promised that the rising tide of cross-border trade would 'lift all boats', benefiting everyone.

The agreement certainly produced some winners. Large corporations building factories south of the US/Mexico border have been able to cut labour costs and increase profits. Mexico created a new generation of billionaires during the treaty's lifetime.

But the swell of profits and productivity did not lift all boats. Instead, on both sides of the border, communities of working people and the poor have paid dearly for trade liberalization.

If anything, predictions of US job losses were underestimated. By November 2002, the US Department of Labor (DoL) had certified 507,000 workers for extended unemployment benefits because their employers had moved their jobs south of the border. The number was so embarrassing that Bush told the DoL to stop counting.

Most observers believe half a million is a significant undercount - partly because many jobless workers don't know they qualify for benefits. According to the Washington-based Economic Policy Institute, NAFTA eliminated nearly 880,000 jobs.

While the job picture for US workers was grim, NAFTA's impact on Mexican jobs was devastating. Before leaving office (and Mexico itself, pursued by charges of corruption), President Carlos Salinas de Gortari promised Mexicans they would gain the jobs the US lost. And promised the US that new jobs south of the Rio Grande would halt the flow of Mexicans heading north.

Instead, during the first year of the deal Mexico lost over a million jobs as NAFTA-related reforms required the privatization of factories, railroads, airlines and other large enterprises. This led to waves of layoffs. And because unemployment and economic desperation in Mexico increased, the flow of migrants to the US actually increased. Meanwhile, Salinas de Gortari's stock plummeted and he became the most unpopular president in Mexican history.

For a while it seemed that the growth of maquiladora factories, little more than sweatshops, along the border would make up for at least some of the job losses. According to the Maquiladora Industry Association more than 1.3 million workers were employed in 2,000 border plants by the end of 2001. Most maquiladoras produced exclusively for the US market. But tying the jobs of so many Mexicans to this market proved a disaster as well. When Americans stopped buying during the recession of 2001, the maquiladoras shed thousands of workers. The Government estimates 400,000 jobs disappeared. As the saying goes: 'When the US economy catches cold, Mexico gets pneumonia.' The industry association and the Mexican Government blamed the job losses on Chinese competition, burying the fact that the plants produced far more goods than a recession-plagued US market could absorb.

But the most serious consequence of NAFTA has been its failure to protect the rights of workers. To attract investment Mexican authorities worked with compliant 'official' unions to maintain a low-wage economy - reinforced with a system of 'labour control'.

According to Martha Ojeda, director of the Coalition for Justice in the Maquiladoras, the government-mandated minimum wage for workers on the border is about $4.20 a day - the same as it was 110 years ago when the treaty came into effect.

According to the Center for Reflection, Education and Action (a church-based research group), a gallon of milk which costs $3 in a Tijuana supermarket takes 5-6 hours of a maquiladora worker's labour to buy. Another study by the Economics Faculty of the National Autonomous University in Mexico City found that Mexican salaries have lost 81 per cent of their buying power in the last two decades.

In the barrios of Torreon, three hours south of the Texas state line, it takes 1,500 pesos a week to provide for a family of four. A normal maquiladora worker makes about 320-350 pesos. 'In our communities, you see kids nine or ten years old bagging groceries in supermarkets or washing cars on the corners,' says local resident Betty Robles.

Maria Ibarra, who works at the Maxell plant in Tijuana, describes the impact of poverty-level wages on her children:

'My oldest one is 19 and works in a maquiladora. He's been there since he was 15. He couldn't continue at school because we couldn't get by on what I was earning. The younger one is 16, he just started in a small shop where they're teaching him the job. He earns enough for his bus fare and his food, that's all.

'I felt very bad when they first went to work. Children should be in school. When they were babies, I thought they were going to study and become something in life. But I was forced to send them to work so we could survive, so that we could live a little better. And it's not just my children - they're just two of many.'

Omar Gil, who works in an auto parts plant in Nuevo Laredo comments: 'I've been in these factories since I was 19 and now I'm 26. I don't have time for any kind of personal life. I am so tired that on weekends I don't even want to leave the house. I just want to rest. I feel like my youth has passed me by.'

To enforce this system, maquiladora workers are required to join unions that have no intention of raising wages or ending dangerous working conditions. Throughout NAFTA's 10-year history, workers have sought to break free in a long labour war waged from plant to plant along the border. They have organized independent unions to fight for a larger share of the enormous wealth the factories produce. But these efforts have been met with firings, plant closures and even physical violence.

In those few instances when workers successfully formed independent unions - as they did at Tijuana's Han Young plant in 1998 - their strikes were broken, despite guarantees under Mexico's Constitution and Federal Labour Law.

NAFTA's sponsors promised that the treaty's labour side agreement would protect workers, even though the treaty itself was intended to demolish all barriers to foreign investment. The side agreement proved toothless. In ten years not one fired worker has been returned to their job, and not one independent union has gained legal status.

Instead, the labour protections built into Mexico's legal system have been systematically undermined and eliminated as obstacles to investment. Even when Mexican judges held that strikes were legal their decisions were defied with impunity by government authorities.

The maquila model has become the goal for the World Bank as well. In 2002, Mexican President Vicente Fox announced he would support the Bank's recommendations to scrap most of Mexico's Federal Labour Law - eliminating mandatory severance pay and the 40-hour week. Mexico's historic (though not always enforced) ban on strike-breaking and guarantees of healthcare and housing would be gutted as well.

The recommendations were so extreme that a leading Mexican entrepreneur, Claudio X Gonzales, called them 'over the top', charging that the World Bank wouldn't dare make such proposals for a developed nation.

The policy of encouraging foreign investment at all cost also led to the wholesale privatization of Mexican industry over the past decade and the effects have been devastating. While three-quarters of the workforce belonged to unions three decades ago, less than 30 per cent do today. Private owners reduced the membership of the railway workers' union from 90,000 to 36,000.

During the last two decades the income of Mexican workers has lost 76 per cent of its purchasing power. Under pressure from foreign lenders, the Mexican Government ended subsidies on the prices of basic necessities - including gasoline, electricity, bus fares, tortillas and milk - all of which have risen drastically. An estimated 40 million people live in poverty and 25 million in extreme poverty. The country's new independent union federation, the National Union of Workers, claims more than nine million people are out of work - a quarter of the workforce.

Well before NAFTA the disparity between US and Mexican wages was growing. Mexican salaries were a third of those in the US in the 1970s. They are now less than an eighth. It is this disparity which both impoverishes Mexican workers and acts as a magnet drawing production from the US. By exacerbating these trends NAFTA forced working communities in Canada, the US and Mexico to ask some basic questions.

Do workers in developing countries have the right to pursue economic development in their own interest? Is there an alternative to becoming a low-wage export platform with increasing social and economic inequality?

Unless the international trade structure is changed drastically, national development alternatives, based on rising wages and production for a domestic market, will not be possible. Proposing a social clause within that trade structure, even one that limits the prerogatives of foreign investors, does little to make national development less dependent on transnational capital.

'The struggle by unions, social justice groups and environmentalists is about more than just winning a seat at the table or a social clause or environmental rules,' the Canadian Labour Congress declared at the time of the World Trade Organization negotiations in Seattle. 'We're determined to change the entire trade regime.'

Four years ago, at the height of the protests that shook those negotiations, Zwelenzima Vavi, the head of the Congress of South African Trade Unions, described the alternative to NAFTA and the free trade philosophy underpinning it.

'In the pursuit of profit,' he said, 'governments are told to remove worker protections, and then use that as an inducement for investment. But development is a wider concept. It includes social development, and the living conditions of the people. Development can't exist with mass unemployment and poverty.'

That one-sided development - productivity and profits for the few, unemployment and poverty for the many - is NAFTA's legacy..

David Bacon is a San Francisco based writer and photographer. His book The Children of NAFTA has just been published by the University of California Press (www.ucpress.edu).

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