NAFTA and Illegal Immigration

According to this article from the Los Angeles Times, much of the illegal immigration from Mexico in recent years may be explained by the joint effects of NAFTA, U.S. farm subsidies, and abundant cheap labor in other parts of the world:

Placing Blame for Mexico's Ills, by Marla Dickerson, LA Times: ...Many Americans are angry that as many as 12 million illegal immigrants, mostly Mexican, are living in the U.S., driven by lack of opportunities at home. Critics are demanding that Mexico right its stumbling economy ... and end its de facto development strategy of shipping its problems north...

But some experts say U.S. economic policies have played a role in fueling the mass exodus. Pushed hard by the United States, Mexico began embracing the ... prescription of privatization, free trade and government austerity in the early 1980s. A quarter of a century later, the results are decidedly mixed and are the heart of Sunday's cliffhanger presidential election in Mexico.

The contest pits leftist Andres Manuel Lopez Obrador, who wants to boost social spending and rethink ... NAFTA..., against conservative Felipe Calderon, who wants to maintain Mexico's policy on free trade and open the country's state-controlled energy sector to private investment...

Strict fiscal and monetary discipline has helped Mexico rise ... from its devastating 1994 peso devaluation. ... Yet the so-called Washington consensus has done little to spur economic growth, reduce income disparity, create jobs and stem migration to the U.S.

Consider the landmark NAFTA agreement. Proponents point to the nearly threefold leap in trade between the United States and Mexico as proof of the pact's success. ... Yet the agreement has yielded little in the way of net job creation or in helping to build the vibrant Mexican middle class that supporters promised.

U.S. and Mexican officials touted the deal as a way to stanch the flow of illegal immigrants by creating jobs in Mexico. The tide of undocumented Mexicans in the U.S. surged after the pact was implemented. Fully two-thirds of undocumented immigrants currently living in the United States have been there 10 years or less...

Many of those people are Mexicans from hard-hit rural areas, the predictable casualties ... of a trade deal that forced Mexico to wrench open its farm sector without a viable transition strategy for millions of subsistence farmers. ...

Some analysts contend that Mexico simply hasn't moved far enough and fast enough down the free-market path, while botching earlier reforms. Privatizations such as the 1990 sale of the state-owned telephone company essentially replaced public monopolies with private ones. Mexico's inefficient state-owned energy companies are harming its competitiveness. Red tape and corruption are strangling innovation.

But ... others contend that some free-market policies simply haven't delivered and are contributing to the immigration friction... Economists point to a host of demographic, cultural and economic factors fueling the mass migration. But many agree that NAFTA accelerated the decades-long exodus of Mexicans from the countryside by opening the nation's markets wider to subsidized U.S. agriculture products.

Mexico has shed nearly 30% of its farm jobs since the trade pact went into effect, according to government statistics. That translates into 2.8 million farmers and millions more of their dependents fleeing their fields. Some have taken subsistence jobs in Mexico's cities, but many have relocated to the U.S. ....

NAFTA experts say negotiators from Mexico and the U.S. knew that rural families ... would be hard hit by the trade deal. The bet was that many of them would find work in Mexico's burgeoning maquiladora export factories. But ... Mexico has lost more than four times as many farm jobs over the last 12 years as it gained in export manufacturing positions, in part because of relentless competition from China...

Mexico's agriculture minister last month pleaded with the U.S. and Canada to allow the country to keep import restrictions on corn and beans, which are scheduled under NAFTA to come off in 2008. Mexican farm groups have warned that the end of protections would send millions more rural dwellers toward the border. The U.S. quickly rejected the proposal.

But Lopez Obrador, who holds a slight lead in opinion polls, has declared that he wouldn't honor Mexico's NAFTA commitment to eliminate barriers on corn and beans if he were elected. ...  That kind of talk has U.S. trade officials and farmers chafing. ...

Comments

[anne]

http://select.nytimes.com/search/restricted/article?res=F20812FC34580C708CDDAA0894DB404482

March 3, 2003

Why Mexico's Small Corn Farmers Go Hungry
By Tina Rosenberg

MEXICO CITY - Macario Hernández's grandfather grew corn in the hills of Puebla, Mexico. His father does the same. Mr. Hernández grows corn, too, but not for much longer. Around his village of Guadalupe Victoria, people farm the way they have for centuries, on tiny plots of land watered only by rain, their plows pulled by burros. Mr. Hernández, a thoughtful man of 30, is battling to bring his family and neighbors out of the Middle Ages. But these days modernity is less his goal than his enemy.

This is because he, like other small farmers in Mexico, competes with American products raised on megafarms that use satellite imagery to mete out fertilizer. These products are so heavily subsidized by the government that many are exported for less than it costs to grow them. According to the Institute for Agriculture and Trade Policy in Minneapolis, American corn sells in Mexico for 25 percent less than its cost. The prices Mr. Hernández and others receive are so low that they lose money with each acre they plant.

In January, campesinos from all over the country marched into Mexico City's central plaza to protest. Thousands of men in jeans and straw hats jammed the Zócalo, alongside horses and tractors. Farmers have staged smaller protests around Mexico for months. The protests have won campesino organizations a series of talks with the government. But they are unlikely to get what they want: a renegotiation of the North American Free Trade Agreement, or Nafta, protective temporary tariffs and a new policy that seeks to help small farmers instead of trying to force them off the land.

The problems of rural Mexicans are echoed around the world as countries lower their import barriers, required by free trade treaties and the rules of the World Trade Organization. When markets are open, agricultural products flood in from wealthy nations, which subsidize agriculture and allow agribusiness to export crops cheaply. European farmers get 35 percent of their income in government subsidies, American farmers 20 percent. American subsidies are at record levels, and last year, Washington passed a farm bill that included a $40 billion increase in subsidies to large grain and cotton farmers.

It seems paradoxical to argue that cheap food hurts poor people. But three-quarters of the world's poor are rural. When subsidized imports undercut their products, they starve. Agricultural subsidies, which rob developing countries of the ability to export crops, have become the most important dispute at the W.T.O. Wealthy countries do far more harm to poor nations with these subsidies than they do good with foreign aid.

While such subsidies have been deadly for the 18 million Mexicans who live on small farms -- nearly a fifth of the country -- Mexico's near-complete neglect of the countryside is at fault, too. Mexican officials say openly that they long ago concluded that small agriculture was inefficient, and that the solution for farmers was to find other work. ''The government's solution for the problems of the countryside is to get campesinos to stop being campesinos,'' says Victor Suárez, a leader of a coalition of small farmers.

But the government's determination not to invest in losers is a self-fulfilling prophecy....

[anne]

Where China has generally protected its farm sector or allowed for significant and profitable urban movement for members of farm families, Mexico has turned away from the needs of small farmers, providing no farm subsidies and not fostering tecnhology transfer and education to allow for important urban employment opportunities. Waiting for America to reduce farm subsidies, especially for corn to ease the burden on Mexican farmers is a foolish never-to-be-fulfilled wait.

[anne]

Reasons China has taken off so well on development include education, technology transfer, protection of agriculture, currency stability. Mexico, with resource riches and a wild international energy market to help, has faltered in development policy.

[dryfly]

anne - I read that NYT article when it first came out - it is 100% right on... especially this part:

According to the Institute for Agriculture and Trade Policy in Minneapolis, American corn sells in Mexico for 25 percent less than its cost. The prices Mr. Hernández and others receive are so low that they lose money with each acre they plant.

What the article fails to say is the US producers would lose money on every acre too if it wasn't for subsidies. In fact farmers don't make much money on farming - the bankers, chemical, producers, machinery mfgrs are the ones who make most of the money - the subsidies become 'capitalized' into the cost of the land & equipment.

And I also agree - waiting for farm subsidies to decline HERE is waiting for Gadot. GOP has a lot of big talk about 'free trade'... but there is no way the predominantly Midwest GOP senators will allow subsidies to be reduced without a gun put to their head.

If you have ever been driving around local Mexico & saw their farms... I have... it is no wonder they abandon them & head to El Norte. Having been in the nasty parts of Juarez - I can tell you they won't stop there.

Last bit... A number of years ago I was diving out of a small town in Mexico near the Belize border (about a six hours drive from Cancun on rural roads). This is a small fishing village, military outpost & local tourist place (Mexicans from Mexico City & such go there, own small villas & not many Americans).

Understand I don't speak any Spanish... didn't have to... almost EVERYONE I talked to had spent time in the US as an 'illegal' one time or another... mostly working in factories, hospitals, restaurants or hotels.

They all spoke English. A couple of them had actually worked in factories I call on & knew those communities as well as I did. It was very strange having them give me advice on which local Taquerias to go to and which to avoid back in 'my' neighborhoods in the US. Those neighborhoods were NOT anywhere near the border, they were in Chicago & such.

This whole current Mexico-US thing is so strange as to be 'Through the Looking Glass'.

[jamzo]

let me see if i understand this

us corn growers can sell corn for 25 percent less than mexican farmers can produce it

the us subsidizes the us corn growers to produce this corn and they produce more than the us market requires

they want to make money selling the surplus corn they have been incentivized to produce

the us government negotiates with mexico to allow
cheap subsidized us corn to compete with their domestic producers who will have a disadvantage in the marketplace

i certainly hope the us gets more from this situation than happy corn growers, happy lobbyists and happy
policiticians

the program certainly imposes great costs on many other people in the us and mexico

it is wondrous to behold the things that economic models can justify

[anne]

Interesting comments. We are a people of corn, by the way. Corn is wonderfully useful as food itself, to food mixes, to animal feed, to most of our mixed sugar, to another sort of fuel entirely, ethanol. Were there corn blouses, I would definitely be there.

[dryfly]

i certainly hope the us gets more from this situation than happy corn growers, happy lobbyists and happy policiticians

jamzo - don't forget the dead zone at the mouth of the Mississippi... all those farm chemicals & such go somewhere after the rain washes them out.

And the channelizing of the big river to allow huge barges up & down the river... means the silt washing down no longer nourishes the delta protecting New Orleans.

So maybe farm subsidies are the ones REALLY at fault for the flooding after Katrina?

We are all down stream from someone.

[Stormy]

NAFTA

1. Mexico’s trade surplus: Disconnect between manufacturing productivity and wages. Real wages declined 5% between 1994 and 2005.

2. Mexico became an export driven economy—just as China now is.

3. There is no protection for either labor or the environment in Mexico. In fact, under NAFTA, attempts to protect the environment is met with lawsuits from foreign firms.

“When officials in any of the NAFTA countries attempt to tackle environmental problems through regulation, they face the threat of an expensive lawsuit, thanks to NAFTA protections for foreign investors. For example, investors are allowed to demand compensation for "indirect expropriation", interpreted to mean any government act that diminishes the value of a foreign investment. Following one such suit, the Mexican government was ordered to pay nearly $17 million to a California firm that was denied a permit from a municipality to operate a hazardous waste treatment facility in an environmentally sensitive location. “

http://www.tni.org/archives/cavanagh/nafta.htm

Yes, Mexico is now competing with China for cheap labor. Yes, NAFTA gutted Mexico’s agricultural economy. But wage decline was not just in agriculture. Without labor regulations, FDI had a field day.

And, of course, we will not mention the effect of the “Guest worker to-be-program” and the loss manufacturing jobs with their multiplier effect in the U.S.

At some point, Mexico is going to turn “Venezualan,” especially if we cut off the borders. The border has been a safety valve for Mexico, as well as a source of cheap labor in the states. Bush knows this full well, as do his corporate buddies.

Is it any wonder that U.S. firms do better abroad than foreign firms in the states? I have seen a lot of dumb things in my life, but the current “free trade” policy, shaped by the WTO, supported by the tnc’s and the economists, is about the dumbest thing yet. Wealth disparity will continue to increase.

Five or six years out and after admiring all the corporate profits, we will wake up and not know the land or world in which we live. If a crash does get us by that time, peak oil and global warming and environmental destruction will be at or near our doorstep.

[bakho]

The US eased its transition for rural workers with WWII followed by the GI Bill that sent soldiers to college for additional training. Where is the money spent by Mexico as part of NAFTA for training its workforce to move into higher paying jobs?

[anne]

Notice the fear-mongering:

http://www.nytimes.com/2006/06/29/world/americas/29mexico.html?ex=1309233600&en=12e78c8c6707ad37&ei=5090&partner=rssuserland&emc=rss

June 29, 2006

Mexico's Election Pits Promise Against Fear
By JAMES C. McKINLEY Jr.

MEXICO CITY — Mexico's polarizing presidential campaign ended officially on Wednesday and, with four days to go before the vote, it has come down to a contest between a gritty, charismatic advocate for the poor and a well-educated technocrat.

Like many elections, this one is a struggle between promise and fear and remains too close to call. On one side is Andrés Manuel López Obrador, the former mayor of Mexico City who has traveled little outside Mexico and says he is inspired by Gandhi and Franklin D. Roosevelt. On the other is Felipe Calderón, the former energy minister with a Harvard degree who talks of fitting Mexico into the globalized economy.

But for many voters the choice is complicated because Mexico only emerged six years ago from seven decades of single-party, autocratic rule and there are some who say that what is at stake on Sunday is the survival of still-fragile democratic institutions.

"My fear is that with López Obrador we could end up very soon with an all-powerful president again," Enrique Krauze, an author and historian, said Monday at the Council on Foreign Relations in New York, adding that Mr. López Obrador was "very ignorant" and "inward looking" and "dismisses the rule of law as something made by the bourgeoisie to oppress the poor."

Such accusations and concerns — and many consider them nothing short of fearmongering — have defined the race for many voters.

Mr. López Obrador has been hit with advertisements depicting him as a spendthrift populist with a tendency to foment violent protests. His opponents have compared him to President Hugo Chávez of Venezuela and have suggested that he is an autocrat. Many of Mr. Calderón's supporters acknowledge they are voting out of fear of what a maverick leftist like Mr. López Obrador might do, rather than enthusiasm for Mr. Calderón, a dapper man who speaks with all the fire of an economist.

"It's more of a vote against López Obrador than for Calderón," explained Jorge Valenzuela, a cab driver in Mexico City. "López Obrador seems to me like a well-intentioned person, but he's very violent." ...

[anne]

Fear-mongering:

http://www.nytimes.com/2006/06/28/opinion/28krauze.html?ex=1309147200&en=293eb5246af01d17&ei=5090&partner=rssuserland&emc=rss

June 28, 2006

Bringing Mexico Closer to God
By ENRIQUE KRAUZE

SHOULD Andrés Manuel López Obrador, the front-runner in Mexico's presidential race, emerge victorious on Sunday, it could usher in a form of Latin American leftism as yet unseen: messianic populism. Mexico's fragile democracy could become its first casualty.

Outside of Mexico, people ask which Latin American leader Mr. López Obrador most resembles: Hugo Chávez of Venezuela, Evo Morales of Bolivia or Luiz Inácio Lula da Silva of Brazil. The truth is that he's not like any of them. He does not have the military stamp of Comandante Chávez or the indigenist roots of Mr. Morales. Nor is he a born compromiser like Mr. Lula who, as some Brazilians say, seems to "know the value of 10 percent." Mr. López Obrador is different: he always strives for 100 percent. And he has higher models to emulate.

Earlier this year an interviewer asked him what religion he followed. "I'm Catholic, fundamentally Christian," Mr. López Obrador responded. "The life and work of Jesus fill me with passion. He, too, was persecuted in his time, spied on by the powerful of his era, and he was crucified." ...

[NOITEMPLE15]

This lecture by Minister Eric Muhammad speaks powerfully to the issue of illegal immigration and ties the Cynthia Mckinney incident and the Duke rape case together with it to place it within the larger context of America's race problem.

It has been deleted by THE WHITE MAN several times due to the truth it speaks to America's race problem and we're sure will be deleted again soon. Get it while you can.

THE BLACK...WHITE...PROBLEM IN AMERICA

4/16/06

THIS LECTURE IS 5.90MB IN SIZE. WITH HIGH SPEED INTERNET, IT WILL TAKE ONLY SECONDS TO DOWNLOAD. WITH DIAL-UP IT COULD TAKE UP TO AN HOUR.

CLICK ON THE LINK BELOW TO BEGIN DOWNLOAD.

http://www.zshare.net/download/the-black-white-problem-in-america-4-16-06-wma.html

MUHAMMAD'S TEMPLE # 15

ATLANTA, GA.

[dryfly]

At some point, Mexico is going to turn “Venezualan,”

Looking at the reports & annes links... maybe later today.

[Stormy]

Because Mexico cannot require foreign investors to give preferences to Mexican suppliers, there is not much spillover to the Mexican economy. (See link above.)

Among OECD countries:

1. Its per capital wealth vs GDP is second lowest.

2. Its spending on education rose faster than its GDP.

3. Its population is rapidly increasing. Consequently, there is not much left over for educational infrastructure. In short, it is running a losing race.

4. It has also cut the tax rate on the wealthy and on corporations, both from 33% to 30%. Sound familiar?

(Information is from www.oecd.org and the Heritage Foundation.)

GDP growth has slowed since NAFTA. According to the IMF: GDP growth from 1960 to 1980 was 4%; from 1993 to 2005, 1.3%.

Remittances—money sent back to Mexico from those outside its borders—are approximately 3% of its income. That is a huge number.

In short, NAFTA has not been a wealth creator for Mexico, certainly not where it counts. It has created wealth for the already wealth and for foreign firms. End of story.

Anne is right: the fear mongering has begun. Close the Mexican/U.S. border and there will be an explosion.

Watch the economists join in the fear-mongering if Obrador is elected. We have created this condition with long-term policy and trade failures.

[dryfly]

Remittances—money sent back to Mexico from those outside its borders—are approximately 3% of its income. That is a huge number.

I was reading that in some of the Mexican states remits are larger than total payroll of the citizens remaining. These were extremely poor & rural states like Michoacan & Zacatecas.

NAFTA had a awful lot of promise but it has been a terrible failure. Corporate special interests on both sides ground it to pulp... and are now squeezing the juices.

A lot of folks predicted that back in the 90s. I myself was worried but optimistic it would work out better. So far it hasn't.

[Fred Hapgood]

I understand why people might want to shore up third-world agriculture, but surely it is -- for the most part -- a doomed enterprise. To a first approximation, a modern economy can feed itself on around 1% of its population, including the market for organic produce and free range chicken. Mexico has a population of around 100 million, which suggests that its agricultural sector will eventually arrive at a employed population of less than a million (depending on the details of technology and trade, perhaps a less). Right now it has a labor force of about 40 million, maybe eight of which are in agriculture. Thus it looks like the sector is about eight times larger than the underlying economics can support. Given that, what is the right policy to take towards Mexican peasantry? Encouraging them to stay on the land doesn't look like the right thing to me.

[anne]

The curious problem for Mexico has been an absence of political support for national development that has become self-sustaining. There have been no plans other than to allow markets to generate growth and opportunities of themselves, while there had been some susbsidy of agricultural production by regulation of the consumer price of corn products. This product price regulation however after American corn products began to be imported proved to be almost no protection. There is indifferent general education, though university education is well-subsidized. Technology transfer has never been a bargaining issue for Mexico.

[anne]

Subsidizing agriculture through a transition in development is precisely what is necessary in Mexico and similar countries. There is where the public safety net must be. Workers, especially educated workers, will move to urban settings no matter the subsidy to agriculture, but there will be a cushion. Leadership's main worry about China has been whether the cushion can be well enough sustained.

[save_the_rustbelt]

NAFTA has made a ginat mess for both the Us and Mexico and maybe it is time the federal government comes up with a means of cleaning up the damage.

[donna]

All of this is because of cheap oil. Cheap oil means we can import crap cheaper from China than Mexico, and fertilize crops on huge farms instead of relying on small organic farms.

The real "trade imbalance" is based on our addiction to oil.

[anne]

http://maxspeak.org/mt/archives/002331.html#more

June 30, 2006

The Morning NAFTA
By Julio Huato

Enrique Krauze's op-ed in the New York Times ("Bringing Mexico Closer to God") about Andrés Manuel López Obrador, Mexico's leftist presidential candidate, reveals more about Krauze's conservative outlook than about the true prospects of a López Obrador administration. Lacking substantive facts, Krauze mixes a few casual remarks with his own personal impressions to project the ghost of "messianic populism" onto López Obrador's future presidency.

But the main threat to Mexico's fragile democracy is not a ghost. It is, instead, the brutal reality of the country's social inequality. Twelve years after NAFTA was implemented -- official sources attest -- almost fifty percent of Mexicans still live in poverty. Measures of wealth dispersion are dismal, comparable to those in Brazil, Haiti, and sub-Saharan Africa. Many Mexicans are under the impression that Felipe Calderón, the candidate of the right, "has failed to convey real concern for Mexico's poor," as Krauze puts it, because he has no actual concern for Mexico's poor.

There can be no political stability in Mexico and -- therefore -- lasting growth without narrowing the gaping economic divide between the rich and poor. López Obrador's redistributive policies promise to be effective without disrupting private ownership and markets; not only compatible with the growth of the economy but actually growth inducing. Wall Street seems to have grasped this. Joydeep Mukherji, Standard & Poor's specialist in Latin America, recently told CNN en Español that foreign investors' real concern was Mexico's ability to grow in the long run, which depended on stable social conditions, and dismissed short-term turbulence should López Obrador win.

López Obrador has been quite consistent in his economic policy stance, pledging to respect the autonomy of Mexico's central bank, rejecting fiscal and monetary policy gimmicks, and ruling out increased indebtedness. While fulfilling his vow to tackle inequality will require a substantial hike in tax revenues, López Obrador intends to accomplish it by eliminating tax privileges for the rich and well connected, limiting tax evasion, fighting corruption, and reducing the top bureaucracy's frivolous spending and outrageous salaries. Krauze dismisses it as demagoguery, but it is credible.

As mayor of Mexico City, López Obrador proved to be a resourceful penny pincher....

[anne]

What is interesting is that a Mexican Presidential candidate who simply mentions Franklin Roosevelt will so frighten conservatives. Mentioning Gandhi or Jesus is worse, however :). Several years ago, I can remember watching Wall Street Week being broadcast from Argentina and ministers from Argentina and executives from Wall Street rave about the economy to which a Peso linked to the dollar attracted large dollar flows. The problem though was that the Peso was too expensive and the Argentine economy was already faltering, but every analyst knew that Argentina must keep the currency link and let the market do what the market would do. A depression later, Argentina learned. Brazil has learned even better. Mexican conservatives have an interest in not learning.

[anne]

The model for Mexico needs to be partly China and partly Brazil. China for the emphasis on education and technology transfer and corresponding employment opportunity and for a limitation of flighty capital flows and domestic saving. Brazil for the social safety net and protection of the natural resource base. China and Brazil for infrastructure development.

[anne]

When a Mexican Presidential candidate mentions Jesus, the fear engendered among conservatives comes from the relation of the mention to the Jesus who loved the poor (shudder). Be afraid, be very afraid of poor loving Mexicans :)

[anne]

No matter the criticism, I am not including the last comment in confession because the last time I had to swear I never was nor ever could be a "liberation theologist." Never again :)

[ninjaplease]

Please please,

Keep promoting free trade.

The makers of weapons need another soviet union to out build when the eventual backlash occurs.

[camille roy]

I understand why people might want to shore up third-world agriculture, but surely it is -- for the most part -- a doomed enterprise.

Ah, that comment is surely from a free market ideologue. Who else would propose throwing millions out of subsistence work so that they could starve, according to his theories?

Though it is true that one of the most consistent 'lessons' of the Bush administration is a deep lack of concern about death as a result of failed policy or the lack of policy. American deaths, Iraqi deaths, Mexican deaths - all part of our governing 'philosophy'.

[lonesome moderate]

While fulfilling his vow to tackle inequality will require a substantial hike in tax revenues, López Obrador intends to accomplish it by eliminating tax privileges for the rich and well connected, limiting tax evasion, fighting corruption, and reducing the top bureaucracy's frivolous spending and outrageous salaries.

Boy, if you believe that then I've got a thriving Mexican corn farm to sell you. What I've heard of Lopez Obrador's rhetoric so far reminds me a lot of Jose Lopez Portillo, who may have mismanaged the economy worse than any other Mexican president. If that's truly the direction he's going in then it seems to me that fear is a quite appropriate reaction.