Mexico and the North American Free Trade

mexican-flagDuring this sad excuse of a presidential election, Republican President-elect Donald Trump surprisingly raised the attention to the impact of globalism, often hammering Hillary Clinton on her initial support of the Trans Pacific Partnership (TPP) and North American Free Trade Agreement (NAFTA). However, this has interestingly manifested in public opposition towards free trade, with Jennifer Steinhauer of the New York Times remarking that once “bedrock of the economic agendas of both parties” has become a political pariah (Steinhauer, 2016). This also calls back to the 1993 debate between Ross Perot and Vice President Al Gore on the merits of NAFTA, and has perplexed Gallup which has shown an overall positive attitude towards foreign trade (Newport, 2016).

The question on everyone’s mind is whether the NAFTA, a potential precursor to future trade agreements between the United States and other countries, has positively impacted Mexico, United States, and Canada? Because of this, people have raised points about the economic and social trends in the countries, particularly Mexico who became a wedge issue in the election. 

Ayhan Kose, Guy M. Meredith, and Christopher M. Towe states that “separating the effects of NAFTA on Mexico”, or any country involved in the Agreement for that matter in my opinion,  “from the macroeconomics shocks over the past decade is difficult”, with the impact of Mexico’s own economic policies including fiscal imbalances, the 2000 stock market collapse, and subsequent recession (Kose et al, 2004). According to an assessment of Mexico under two decades of NAFTA by the Center for Economic and Policy Research (CEPR), Mexico however hasn’t fulfilled the promise of growth and development politicians had emphasized its creation: Mexico “ranks 18th of the 20 Latin American countries in growth of real GDP per person”, and has only grown a measly 18.6% real GDP per person growth in the past 20 years compared to the 98.7% growth in 1960-1980 (Weisbrot et al, 2014). On the other hand, this explosive growth could be attributed to Mexican “policies that promoted urbanization, industrialization, and education”, while stagnation and crises could be attributed to fiscal imbalances and “protection of inefficiency” under government intervention in the economy as Timothy J. Kehoe and Felipe Meza described in their research under the Research Department of the Federal Reserve Bank of Minneapolis (Kehoe et al, 2012). Thus, the underperformance of the Mexican economy could be attributed to Mexico’s own policies and the synchronization with the United States during the stock market collapse and subsequent recession rather than NAFTA, but interestingly, Figure 7 of the research project shows a visible decline in percentage of agriculture in the composition of GDP in Mexico (Kehoe et al, 2012).

Critics of NAFTA have shared the same view that NAFTA had severely damaged the agriculture industry in Mexico, with the CPR’s assessment stating the “severe impact on agricultural employment” as one of the many available economic and social indicators of economic performance (Weisbrot et al, 2014). Lauren Carlsen of the Centre for Research on Globalization has described the NAFTA as a transition for Mexico into “political and economic dependency to a degree not seen since Spanish colonialism”, describing the Agreement as a dismissal of  the “basic institutional relationships that had united Mexicans in the past”, especially its “system of political patronage via national organizations of farmers, workers, and the popular urban sector” (Carlsen, 2008). Adding to this destruction of the social compact, Carson argues that structural adjustment centered around the NAFTA has effectively “eroded the ability of the poor to fight back” (Carlsen, 2008), and it is corroborated  in the humanistic setback the Mexican public has received: a nearly identical rate of poverty, unemployment, and inflation-adjusted wages for Mexico (Weisbrot et al, 2014).  Furthermore, author Seth Holmes of Fresh Fruit, Broken Bodies: Migrant Farmworkers himself linked this ‘production of poverty’ under the Agreement to the dispossession of migrant workers, describing the alternative to migration as a “slow, communal death” by the same “unequal, ‘free’ market” that heartlessly annihilated “remote villages and hamlets” (Holmes, S). For many, this confirms the fears of a public that feels that free trade agreements often than not exist for benefit of interests-investors and financiers beyond anything else, especially those who received the short end of the stick.

Particularly in his ethnographic book, Holmes briefly explores the relationship between NAFTA and the plight of Mexican migrants in the United States in his research, connecting it to the structural violence that shapes their lives. In Holmes’ own words,  neoliberalist international policies are described as “intimately related” to migration  (Holmes, 2013), and in an interview with Julie Guthman, he further elaborates that “policies such as NAFTA have played into the widespread phenomenon of dispossession of indigenous Mexicans from their own family farms and ancestral lands”, and only to collect the grim experiences of “dangerous border crossing and … harmful wage labor on U.S. farms” (Guthman, 2014). Concerning migration between Mexico and the United States, these grim experiences are best summed in the Jack Jenkins’ article in Think Progress, who nearly characterizes the border crossing as a Charybdis of its own (Jenkins, 2015). Similarly, Holmes corroborates this characterization with the description of his own personal trek through the border: a rough transition between a cramped bus ride and a “dangerous” hike through a desert area of “biblical proportions”, bombarded by soldiers and thieves (Holmes, 2013). However, Holmes qualifies his own experience, expressing the tragic concern that his experience ended when the Border Patrol agents relieved him of any charges while his Triqui friends would only worsen.

However, NAFTA is not a complete basket of regrets and has benefited specific sectors of the Mexican economy, a somewhat ironic projection of the American public who believes in the net benefits of free trade but also believes that free trade displaces jobs and diminishes wages. Julian Beltrame of The Canadian Press even forwards the idea that Mexico was by far the biggest winner of the Agreement as a country whose exports has increased tenfold since 1994 and is “now estimated to be the world’s largest economy with total output similar to Canada’s” (Beltrame, 2013). Moreover, Kose, Meredith, and Towe shares this conclusion, suggesting that NAFTA has increased trade, financial linkages, and have become “instrumental in improving macroeconomic as well as institutional policies in Mexico” (Kose et al, 2004).  Even the issue of agriculture has been spun in a positive direction, with the Council on Foreign Relations connecting NAFTA to an increase in Mexican farm exports to the United States and the relatively quick bounce of Mexico’s economy during the Great Recession (Mcbride et al, 2016).

As for the present, Kose, Meredith, and Towe forwards the following solutions to alleviate Mexico’s lack of “competitiveness in a number of areas”, including structural reforms, easing labor market rigidities, facilitation of investment in the energy sector, deregulation of telecommunications, judicial reforms, alleviating security concerns, and finally a comprehensive tax reform  (Kose et al, 2004). Furthermore, Kehoe and Meza shares the same support for these solutions, particularly the monopolies in electricity, telecommunications, transportation, and petroleum extraction and security concerns (Kehoe et al, 2012).

Regardless of whether NAFTA was a heroic catalyst for Mexico’s economic liberalization and growth or a neoliberalist arena for a race to the bottom between countries,  The Independent reports that the Mexican Economy Minister Ildefonso Guajardo is open to “dialogue” about the treaty, not renegotiation (Mortimer, 2016).


Works Cited:

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