Exporting Desperation: Free Trade in Mexico / World Policy Blog

April 9, 2014 – 2:24pm

By Lauryn Beer

“Right now, you could say that very few people have enough to survive on,” says Don Cristobal Sanders, the father of a deceased Honduran migrant whose story is told in the new documentary, Who is Dayani Cristal?

The film follows the journey of Dilcy Yohan Sandros Martinez – whose unidentified body was discovered in the Arizona desert. His tragic story unfolds as his remains are reunited with his family. As a husband and father of three children, Yohan made the difficult decision to “give [his family] a better life.”

Throughout much of Mexico and Central America, citizens are struggling to survive. Ironically, free trade agreements, known as NAFTA and CAFTA-DR, that were put in place partly to bolster their chances at home have actually undermined their ability to stay there.

Free Trade and Migration:

In 1993, just prior to its passage, then-President Bill Clinton explained that not only would NAFTA create more jobs in the U.S. through greater demand for U.S. exports, it would also lift Mexico out of poverty. Mexico, struggling with years of economic lethargy and endemic poverty, jumped at the chance. But there were a few conditions Mexico had to meet first.

The first NAFTA-led condition was the removal of subsides and tariffs. For many years, corn was the staple and primary crop of Mexico, and many livelihoods depended on its growth. Mexico historically subsidized its most imported crop —corn —enabling small growers to not only maintain a livelihood, but providing them with a means to feed their families and neighbors with what they grew. Post-NAFTA, the corn subsidies disappeared.

The result? U.S. agro-giants like Archer Daniels Midland and Cargill quickly moved to take over the Mexican market by flooding it with corn priced below the cost of production. Predictably, Mexican farmers of small-to-medium corn fields were quickly put out of business, but Mexico had no real strategy for how to reemploy so many displaced farmers. Coupled with the removal of the corn subsides came a flood of other cheaply priced agricultural crops from the U.S. This meant that Mexican meat, soybeans, cotton, poultry, and other farmers could no longer sell their own products at a high enough price to make them viable. The poverty that resulted was further exacerbated by the concurrent peso devaluation, which meant that all Mexican exports became less profitable.

NAFTA also led to a significant change of law that affected millions of small farmers who previously had been granted ejidos, parcels of land provided to producers too poor to otherwise afford land. After the change, the ejidos could be sold. As a result, not only did small farmers face a ruined market where they could not command a fair price for their crops, they lost the very land they farmed those crops on. The effect of these changes on rural communities was devastating.

Just as predictable was the migration north of small farmers in search of work. As Timothy Wise of Tufts University found, the impact of NAFTA and other international agreements in combination with U.S. agricultural subsidies has led to the movement of millions of Mexicans and other rural workers from their countries of origin into the United States every year. And while other factors have certainly combined to spur migration north, including prolific violence and environmental degradation, the devastation on Mexico’s economy caused in large part by NAFTA is a predominant reason.

What Happened to Job Creation in Mexico:

In theory, new jobs were to be created that would move Mexico out of reliance on agricultural crops and into manufacturing jobs, with higher wages. But the export-led economy NAFTA was meant to develop did not yield such jobs in either great enough number or at high enough wages to lift poverty in Mexico. In fact, the opposite happened. Wages either remained flat or dropped as productivity increased output without creating new jobs.

As the Carnegie Endowment reported, “Some Mexican workers have gotten export jobs, but only at real wages that are 20% lower than they were in 1994.” The exports created by U.S. manufacturers inside Mexico were designed to be returned to the U.S. market, leaving no in-country value to the Mexican economy beyond labor.

The proliferation of maquiladoras- manufacturing facilities along the U.S.-Mexican border- brought low-waged jobs, frequently poor working conditions, and a host of environmental problems. The government was ill-equipped to deal with the sudden boom town growth along the border in cities like Matamoros and Ciudad Juarez, and as those towns grew, infrastructure crumbled, and new problems arose around sewage disposal and clean water. The combination of significant health problems brought on by these issues added to the increasing number of Mexicans fleeing to the U.S.

CAFTA: lessons not learned

Unfortunately, the salutary concerns raised by NAFTA did not translate into better protections and the creation of a genuine level playing field for Central American countries under CAFTA. Many of the same practices that created problems in Mexico were included as part of CAFTA in 2004, including floods of cheap imports from U.S. corporations that displaced farmers by reducing the prices for their goods,and few alternatives to real work provided.

The level playing field and upward harmonization promised by both NAFTA and CAFTA have not come to fruition. Instead, millions of former farmers and agricultural works from Mexico and Central America have continued to stream across the U.S. border to take up available jobs, often without permission and at great personal risk.

What is the solution to these tremendously complicated economic problems fundamental to thousands of migration decisions? For a start, it must be acknowledged that a largely agrarian society with high levels of poverty cannot begin to compete against North American corporate behemoths on anything resembling the famous “level playing field” the Clinton administration promised back in 1993.

In the future, U.S. trade agreements with developing countries should do away with the kind of restrictions found in NAFTA that hinder those government’s policies that promote dynamic development. Instead, as Timothy Wise has concluded, “They should leave countries such as Mexico the flexibility to deploy effective policies for industrialization, rural development, poverty alleviation, and environmental protection.”

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This is the final instalmment in a series of Arts-Policy articles examining global migration through a cinematic lens.

Lauryn Beer is a writer who specializes in trade and human rights.

[Photos courtesy of Peter Haden, the White House, Bread For the World, andKashfi Halford]