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NAFTA's Legacy -- Profits and Poverty
Published on Wednesday, January 14, 2004 by the San Francisco Chronicle
NAFTA's Legacy -- Profits and Poverty
by David Bacon
 

Ten years after the North American Free Trade Agreement was signed, President Bush calls it a great success and vows to extend it to Central America through a new Central American Free Trade Agreement, as well as the rest of Latin America through the Free Trade Area of the Americas. President Bill Clinton before him promised that the rising tide of cross-border trade would "lift all boats," benefiting everyone.

The agreement certainly produced some winners. Multinational corporations who built factories south of the U.S./Mexico border have been able to cut labor costs and increase profits. Mexico created a new generation of its own billionaires during the treaty's 10-year history.

But not everyone reaped NAFTA's benefits. The rising tide of profits and productivity did not lift all boats. Instead, on both sides of the border, communities of working people and the poor have paid the price for trade liberalization.

Predictions of U.S. job losses were, if anything, underestimated. By November 2002, the U.S. Department of Labor had certified 507,000 workers for extensions of unemployment benefits under the treaty because their employers had moved their jobs south of the border. Most observers believe that is actually a significant undercount, partly because many workers losing jobs don't know they qualify for trade-related benefits. According to the Economic Policy Institute in Washington, NAFTA eliminated 879,000 U.S. jobs because of the rapid growth in the net U.S. export deficit with Mexico and Canada.

While the job picture for U.S. workers was grim, NAFTA's impact on Mexican jobs was devastating. Before leaving office (and Mexico itself, pursued by charges of corruption), President Carlos Salinas de Gortari promised Mexicans they would gain the jobs Americans lost. In the United States, he promised that this job gain would halt the northward flow of Mexican job-seekers.

NAFTA's first year saw instead the loss of more than a million jobs across Mexico. To attract investment, NAFTA-related reforms required the privatization of factories, railroads, airlines and other large enterprises. This led to huge waves of layoffs. Mexican enterprises and farmers, who couldn't compete with U.S. imports, also shed workers, and the subsequent peso devaluation cost even more jobs. Because unemployment and economic desperation in Mexico increased, immigration to the United States has been the only hope for survival for millions of Mexicans.

For a while, however, it seemed that the growth of maquiladora factories along the border would make up for at least part of the job loss. By 2001, more than 1.3 million workers were employed in some 2,000 border plants, according to the Maquiladora Industry Association. But tying the jobs of so many Mexicans to the U.S. market, for which the plants were producing, proved a disaster as well. When U.S. consumers stopped buying as the recession hit in 2001, maquiladoras also began shedding workers. The Mexican government estimates that more than 400,000 jobs disappeared in the process -- as the saying goes on the border, when the U.S. economy catches cold, Mexico gets pneumonia. A two-year PR campaign by the association and the Mexican government to blame the loss in border jobs on Chinese competition then sought to obscure the obvious fact that the plants produced far more goods than a recession-plagued market in the United States could absorb.

But the most serious consequence of NAFTA has been its failure to protect the rights of workers as promised by its supporters. To attract investment to the maquiladoras, Mexican government authorities cooperated with investors and compliant official unions in maintaining low wages, reinforced with a system of labor control.

According to Martha Ojeda, director of the Coalition for Justice in the Maquiladoras, the government-mandated minimum wage for workers on the border is about $4.20 a day, the same as 10 years ago. Ojeda estimates that a majority of maquiladora workers earn close to this wage. A study by the Center for Reflection, Education and Action, a religious research group, found that at the minimum wage, it took a maquiladora worker in Juarez almost an hour to earn enough money to buy a kilo (2.2 pounds) of rice. A gallon of milk, which costs $3 in a Tijuana supermarket, requires five to six hours of labor.

To enforce this system, maquiladora workers are required to belong to unions that have no intention of raising low wages or ending dangerous working conditions. Throughout NAFTA's 10-year history, workers have organized independent unions, willing to fight for a larger share of the enormous wealth the factories produce. But these efforts have been met with firings, plant closures and even physical violence. Ten years of hearings held under NAFTA's labor side agreement have documented extensive violations of labor rights. In those few instances in which workers have successfully formed independent unions, as they did at Tijuana's Han Young plant in 1998-9, their strikes were broken, despite guarantees under Mexico's Constitution and federal labor law.

NAFTA's sponsors promised that the treaty's labor side agreement would protect workers, but it proved toothless. In 10 years, not one fired worker has been returned to his or her job, and not one independent union has gained legal status and a contract as a result of NAFTA. Breaking strikes and unions on the border under NAFTA has become an integral part of economic development, and legal protections for workers have been swept away.

Four years ago, at the height of the protests against the World Trade Organization, Zwelenzima Vavi, the head of the South African Congress of Trade Unions, described the alternative to NAFTA and the free-trade philosophy underpinning it. "In the pursuit of profit," he said, "governments are told to remove worker protections, and then use that as an inducement for investment. But development is a wider concept. It includes social development, and the living conditions of the people. Development can't exist with mass unemployment and poverty."

That one-sided development, with productivity and profits for the few, and unemployment and poverty for the many, is NAFTA's legacy.

David Bacon is a Bay Area writer and photographer. His book describing NAFTA's 10-year history, "The Children of NAFTA," was just published by the University of California Press (www.ucpress.edu).

2004 San Francisco Chronicle

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