As final NAFTA rules kick in, Mexicans worry

Author: Emile Schepers

People's Weekly World Newspaper, 12/20/07 14:32

On New Year’s Day, the 13-year-old North American Free Trade Act linking the United States, Mexico and Canada will come into full bloom as the remaining tariffs on agricultural products, including corn, beans, sugar, milk and chicken, are lifted.

NAFTA came into force on Jan. 1, 1994, with a three-nation publicity campaign full of promises of prosperity for everybody.

In Mexico, then President Carlos Salinas de Gortari, while acknowledging that up to 13 million of the country’s farmers could be driven off the land by cheap U.S. and Canadian grain imports, argued that such losses would be more than offset by Mexico’s export of specialty fruits and vegetables to the U.S. and Canada (whose high tariffs had always kept such Mexican products out) and by increased investment by foreign manufacturers seeking low-wage labor.

But on the same day NAFTA took effect, the rebels of the Zapatista Army of National Liberation marched into towns in Mexico’s southernmost Chiapas state, proclaiming war against NAFTA and drawing attention to the impoverished plight of the region’s indigenous people.

Three months later, the presidential candidate of Salinas’ Institutional Revolutionary Party (PRI) was assassinated under suspicious circumstances. Shortly thereafter, Ernesto Zedillo, the newly elected president (also from the PRI), decided to devalue the peso … and tipped off politically connected Mexican investors about the devaluation in advance. Zedillo’s actions created a panic as both Mexican and foreign investors rushed to offload treasury bonds and take their capital out of the country. Mexico faced bankruptcy.

President Bill Clinton and Treasury Secretary Robert Rubin, seeking to rescue Wall Street’s investors, arranged a $50 billion bailout loan, but with harsh conditions. Whereas the Mexican government had hoped to keep some social safety nets in place to cushion the blows of NAFTA, these were scrapped in the name of repaying the loan. The old Conasupo system, whereby the government stabilized farmers by buying their crops at above-market prices and then distributing them cheap to the urban poor, was dismantled.

As tariffs on U.S. imported grain were cut to a minimum, Mexican farmers were indeed driven off the land, but the increased fruit and vegetable exports did not help them. Since NAFTA was introduced, a million and a half Mexican farmers have gone broke, resulting in the impoverishment and displacement of the farmers and their families — about 6 million people.

The hoped-for new foreign investment in manufacturing never panned out, partly because of the country’s social and economic instability and partly because other countries offered even lower labor costs.

The result was a sharp drop in living standards for millions of Mexicans. Is it any wonder that the rate of undocumented immigration from Mexico to the U.S. quickly rose by 60 percent?

Moreover, Mexico, which used to be self-sufficient, now imports 40 percent of its food, according to the newspaper La Jornada del Campo.

Yet the U.S. grain industry continues to be heavily subsidized, with the biggest benefits going to major transnationals like Archer Daniels Midland, Cargill and the Mexico-based MASECA — not to family farmers on either side of the border. Analyst Laura Carlsen of the Americas Policy Program writes that in 2001, corn, which costs $3.41 a bushel to produce in the U.S., was “dumped” in Mexico and elsewhere at $2.28 a bushel. Policies like these have devastated Mexico’s rural areas.

The Bush administration has made it clear that it will accept no renegotiation of NAFTA. The Mexican and U.S. governments, rather, are talking about security cooperation, which many suspect means U.S. intervention in Mexico to help stem the coming political unrest.

A group in the Mexican Senate, mostly on the left, has petitioned President Felipe Calderon to demand a renegotiation of NAFTA, and is receiving support from progressive organizations in the U.S. and Canada. Mexican farmers and their allies are organizing mass street actions, including rolling hunger strikes and blockades of roads on which U.S. farm products enter the country. These protests will grow, but even more hard times are ahead, along with more undocumented Mexican immigration to “El Norte.”