NAFTA did more harm than good for Mexico
One immediate result of NAFTA was the export of cheap, subsidized American corn into Mexico and the consequent bankruptcy of about 2 million individual Mexican maize farmers, who then found poverty-wage work on large Mexican corporate farms, with American companies along the border or, crossing the border, throughout the United States.
Mexican manufacturing — e.g., of farm implements — was wiped out. Real Mexican wage levels in general have declined since NAFTA and 20 million Mexicans now live in food poverty. With the Mexican economy, largely rural, decimated, it became more dependent on the trade of drugs into the United States. The drug cartel money and power now reaches into Mexican government and police — as seen in the massacre of 43 students in Iguala, south of Mexico City.
Since NAFTA in 1994, a half-million jobless Mexicans per year on average have migrated into the United States, and our current trade deficit with Mexico is about $50 billion per year. The general U.S. trade deficit with trade deal partners is about $300 billion per year — i.e., we operate that policy at a consistent, large loss.
Despite the common-sense-expected reduction in American manufacturing, jobs and wages that accompanies trade deal outsourcing of U.S. manufacturing to cheaper countries, the current administration and Congress are trying to push through more such corporate-friendly trade deals with Asian and European countries using a “fast track” up-down vote procedure that avoids public debate that would reveal details upsetting to the American public.
http://www.startribune.com/opinion/284936631.html
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NAFTA: 20 years of regret for Mexico
Mark Weisbrot 4 January 2014
Mark Weisbrot is co-director of the Centre for Economic and Policy Research in Washington DC. He is also president of Just Foreign Policy. He co-wrote Oliver Stone's documentary South of the Border.
Mexican tractor drivers burn a tyre of one of their vehicles in Mexico City on 31 January 2008 prior to a rally against the North American Free Trade Agreement (NAFTA). Photograph: Mario Guzman/EPA
It was 20 years ago that the North American Free Trade Agreement between the US, Canada, and Mexico was implemented. In Washington, the date coincided with an outbreak of the bacteria cryptosporidium in the city's water supply, with residents having to boil their water before drinking it. The joke in town was, "See what happens, NAFTA takes effect and you can't drink the water here."
Our neglected infrastructure aside, it is easy to see that NAFTA was a bad deal for most Americans. The promised trade surpluses with Mexico turned out to be deficits, some hundreds of thousands of jobs were lost, and there was downward pressure on US wages – which was, after all, the purpose of the agreement. This was not like the European Union's (pre-Eurozone) economic integration, which allocated hundreds of billions of dollars of development aid to the poorer countries of Europe so as to pull their living standards up toward the average. The idea was to push US wages downward, toward Mexico's, and to create new rights for corporations within the trade area: these lucky multinational enterprises could now sue governments directly before a corporate-friendly international tribunal, unaccountable to any national judicial system, for regulations (eg environmental) that infringed upon their profit-making potential.
But what about Mexico? Didn't Mexico at least benefit from the agreement? Well if we look at the past 20 years, it's not a pretty picture. The most basic measure of economic progress, especially for a developing country like Mexico, is the growth of income (or GDP) per person. Out of 20 Latin American countries (South and Central America plus Mexico), Mexico ranks 18, with growth of less than 1% annually since 1994. It is, of course, possible to argue that Mexico would have done even worse without NAFTA, but then the question would be, why?
From 1960-80 Mexico's GDP per capita nearly doubled. This amounted to huge increases in living standards for the vast majority of Mexicans. If the country had continued to grow at this rate, it would have European living standards today. This is what happened in South Korea, for example. But Mexico, like the rest of the region, began a long period of neoliberal policy changes that, beginning with its handling of the early 1980s debt crisis, got rid of industrial and development policies, gave a bigger role to de-regulated international trade and investment, and prioritized tighter fiscal and monetary policies (sometimes even in recessions). These policies put an end to the prior period of growth and development. The region as a whole grew just 6% per capita from 1980-2000; and Mexico grew by 16% – a far cry from the 99% of the previous 20 years.
For Mexico, NAFTA helped to consolidate the neo-liberal, anti-development economic policies that had already been implemented in the prior decade, enshrining them in an international treaty...
http://www.theguardian.com/commentisfree/2014/jan/04/nafta-20-years-mexico-regret
