The “North American Free Trade Agreement”? What Will it Mean for Low Income Mexicans and Americans?
“Latin America is going to be convinced that Mexico has resigned from the continent and now belongs to the United States, but prosperity has its costs and giving up sovereignty is the price Mexico must pay for it.”
— Elliot Abrams, former Assistant Secretary of State for Inter-American Affairs. (1)
Although it may seem to be an arcane matter best left to hard-core economists, the proposed North American Free Trade Agreement (NAFTA)—which would unite the US, Mexico, and Canada in a single huge economic system—should be of deep concern to all US and Mexican citizens. While in Mexico the NAFTA has been the subject of heated debate both in the media and at every level of society, here in the US the proposed trade pact has been largely ignored by the mainstream media, and many US citizens do not even know of its existence. Indeed, it is partly thanks to this public ignorance that President Bush has been able to persuade Congress to give him “fast-track” negotiating authority. This means that he has free rein to craft the sort of treaty he and his two equally conservative counter-parts want behind closed doors, and then present Congress with a fait accompli for a simple yes-or-no vote. * Nor does Bush intend to limit the trade agreement to these three countries; in fact, the NAFTA forms part of a broader agenda, setting the stage for Bush’s “Enterprise for the Americas,” which would expand the free trade zone, with all its faults, to cover the entire hemisphere with the single exception of Cuba.
* With fast-track authority the President can sign the agreement and present it for Congressional approval— Congress then has a maximum of 90 days to debate and vote on it, without possibility of any amendments. (Bush has just signed the agreement as we write…) As this vote will be taken after the November elections, most likely in early 1993, you can make a difference. There are already a substantial number of Congressmembers protesting the lack of protection of environmental, safety, health, and labor standards in the agreement.
Few groups in either the US, Canada, or Mexico oppose the basic principle of liberalizing trade, but there is much opposition to the NAFTA as it is currently being planned. While a carefully developed trade pact could benefit a large number of people in all three countries, the NAFTA as it now stands pits major US, Canadian, and Mexican industries and multinational conglomerates against labor unions, ecology advocates, and ultimately the poor majority in all three countries. Meanwhile, the groups lined up against it lack the lobbying power to make their voices heard in Washington.
The bulk of the arguments in favor of a free trade pact with Mexico are based on the hypothesis (supported by sophisticated economic modeling predicated on several unrealistic assumptions) that free trade ultimately benefits all sides. It does so, in theory, by allowing each country to exploit their “comparative advantage” in the production of different goods. Put simply, this means that each country can focus on producing and exporting the goods that it can make most efficiently—Mexico, for example, would produce goods requiring labor-intensive production, since it has a larger pool of “cheap labor,” while the US would focus on more capital-intensive, high-tech production.
The US View
For the US, the clear aim of “liberalizing” trade is to improve US competitiveness in the world economy. For the majority of large US corporations, the opportunity to take advantage of low Mexican wages means that profit margins can be increased while lower prices simultaneously make US goods more competitive against imports from other countries. Similarly, the large multinationals have every reason to overwhelmingly support an agreement which would guarantee their right to continue exporting from their low-cost production centers in Mexico.
Free trade, according to its proponents, would also benefit all concerned by opening up new markets for each country’s products. NAFTA advocates argue that by encouraging US-based corporations to move more of their operations to Mexico, the agreement will create new jobs in that country and as a result, will boost Mexican purchasing power and open up a large Mexican consumer market for US products.
The Mexican View
In addition to the production and export gains for the US, NAFTA proponents argue that by attracting increased foreign investment (through cheap labor and lax regulations) and opening up US markets to Mexican export firms, trade liberalization will ultimately lead to increased Mexican prosperity and stability. Some advocates even go so far as to suggest that this increased prosperity will allow the Mexican government to finance enforcement of environmental and workplace safety laws, leading to improved working and living conditions for all Mexicans.
A major goal of NAFTA from the Mexican perspective is to guarantee access to US markets for Mexican exports. Since the mid 80s, Mexico’s economic strategy has been based on export promotion. The government of President Carlos Salinas de Gortari has instituted a series of dramatic economic reforms following the “structural adjustment” model heavily promoted by the US government and the large international lending institutions such as the International Monetary Fund and the World Bank. This has entailed a focus on production of export goods, the removal of trade barriers and agricultural subsidies, a devaluation of the peso, privatization of public corporations, rigid wage controls, and cuts in social spending (including education, health, and social welfare). One result of this reform program has been some recovery in economic growth. However, the cost for the majority of Mexicans has been severe, including an over 60% decline in real wages over the last decade, a 50% decline in real crop prices, a 30% decline in per capita consumption of basic foods, and a net redistribution of income from the poor to the rich. (2) So wholeheartedly has Salinas embraced this export-oriented model, however, that the political future of his ruling Institutional Revolutionary Party (PRI) is now to some extent tied to the success of this free trade enterprise—the failure of NAFTA topass could undermine his entire economic program.
At this point, Salinas wants to see NAFTA pushed through as quickly as possible, in order to speed up the foreign investment he expects from it, and alleviate Mexico’s economic crisis. Mexico’s current economic strategy is heavily dependent on US investment, and NAFTA is seen as providing security and encouragement to investors who are looking for a long-term open market policy. Furthermore, NAFTA would safeguard Mexico against US protectionism—an important consideration, since any closing of US markets to Mexican exports would be very damaging to Mexico at this point, as approximately 70% of Mexican trade is with the US.
There are numerous fallacies in these arguments. For one thing, they gloss over several likely consequences of the proposed agreement which could bode disaster for lower income Mexicans and Americans. Moreover, some of the economic rationale behind the agreement is itself unsubstantiated.
The Average Mexican Citizen is Too Poor
For example, the idea that trade liberalization would open up a vast new market for American exports fails to take into account the overwhelming poverty of the average Mexican citizen. In fact, Mexico’s import barriers have largely been lifted over the last five years, so that most of the theoretical gains of this liberalization have already been realized. While there may be some increased demand for American consumer goods among the tiny Mexican middle class, at an average wage of under $2 an hour the vast majority of Mexicans simply do not have the purchasing power to boost American exports. (3)
Many critics have argued that the unemployment created by displacement of the Mexican peasantry will more than offset the job creation in the export sector, so that the net effect will be an increase in unemployment.
More to the point, there is very little chance that the NAFTA will result in higher wages for Mexican workers. The proponents of the agreement argue that increased investment by US firms in Mexico and the creation of new jobs in multinational industries will raise Mexican wages by increasing the demand for labor. (This is standard economic reasoning: more jobs mean less unemployment, and when unemployment is not a threat, employers must offer higher wages to retain their workers.) Again, this argument is contradicted by the Mexican reality: the enormous pool of unemployed and underemployed workers would more than meet the increased demand. (Estimates of unemployment and underemployment vary, but many have put the combined figures at approximately 50% of the workforce.)
Secondly, while there is little doubt that NAFTA would bring new jobs to Mexico, the fact that this job creation would be focused in the export industries means that the net effect on unemployment in Mexico would be minimal. This is well illustrated by the example of the maquiladoras—the belt of export assembly plants, the bulk of them US-owned, which stretch along Mexico’s northern border. These large manufacturing plants, which are notorious for their low wages and poor working and living conditions, have mushroomed over the last two decades as a result of the gradual liberalizing of trade restrictions. While the rapid growth of the maquiladora zone has brought with it the creation of many new (if underpaid) jobs, the rest of the country has seen little of these gains. The assembly plants import almost all of their inputs (over 98%) from outside the country, and therefore have virtually no spin-off effects on employment in other sectors. Consequently, even substantial growth in job opportunities in this sector has been nowhere near enough to absorb the one million people who enter the labor force every year. “Total new employment over five years [1985-1990] was less than half the number of new entrants to the labor force each year.” (4) In fact, many critics have argued that the unemployment created by displacement of the Mexican peasantry (see below), which is an almost inevitable consequence of the proposed agreement, will more than offset the job creation in the exportsector, so that the net effect will be an increase in unemployment.
Many other factors suggest that Mexican workers’ real wages are unlikely to rise. For one thing, the austerity measures imposed under the structural adjustment programs place a ceiling on wages in order to increase exports (lower production costs keep exports competitive) and direct any trade earnings toward debt servicing. These measures have already had a devastating effect on the poor, contributing not only to a decline in real wages but also to a dramatic rise in unemployment and displacement of the Mexican peasantry. (A recent study found that Mexico has the lowest real wage scale of any Latin American country—58% less than Brazil,110% less than Argentina and Colombia, and 291% less than Panama.) (5) There is no evidence to suggest that these austerity measures will be in any way eased by the NAFTA—indeed, it is likely to have the opposite effect, for the NAFTA will lock Mexico securely into the export-oriented model which has created such hardship for the Mexican working classes over the last five years.
remaining agricultural protections. (Without protective tariffs, which raise the prices of imported products to a level necessary for smaller farmers to stay afloat, these small-scale farmers cannot compete with the efficiency of huge US agricultural enterprises with their advanced technology and low-cost bulk production.) As a result, the agreement will complete the ongoing process of the marginalization of Mexico’s rural population—the one effect of the agreement on which practically all analysts concur. As US agribusiness and food processing firms pour into Mexico, campesinos (small, subsistence farmers) will lose their plots to large export enterprises, which will replace the traditional corn and beans with broccoli, asparagus, and other crops popular in the US. Besides leaving the campesinos landless, jobless, and impoverished, this trend will also lead in Mexico to increased hunger and dependence on US and Canadian basic grain imports.
As recently as a decade ago, Mexico imported very little corn and was close to being self-sufficient in its agricultural staples; by 1990, it had to import more than half its supply of basic grains from its two northern neighbors. This change would have been even more dramatic, had not the decline in real wages and increasing unemployment resulted in the decrease in per capita food consumption over the last eight years. (Current Mexican government figures estimate that over 40% of Mexicans suffer from malnutrition.) (6) As Mexican garment industry organizer Evangelina Corona puts it: “Free Trade is going to destroy Mexican industry, and we will wind up working for the Americanos at the same starvation wages. Who needs it?” (7)
Wreaking havoc on Mexican agriculture
In fact, the availability of new jobs in the export industries would almost certainly lure more Mexican workers away from the agricultural sector, especially as Mexican subsistence farmers would simultaneously be driven off the land by the removal of any
The concerns of American workers
The impact of NAFTA on American workers is also likely to be severe. At worst, wages, worklace health and safety standards, benefits, and environmental regulations could be driven down toward a lowest common denominator approximating the current levels in the maquiladoras. In particular, the agreement would give companies another club to hold over the heads of unions and communities by making it easier for them to threaten that, if they don’t get what they demand, they will simply close up shop and move to Mexico.
Indeed, the willingness of companies to act on this threat and the resulting consequences for US workers are already being felt. For instance, Grand Metropolitan, Inc., the parent company of Green Giant, recently moved its broccoli packaging operations from Watsonville, California, to Irapuato, near Mexico City. Ten years ago the Watsonville plant, which offers an average wage of $7.30 per hour, employed 1,200 workers. Today it employs 100, while the Irapuato plant is employing some 800 workers at an average wage of about 50 cents an hour. Since Green Giant is anticipating no import tariffs under the proposed version of NAFTA, its gains from such a move are obvious. Meanwhile, the closing down of the Watsonville plant has resulted in income and job losses for California broccoli pickers, cannery workers, and local farmers who supplied the plant with vegetables.
The US Administration has assured domestic workers that funds will be provided to compensate for job displacement and provide for worker retraining in affected industries. However, Bush has refused to include such plans in the trade negotiations, and offers no guarantee on these promises. Overall, there is little doubt that US citizens will gain from lower prices on some consumer goods. However, there is an equally strong likelihood of a rise in unemployment. The AFL-CIO estimates that US workers have already lost some 400,000 jobs to Mexico, largely thanks to the maquiladoras, while the American Coalition for Competitive Trade projects that a million additional jobs would be lost by 1995 should the NAFTA be approved. Less skilled workers will suffer at worst unemployment and at best a downward pressure on wages, effectively resulting in a decline in real income.
Environmental and health consequences
Some of the most serious implications of the NAFTA for Mexicans and Americans alike concern its potential environmental and health consequences. One of the greatest attractions of the southward move for profit-minded multinational corporations is Mexico’s lax enforcement of environmental regulations. The maquiladora zone itself is considered to be a toxic waste disaster area: according to one recent report, “of the 1,963 maquiladora factories set up on the Northern Border of Mexico… 1,035 generate significant amounts of toxic wastes. Of these latter, only 307 plants… comply with the requirements of Mexican environmental law.” (8) The problem lies not so much in the environmental regulations themselves, but in the Mexican government’s lack of resources and political will to enforce them.
Again, the implications for large US firms and multinationals are obvious: rather than incurring greater costs through compliance with US standards, these firms can move south to where standards are lower—a step that would become much easier should the NAFTA be approved in its current form. The recent relocation of the furniture manufacturing industry from the Los Angeles area is a case in point. Four years ago, the South Coast Air Quality Management District began to enforce the installation of spray chambers in these furniture plants because of the smog-producing hydrocarbon fumes which were leaking from their paint solvents. As a result, over 40 of these plants have now relocated to the maquiladora zone, where this requirement is not enforced.
Similarly, lower Mexican standards for the pesticide and chemical content of foods combined with the greater processing required for longer transport and storage time will in all likelihood have a negative impact on food quality and safety here in the US. Among the more vocal anti-NAFTA groups, in fact, are consumers concerned about the increased risk of contaminated food imports. Clearly, steps to raise Mexican standards in these areas to bring them more closely in line with American ones are a key prerequisite to drawing up a free trade agreement that is acceptable in terms of the health of the environment and consumers. Until this happens, Mexico’s “comparative advantage” will continue to consist largely of the humiliating, undesirable, and unproductive assets of low wages, poor working conditions, nonexistent or pliant government-controlled unions, low corporate taxes, and weak environmental protection regulations.
Learning From Past Mistakes: Canada
The Canadian parallel provides a sobering example of what lies in store for middle-and low-income US manufacturing workers if the NAFTA is allowed to pass in its current form. In 1988, Canada signed its own free trade agreement with the US. (It is this agreement that the Bush Administration is now seeking to extend in a somewhat revised form to include Mexico as well.) Just as the US ranks above Mexico in terms of wages, work place safety regulations, benefits, taxes, environmental protection laws, etc., so Canada by and large observes a higher standard than the US on most of these counts. Since the agreement went into effect, multi-national corporations (many of them US-based) have repeatedly sought to push standards in these areas down to the US level by threatening that, if labor unions, communities, and the government do not give them what they want, they will pack up and move their operations south, either to the US or to Mexico—a threat that the corporations have been quite ready to carry out. For example, Electrowire, Inc., a Canada ased US subsidiary firm, recently warned its workers that if they did not accept what amounted to a three-year wage freeze it would close shop and move to Mexico, backing up this blackmail by showing them a letter it had received inviting it to relocate to the maquiladora zone. The workers gave in, but their sacrifice may well prove futile if the present version of the NAFTA goes through.
The Bush Administration no more represents the interests of all, or even most Americans than the Salinas administration does those of all or most Mexicans.
In 1990, Canada’s manufacturing work force shrunk by 11%, or 180,000 jobs. The Canadian food processing industry alone has lost 30,000 jobs over the past two years, with the auto industry losing an additional 16,000. It is estimated that 55% of these layoffs resulted from plant closures. Unemployment has now climbed to over 10%; when workers who have simply given up and dropped out of the job market are taken into account, it reaches 15%. From April 1988 to April 1990, Canada experienced an unprecedented 1,403 foreign corporate takeovers of domestically based companies, with a combined value of $30.5 billion. (9) While not all of these developments can be blamed on the Canadian-US free trade agreement, the abrupt departure from, and in some cases outright reversal of, previous economic trends following its passage offers compelling evidence that it is responsible for much of what has happened. A recent poll in Canada found the majority of Canadians opposed to the proposed NAFTA, primarily because of the detrimental effects of the current US-Canada accord. The NAFTA’s aftermath in the US might well be comparable.
A Viable Alternative?
One of the ploys Bush is sure to use in selling the agreement is invoking the old myth of a unified national interest. The reality is that the Bush Administration no more represents the interests of all, or even most Americans than the Salinas administration does those of all or most Mexicans. In the final analysis, what is at issue here is power. While some sort of integration is inevitable, the blueprint which the Bush, Salinas, and Mulroney administrations are trying to steamroll through will increase the power of US-based multinational corporations relative to the state, workers, and the general public, and the power of the US relative to Mexico. As one analyst puts it, “NAFTA will represent little more than the annexation of the underpaid Mexican work force by US manufacturers.” (10)
What, then, would constitute an alternative vision for a trade pact that would promote equitable and egalitarian economic development while enhancing social and health standards? Mexican opposition leader Cuauhtemoc Cárdenas eloquently sketched its outlines in a speech last year, in which he proosed a plan for continued integration through a broad Continental Trade and Development Pact:
Correcting Existing Inequalities
“To have a new relationship, to do things the right way, Mexicans and Americans in particular must acknowledge that the existing premises of our economic integration are not necessarily adequate to build a just and viable new relationship. The exploitation of cheap labor, energy and raw materials, technological dependency and lax environmental protection, should not be the premises upon which Mexico establishes links with the US, Canada and the world economy ….
“False prophets of economic determinism say we have no option but to enroll in a given international bloc. However, there is one thing in which countries like Mexico truly have no choice: to redistribute income and to promote social development by conceiving new strategies in consonance with the world economy. We cannot accept the present order without attempting to negotiate the best possible conditions for our gradual international integration …. What we want to create is not defensive blocks or exclusive clubs but a new system of cooperation and integration between developed and developing countries.” (11)
An equitable trade pact, then, must take into account the current extreme economic imbalance between the US and Mexico, and promote a gradual liberalization of trade in such a way as to nurture Mexico’s infant industries until the two countries are in a comparable position to compete in a free market. From the outset of the NAFTA discussions, Bush has insisted that the two countries (and, later, Canada) must negotiate as equal partners, and that Mexico must not be accorded any special status because of its weaker economy despite Salinas’ requests to the contrary. The fact is, however, that Mexico is a “Third World” country with a per capita annual income of $3,458. Average annual incomes in the US and Canada, in contrast, are $22,690 and $21,245 respectively. Moreover, Mexico has a large foreign debt, and is heavily dependent on the US both for investment within the country and as a market for its exports. There is no question that the US-Mexico relationship is highly skewed.
Tim Golden of the New York Times described this disparity in an article last July: “The Mexican economy is on-twentieth the size of America’s. It is full of bottlenecks, inefficiencies and failing companies that still hang on. Under the expected terms of the treaty, Mr. Salinas’ third-world nation will have to integrate with its first world neighbors more quickly (though less fully) than Spain or Greece did in joining the European Community. And it will receive nothing like the regional-development funds that the European club gave its new members.” (12) A fairer plan for economic cooperation would allow Mexico time to phase in many of the adjustments, and
The pronounced disparity in social, labor, and health standards that prevails between the US, Canada, and Mexico also needs to be explicitly addressed in the trade agreement so that liberalization does not have the effect of driving these standards down to the lowest common denominator.
would provide financing to help Mexico develop the infrastructure and provide the retraining necessary for it to accommodate new investment by US firms. Special funding could also be provided to particular communities severely impacted by the transition. In the absence of such arrangements, integration is sure to impose severe hardships on Mexico.
Additionally, there is a case to be made for reestablishing (at least for the moment) some protections, specifically in the Mexican agricultural sector. Government support of basic grain prices, for example (comparable to that which US farmers have received for decades), could dramatically revive the rural economy. This could stem the continuing mass migration to the overcrowded cities with its disastrous effects on both the labor force and the environment. By increasing the incomes of small farmers and rural laborers, such a policy could reduce unemployment and help distribute income more equitably. In comparison to the enormous debt which Mexico continues to accrue through the import of food staples, this would be a relatively inexpensive way to prevent the further marginalization and impoverishment of the country’s underclass. Moreover, if carried out in tandem with some form of land redistribution, and an effort to ensure the effective participation of campesinos in the design and administration of agricultural programs, a re-channelling of state resources to the agricultural sector could promote the maintenance of economic and ecological diversity as well as enhance Mexico’s longterm food security.
Finally, the issue of Mexico’s foreign debt should be incorporated into the negotiation. Perhaps, as some NAFTA critics have argued, the only fair basis on which to begin a more collaborative relationship between the countries would be through a cancellation of this debt, or at least that part of it (the great majority) which is owed to banks in the US and Canada. Much of Mexico’s recent decline in environmental, health, and living standards has been the result of the repressive domestic economic policies which the Salinas government has pursued in an attempt to fulfill the country’s debt repayment obligations (during the period of these reforms, over half of Mexico’s export earnings have gone to servicing the debt). A US offering of debt relief would allow Mexico to reinvest in its infrastructure. Given the political will in both countries, the incomes of Mexican workers could then rise to a level that would make more realistic the possibility of Mexico offering a large consumer market for US exports.
The Need for a Health and SocialCharter
The pronounced disparity in social, labor, and health standards that prevails between the US, Canada. And Mexico also needs to be explicitly addressed in the trade agreement so that liberalization does not have the effect of driving these standards down to the lowest common denominator. As Cárdenas states “It is absolutely inadmissible that an international division of labor between the three countries assigns Mexico the role of permanent supplier of cheap labor. Raising Mexican wage levels and working conditions in the general direction of American or Canadian standards, instead of systematically lowering our salaries and incomes to attract reluctant investors, is a paramount reason for pursuing new forms of economic integration ….” (13)
If Mexican workers were able to seek jobs in this country more freely, Mexican employers would be forced to raise their wages in order to retain their services. The opening up of the border to jobseeking migrants, therefore, would be one option for ensuring greater equity in working conditions. This would in turn deprive US-based corporations of one of their principal incentives for moving south: cheap labor. By failing to include a provision liberalizing US immigration policies, the agreement tends to perpetuate the ten-to-one industrial wage differential currently prevailing between the two countries. However, the consequences for US workers could be dire: the rising unemployment in this country could be exacerbated and US unions weakened. A better option would be to enforce higher working standards within Mexico, reducing the need for migration.
Putting immigration on the agenda, moreover, has been politically unacceptable in the US, and the
Bush administration has vetoed the possibility from the outset. Many critics have argued that the implementation of NAFTA will only exacerbate the salary differential between North and South, and therefore will lead to more illegal immigration. NAFTA proponents counter that free trade, with its resultant increase in Mexican jobs and wages, will reduce the need for Mexico-to-US migration. However, the arguments outlined above suggest that this will not happen, unless there is some provision within the agreement to promote a rise in wage levels. Some NAFTA critics suggest that a formal development policy of raising the Mexican minimum wage over time is needed, to bring it more in harmony with US levels. Others argue that wage levels need not be speci-fied within the negotiations, so long as the agreement incorporates protections for union organizing and basic labor rights.
A humane and just trade agreement, therefore, needs to incorporate not only guarantees of internationally recognized rights, but also mechanisms for multilateral monitoring and enforcement of these rights.
Mexican unions are currently under strict government control, and the majority of the workforce is not unionized. In the maquiladora zone, a major attraction for foreign investors has been the fact that only 10% of the nearly half a mil-lion, predominantly female labor force is organized. As a consequence, general working condi-tions as well as safety and health conditions in these industries are appallingly poor. A trade agreement which incorporates basic worker protections, including standards for collective bargaining (and the right to strike), pay equity, and health and safety, should promote higher wage levels as well as better working conditions. This agreement should stipulate a schedule that makes tariff reductions contingent on improvements in the standards.
Similarly, a cooperative agreement which promotes greater integration between the US and Mexico cannot ignore the need for better protection of human rights in the latter country. Documented cases of human rights abuses in Mexico are on the rise—ranging from the PRI’s widely publicized electoral fraud in the 1988 Salinas victory over Cárdenas to torture within the prison system. Politically motivated violence has spread from the cities to the countryside, where campesino organizers are subject to frequent police and government harassment and repression.
Various US laws already restrict trade with countries that violate certain US human rights standards. Ironically, social, human, and economic rights are actually far better enshrined in Mexico’s constitution than in most countries of the world the problem, again, is in the lax enforcement of these provisions. A humane and just trade agreement, therefore, needs to incorporate not only guarantees of intemationally recognized rights, but also mechanisms for multi-lateral monitoring and enforcement of these rights.
Finally, a fairer pact should include safety nets for those displaced by the economic rearrangements, and the removal of the structural adjustment conditions which only entrench Mexico’s dependence on the US. Also, provisions need to be included to ensure that imports of products from other countries are subject to similar regulations. Many critics of NAFTA have aired concerns about the potential for Mexico serving as a “back-door,” through which cheap imports could be brought into the US without being subject to the wage and environmental standards which currently govern US imports. Without specific provisions, any efforts to improve Mexican wage levels and working conditions could therefore be undercut as multinationals simply relocate to still poorer countries, with weaker regulations, and then import their products into the US through the gateway of Mexico. Again, given the political will, such a detrimental impact of trade liberalization could be avoided through the imposition of “social” and “environmental” tariffs on imports to all three North American countries. Such tariffs could tax imports by an amount reflecting the wage differential between Mexico and the “third country.” Similar monetary amounts could be set to serve as “tariffs” representing environmental or social responsibility.
In the long run, protectionism itself is not the answer for either Mexico, the US, or Canada. However, it is equally important to recognize that the free market alone cannot ensure the well-being of all members of society. For this reason, no industrialized country allows the market unlimited freedom, but creates regulations to which all business must conform, in order to protect basic economic and human rights. Similar safeguards need to be incorporated into any agreement providing for the economic integration of North America. A well thought-out pact could reduce the dislocations which have already begun in the ongoing, less regulated process of regional trade liberalization. “Development is not just the business of developing countries. It is now clear to everybody, but above all to Americans, that they cannot isolate themselves from the poverty, deprivation, injustice, and environmental degradation of their neighbors. Without the north adopting a humanistic ideal of development, international cooperation will be hampered by pollution, urban decay, crime, drug consumption, and intolerance. The responsibility for solving these linked problems is not only the market’s.” (14)
Some Resources for Information and Action on NAFTA
NAFTATHOUGHTS—A newsletter on the North American Free Trade Agreement is published by The Development GAP and Mobilization on Development, Labor, Trade & Environment. Contact: The Development GAP, 1400 I Street, NW, Suite 520, Wash. D.C. 20005. Tel. (202) 898-1566.
Trading Freedom: How Free Trade Affects our Lives, Work and Environment, 1991, Institute for Food and Development Policy (Food First), 145 Ninth Street, San Francisco, CA 94103.
Report on the Americas, NACLA, 475 Riverside Drive #454, New York, New York 10115: Vol. XXIV, Number 6: “The New Gospel: North American Free Trade,” May 1991. 13
Mexican Action Network on Free Trade, c/o Frente Autentico del Trabajo, Calle Godard 20, Colonia Guadelupe Victoria, Mexico, D.F., Mexico 07790.
Action-Canada Network, 904251 Laurier Avenue West, Ottawa, Ontario, Canada K1P 5J6.
The Institute for Agriculture and Trade Policy provides daily summaries of news related to NAFTA, available on Econet on the TRADE.NEWS conference and on Peacenet on the EAI.NEWS conference.
Coalition for Justice in the Maquiladoras, 475 Riverside Drive, Room 566, New York, New York, 10115.
Mobilization on Development, Trade, Labor and the Environment, 100 Maryland Avenue, Box 74, Washington, D.C. 20002.
Your Local Congressperson.
El Financiero, April 15, 1991.
Free Trade Won’t Help Mexico’s Poor, Ecumenical Coalition for Economic Justice, Toronto, Canada, 1991, pp. 1-3
As Faux and Rothstein point out, “the very small potential of the Mexican market is illustrated by an ITC scenario, which assumes that the Mexican economy would grow by an extraordinary 2 percent per year because of NAFTA. This works out to a net increase in U.S. exports over 20 years of a miniscule 0.16 percent of the U.S. Gross Domestic Product (GDP). This figure is less than the measurement error that exists in the estimate of U.S. GDP.” Jeff Faux and Richard Rothstein, Fast Track, Fast Shuffle, briefing paper, Economic Policy Institute, Washington, D. C. 1991
Ecumenical Coalition Economic Justice, p.2 for
John Ross, “The Annexation of Mexico,” Z Magazine, July/August 1991, p. 143
John Ross, p. 144
Cited in John Ross, p. 143
Latin America News Update, Vol. 7, No. 7, July, 1991
Bruce Campbell, “Beggar Thy Neighbor,” in NACLA Report on the Americas, Vol. XXIV, No. 6, May 1991, p. 25
William A. Orme, Jr. “The Sunbelt Moves South,” in NACLA Report on the Americas, p. 19
“The Continental Development and Trade Initiative,” statement by Cuauhtemoc Cárdenas, New York, February 8, 1991, pp. 1-3
“In Free Trade, Mexico Sees an Economy in U.S. Image,” Tim Golden, New York Times, July 23, 1992.