The Short End of the Stick: NAFTA, and What We Can Do About It

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“Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!”

The New Colossus by Emma Lazarus

In the face of a new wave of nativism in the United States, this paper is an interrogation into how globalization has reshaped immigration. It uses the North American Free Trade Agreement and an assessment of its negative impacts to frame the movement of peoples in modern society, and discusses how these problems may be remedied.

The North American Free Trade Agreement (or NAFTA), implemented in 1994, is a trade liberalization pact between the countries of the United States, Canada, and Mexico that created the world’s largest trading bloc. The agreement in effect eliminated all export tariffs between the United States and Mexico, half of which were swept away with the signing of the law and the other half phased out over the following 15 years. This meant that goods were now able to flow freely between the two nations, which had profound impacts on the nature of employment.

NAFTA was perhaps lofty in the breadth of tariffs it undid, but it is not a standalone case in the world. Ever since the boom in technology from the 1970s onward made global communications possible, businesses have been expanding to operate in more and more markets. Coupled with fast, efficient transportation and certain benefits to outsourcing production, they have paved the new model of global exchange. Corporations are no longer intra-national entities that produce and sell within one specified region. They can now produce in regions all over the planet, even if the market for their goods may be half a world away. With the increased volume of input and end product exchange that globalized business necessitated, trade liberalization as a movement long predates NAFTA.

To view what effects globalization has specifically had, we turn our attention to the manufacturing sector. Here in the United States, the standard of living, and thus wages, are higher than in the rest of the world. Manufacturing is a physical labor that is typically low skill, and so the opening up of the world to the world of American business has provided firms with opportunities to move production to countries with relatively lower wages. Be it China, India, or more recently, Mexico, they can employ the same amount of labor abroad for less money and don’t have to pay for that displacement when moving goods across open borders. According to data from the United States Bureau of Labor Statistics, manufacturing jobs fell from 19.7 million in 1979 to 13.7 million in 2007. In terms of the ratio of manufacturing jobs to population (the United States population grew by 46 million during that same period), that is a 40.8% decline in employment in the sector. Those jobs have not disappeared: It is abundantly evident in the rise of the East Asian “sweatshop” and Mexican “maquiladora” that they have simply been outsourced elsewhere.

NAFTA, then, is neither radical nor revolutionary, but the abrupt opening of trade with our immediate, less-developed neighbor presents a case study on what the future of globalization could look like. Because the two countries share a physical border, transportation costs are literally as low as they can be with production still abroad. The average wage for a job in manufacturing in the United States, according to the International Trade Administration, is about $19.20 per hour. Various sources such as thirdworldtraveler.com and socialistworker.org quote wages in the maquiladoras, U.S. manufacturing firms operating on the Mexican side of the border, as anywhere between $1 per hour and $4–$5 per day. This makes Mexico a perfect candidate for outsourced American production.

It is pertinent then to discuss how the United States trade balance with Mexico has changed before and after NAFTA. The following data are all sourced from the Organization for Economic Cooperation and Development: In 1991, the total trade balance with Mexico was a $2.15 billion surplus. In 2006, that figure had reversed direction, becoming a $64.53 billion deficit. From 1989 through 1994, trade balance in the manufacturing sector was at a surplus. From 1995 on it has been at a deficit, accumulating to $25.3 billion in 2013. The tide of exports to Mexico has become a flood of imports as more and more Mexicans are producing the goods that we consume.

As mentioned previously, an integral component of that change has been in the growth of the maquiladora industry in Mexico. Over the first five years of NAFTA’s existence, maquiladora employment grew 86% (Gruben 2). As employment opportunities in maquiladoras increase, more and more Mexicans are migrating north towards the border region. From 1980 to 2000, the population of the border city of Ciudad Juárez, Chihuahua effectively doubled, from 650,000 to over 1.2 million (elpasotexas.gov).

The jobs that these Mexicans are taking, however, are neither stable nor safe. In 2000, Socialist Worker’s Todd Chretien and Jessie Muldoon toured various maquiladoras and published a report titled “Misery of the Maquiladoras.” In it they describe the plight of workers in these plants, such as a woman they call Maria. She had suffered various chemical burns to her face, which turned it a dark, sickly grey.

“Most of the chemical names are in English, so we can’t read the warning labels,” she said. “My skin has been burned by these chemicals, and now they want to fire me. They say I came to the factory this way, but everyone knows that’s not true.” Workers routinely lose fingers and hands in the machinery and are fired from their jobs without notice. They say they are abused “physically and emotionally.” The conditions in these factories are eerily reminiscent of the Gilded Age of American history, before workers here were afforded the protections they have today. Perhaps conditions will improve as time goes on, but maquiladoras nevertheless treat their workers poorly even by 1920’s standards.

In a more general sense, the rise of the maquiladora with its unique supply chain presents a long-term problem of dependency between the United States and Mexico. Cheap Mexican labor is the sole value-added component in the Mexican side of the equation, as 77% of the inputs used in the productive process are imported. This leaves Mexico “inter alia, [with] a low growth rate and structural inability to create sufficient formal jobs to improve the standards of living of workers and their families” (Delgado-Wise and Márquez Covarrubias 663). With increasing dependence on American firms to supply jobs, Mexico’s ability to develop its own economy over the long term is severely in question. For the foreseeable future, this means that the “drawing up” effect seen in the doubling of Juárez’s population will be predominant in a post-NAFTA Mexican economy.

In terms of United States’ exports to Mexico, one of the few areas which has seen a dramatic increase is agriculture. The trade balance of agriculture with Mexico in 1991 was at a $244 million deficit, which became an $838 million surplus by 2002. One of the chief reasons for this shift has been the flood of subsidized American corn into Mexico. A Wilson Center study on the effects of U.S. agriculture on Mexican farmers found sharp increases in exports in every product surveyed. Increases ranged from as low as 159% for soybeans to upwards of 400% and 500% for corn, wheat, cotton, and rice (166). The cost to Mexican farmers was estimated to be $12.1 billion, or 10% of the entire value of Mexican exports to the United States.

A restructured United States farm bill in 1996 has given out an average of $11.5 billion in subsidies per year to American farmers (165). In Mexico, on the other hand, the Wilson Center survey found that “even Mexico’s most inclusionary, pro-poor farm program for corn growers excludes much of its target population and benefits better-off growers disproportionately. NAFTA did not discipline subsidies, in contrast to WTO negotiations which in agriculture have treated domestic farm subsidies as one of the three ‘pillars’ of trade-distorting agricultural protection” (8, 165).

As a result, Mexico lost 20% of its farm jobs between 1991 and 2007. The data speak for themselves, and in a time when employment in Mexico is difficult to find and increasingly at the hand of American companies, it is no wonder that immigration to the United States from Mexico has seen a sharp uptick. In 2000, the INS estimated that there were 7 million people living in the United States illegally, a number that grew by about 350,000 per year from 1990 to 1999 (United States Department of Homeland Security). That represents an effective doubling in the illegal population during that period.

The realistic question when discussing NAFTA is not its repeal. Globalization has been happening for a long time now, and the crusade for neoliberal economic freedom that follows it is a trend that will not be reversed. The issue at hand is how to accommodate this changing global dynamic, be it good or bad. The problem is that the increasingly free flow of goods and money between countries has been accompanied by an increasing restriction on the movement of people.

The United States border with Mexico has been increasingly militarized and delineated with ever-more-intense fortifications. Walls now stand where a “line in the sand” used to separate the United States and Mexico, and the United States Border Patrol has implemented the use of “low-intensity conflict” strategies and technology such as drones and helicopters to “defend” the southern border (Mize 138). Rather than deter immigration from Mexico, however, it was noted above that immigration into the United States has only been increasing. Militarized borders make would-be crossers only more desperate, and as they divert their crossings towards more remote regions of the border, they put themselves in graver peril. As Mize explains, “The walls are really a strategy of containment and marginalization of those of Mexican origin who are increasingly subject to racial profiling [and] class marginalization” (140).

In other words, the displacement and disruption that NAFTA caused within Mexico has created an economic subclass of Mexicans who migrate to the U.S. in need of employment. Subsequent efforts to keep them out have not only neglected the phenomenon’s inevitability but have also racialized the immigration conflict. The difficulty in crossing the border has meant that illegal status has become synonymous with criminality, fueling the fire of neo-nativist spite against Mexicans. Mize sums it up best: “Even though police departments have either voluntarily or been required by law to officially abandon the policy of racial profiling, the Supreme Court has consistently found that ‘Mexican appearance’ is sufficient justification for INS and border patrol stops” (141).

There is no doubt that globalization has created more wealth than has ever existed in human history and lifted more people out of subsistence living than ever before. A rapidly changing business environment has created a world that is more economically connected than ever. With the world moving towards more liberal trade, companies are now able to take advantage of low-cost labor in developing countries, and consumers reap the benefit in lower prices. However humans are as integral a part of the economy as the material goods they produce. Free flow of goods and capital needs to be accompanied by free flow of individuals. Nativism, the nationalistic racism that predates globalization, has no place in a global economy; the confluence of neoliberalism and nativism is a paradox. In the United States-Mexico dichotomy, liberal trade regulations need to be accompanied by liberal immigration policies. Post-NAFTA North America needs to open its borders so that the new North American economy can position itself to provide the most it can to the most people possible.

Works Cited

Chretien, Todd, and Jessie Muldoon. “Misery of the Maquiladoras.” Socialist Worker. N.p., 9 June 2000. Web. <http://socialistworker.org/2011/11/18/misery-of-the-maquiladoras&gt;.

Delgado-Wise, Raúl, and Humberto Márquez Covarrubias. “The Reshaping of Mexican Labor Exports under NAFTA: Paradoxes and Challenges.” International Migration Review 41.3 (2007): 656-79. Print.

Gruben, William C. “Did NAFTA Really Cause Mexico’s High Maquiladora Growth?” The Federal Reserve Bank of Dallas, July 2001. Web. <http://www.dallasfed.org/assets/documents/research/papers/2001/wp0106.pdf&gt;.

Mize, Ronald L. “Interrogating Race, Class, Gender and Capitalism Along the U.S.-Mexico Border: Neoliberal Nativism and Maquila Modes of Production.” Race Gender & Class.Vol. 15, No. 1/2 (2008): 134-55. JSTOR. Web. 06 May 2014. <http://www.jstor.org/stable/10.2307/41675362?ref=search-gateway:a342d231e1784a2a60968d9eb59ae23b&gt;.

“Subsidizing Inequality: Mexican Corn Policy Since NAFTA.” Centro De Investigación Y Docencia Económicas. Ed. Jonathan Fox and Libby Haight. Woodrow Wilson International Center for Scholars, 2010. Web. <http://www.wilsoncenter.org/sites/default/files/Subsidizing%20Inequality_0.pdf&gt;.

United States. The City of El Paso. El Paso – Juarez Regional Historic Population Summary. N.p.: n.p., n.d. Web. <http://www.elpasotexas.gov/_documents/demographics/el%20paso%20ciudad%20juarez%20facts/historical%20population%20el%20paso-ciudad%20juarez.pdf&gt;.

United States. Department of Homeland Security. Office of Policy Planning. Estimates of the Unauthorized Immigrant Population Residing in the United States: 1990 to 2000. N.p.: n.p., n.d. Web.

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