Mexicans have plenty not to like about Donald Trump: his racism, his wall, his tirades against immigrants. But if thereās a disruption provoked by Trump we should actually embrace, itās the renegotiation ofĀ NAFTAāor even the trade pactās possible end.
Along with Mexicoās upcoming presidential elections onĀ July 1āin which center-left candidate AndresĀ ManuelĀ Lopez-Obrador (AMLO, as he is popularly known) is the clear front runnerāthe possible unraveling ofĀ NAFTAĀ has the countryās business elite and political establishment freaking out.
While AMLO sees the renegotiation ofĀ NAFTAĀ as an opportunity for meaningful changes that would benefit the majority of Mexicans, Mexican negotiators from the ruling establishment party have been very busy trying to secure a deal before the vote, in order to keep the status quo as intact as possible.
During its 24 years,Ā NAFTAĀ has helped to widen inequalities in Mexico, Canada and the United States alikeāand to play workers in the three countries against each other. Since the pact went into effect,Ā inequality in Mexico hasĀ risen to levels at triple the OECD average, while about half of the population remains in poverty.
An end toĀ NAFTAĀ could help Mexico finally reduce its economic and political subordination to the United States, diversify its trade relations and develop a sovereign economic policy that benefits its populationānot only transnational corporations.
Here are at least five reasons why most Mexicans would cheer the end ofĀ NAFTA.
1.Ā NAFTAĀ has been a net job destroyer in Mexico.
The most contentious issue in theĀ NAFTAĀ talks is the prevalence of very low salaries and labor standards in Mexico, which companies from the United States and Canada have exploited ruthlessly by moving jobs south of the border. This pressure has led the U.S. team to call for better labor standards in MexicoāaĀ major progressive demandĀ the administration would likely never take up for U.S. workers at home.
In the latest rounds of negotiations, the U.S. and Canadian governments have proposedĀ raising the minimum wageĀ in Mexico. A recentĀ letter signed by 183 members of CongressĀ urges the U.S. Trade Representative to negotiateĀ āa newĀ NAFTAā with āstrong, clear and binding provisions that address Mexicoās labor conditions.āĀ AndĀ PeterĀ Navarro, a trade adviser to Trump,Ā said recentlyĀ that āhigher wages in Mexico are in the interests of Mexico and the United States. Without this adjustment, Mexico will never have a robust middle class, and our middle class will wither if not die.ā
The United States and Canada are also pushing for tougher Mexican labor standards, such as ensuring that Mexican workers can freely organize unions and stage strikes without fear of losing their jobs.
However, the Mexican government contends ludicrously that āsalary policy is an internal matter.ā
Worse still, aĀ new labor bill being proposed in Mexico wouldĀ eliminateĀ all restrictions on subcontracting, including those that requireĀ ācommon-senseā compliance with health and safety laws.Ā Labor organizations like the AFL-CIO have warned that the billās āoverall impact would be to prevent unions fighting for a living wage,āĀ ReutersĀ paraphrases, and would ālure more jobs south of the border.ā
NAFTAĀ was sold to Mexicans as a deal that would reduce the salary gap between Mexico and its neighbors to the north. In fact, this gap has only widened. Manufacturing workers in Mexico earnĀ an average wage of about $13 a day, while the typical assembly-line worker in the United States makes $25 per hour, according to the Labor Department. As theĀ Chicago TribuneĀ reports, āIn Mexico, $2 per hour workers make $40,000 SUVs.ā
What would happen toĀ NAFTAĀ jobs in Mexico if the pact ended? Not much.
AlthoughĀ the Mexican government and the business elite boast thatĀ NAFTAĀ has made Mexico into an exporting powerhouse of the manufacturing sector, the overall job market is not so dependent on exports.
As Alberto Arroyo Picard, a professor at the Autonomous Metropolitan University in Mexico City, told In These Times, a forthcoming paper of his demonstrates with official data that Mexico“s manufacturing exporting sector accounts for only 2.4 percent of the total jobs in the country.
One could argue that many other jobs in Mexico depend on foreign investorsāfor example, the retail sector. However, as they have in the United States, foreign companies like Wal-Mart have displaced scores of smaller Mexican companies, destroying countless jobs. According to small and medium business leaders in the country,Ā more than 600,000 companies have gone bankruptĀ during the current administration alone, and only 5 percent of MexicoĀ“s companies export.
2. Multinational companies have usedĀ NAFTAĀ to devastate Mexicoās environment.
Despite containing a nonbinding environmental side agreement,Ā NAFTAās āenvironmental safeguardsā never had the funding or legal mandate needed to actually protect the environment. And soĀ NAFTAĀ has had aĀ terrible effect on the health of North American communities, as several co-authors and I documented in a 2014 report published by the Sierra Club.
In Mexico,Ā we wrote, āNAFTAĀ has encouraged a boom in environmentally destructive mining activities.ā One reason? Along with passingĀ NAFTA, the Mexican government ratified national laws that āfacilitated the entry of Canadian and U.S. mining corporations into Mexico,ā our report states, giving them easy access to lands and mineral resources.
Since then, the Mexican government has granted more thanĀ 32,000 mining concessionsĀ and devoted more than 20 percent of Mexicoās land to mining, which has been devastating for the environment. Mexico has meanwhile become the worldās leading importer of toxic sodium cyanide for mining, which is a major source of water contamination.
While the rights of foreign mining companies are strongly protected underĀ NAFTA, the pactās environmental side agreement has not required Mexico to better regulate the harmful environmental impacts of runaway extraction. Commercial rights are better protected than environmental and human rights.
3.Ā NAFTAĀ has destroyed the livelihoods of millions in the Mexican countryside.
NAFTAĀ backersā promise that Mexico would become an āagro-exporting powerā failed. Instead, Mexico nowĀ imports 45 percent of the foodĀ it consumes, making it one of the most import-dependent countries in the world for food.
Mexico now relies heavily on the United States forĀ basic staples like corn, soy, wheat, rice, and beans. According to one study, in fact, a stunningĀ 99 percent of Mexicoās imports of corn come from the heavily subsidized U.S agriculture industry. All this has cost MexicoĀ more than $20 billionĀ in the last five years alone.
Food dependency reflects the devastation of Mexicoās small farmersā livelihoods sinceĀ NAFTA. Left to compete with U.S.-based mega-exporters, millions of Mexican farmers have been driven out of work, driving displacement, impoverishment and massive social disruptionāand creating hugeĀ opportunities for organized crime groups.
Victor Suarez of theĀ National Association of Rural Commercialization EnterprisesĀ has said that what Mexico needs is to āreach food self-sufficiencyā and āre-activate the internal production of food to generate employment, income and opportunities to young peopleā to keep them āfrom resorting to migration or organized crime.ā
4. Corporations are usingĀ NAFTAĀ to roll back legitimate government measures aimed at protecting health and the environment.Ā
Although foreign direct investment fromĀ NAFTAĀ has been heralded as the panacea for economic growth, Mexicoās economy grew at āan anemic 1.2 percent growth rateĀ per capita from 1994 to 2016,ā according toĀ The Washington Post. And even that modest growth has been heavily concentrated in few economic enclaves,Ā accentuating regional disparities.
To attract this investment, the Mexican government agreed to enormous curbs on its ability to regulate industry.
NAFTAās āinvestment chapterā helped establish a so-called Investor-State Dispute Settlement (ISDS) mechanism that letsĀ corporations sue governmentsĀ in supranational tribunals, like the World Bankās International Center for the Settlement of Investment Disputes, when a governmentās regulation in the public interest tampers with corporate profits.
This means that multinational companies and unelected foreign bureaucrats, not voters and their representatives, get the final say over many health and safety regulations that impact local populations.
The first case underĀ NAFTAĀ was concluded in 2000,Ā when a World Bank tribunalĀ ruled in favor of the U.S. waste management company Metalclad, forcing Mexican taxpayers to pay the U.S. company $16.7 million.Ā The reason was that a municipality in San Luis PotosiĀ had denied the company a construction permit until existing toxic contamination was cleaned up.
This was just the beginning. To date,Ā Mexico has paid more than $200 millionĀ under similarĀ ISDS, with more than $1 billion more in pending cases.
These provisions have come under huge criticism from civil society groups, which argue that they make it easier for corporations to roll back legitimate government measures aimed at protecting health, the environment and other priorities. Now even the U.S. Trade Representative office is considering a proposal for theĀ NAFTAĀ renegotiations that would give each of the countries the option to opt-in or out of the controversial provision, asĀ Inside U.S. TradeĀ reported.
However,Ā the Mexican government is trying to preserve ISDS.Ā Why would lawmakers seek to continue being handcuffed in policy making?
In talks over another agreement ā the Transpacific Partnership āĀ Mexican Secretary of Economy Ildefonso Guajardo gave a reason: āThe trade agreement will give protectionā in the event that āfuture presidents of the country try to revert MexicoĀ“s energy reform.ā
In other words, ISDS is a tool for the present government to cement the privatization of Mexicoās oil and other industries. No wonder Jack Gerard, head of the American Petroleum Institute, says that ISDS isĀ crucial to maximizing the industryās economic upside in a newĀ NAFTAĀ deal.
5.Ā NAFTAĀ made Mexico the most obese country in Latin America.
Because the initial promises forĀ NAFTAĀ utterly failed,Ā the new spinĀ is to hype its āconsumer benefits.ā
Extreme examples inĀ The Washington Post, for instance, celebrate that Mexico is ābuying more U.S. goods than everā and that in āMexicoās Costco stores, staples such as tortilla chips and chipotle salsa are trucked in from factories in California and Texas that produce for both sides of the border.ā
Another article in theĀ PostĀ celebrates theĀ AmericanizationĀ of Mexico,Ā saying thatĀ āMexicans have become accustomed to such luxurious shopping centers, where you can browse Williams-Sonoma crockery, try on Steve Madden shoes, eat at Olive Garden, take your kids to Chuck E. Cheeseās, and watchĀ War for the Planet of the ApesĀ on the big screen.ā
The reality is that theĀ AmericanizationĀ of Mexican culture has meant theĀ destruction of Mexicoās food security and sovereigntyāand with it, Mexicansā health.Ā The consumption patterns encouraged by a glut of U.S.-made processed foodsĀ have made Mexico theĀ second-most obese of the OECD, withĀ diabetes becoming the countryās leading cause of death.
The Institute for Agriculture and Trade Policy hasĀ documentedĀ that Mexican diets underĀ NAFTAĀ have shifted āfrom traditional food staples toward energy-dense, processed foods and animal-source foodsāwhich tend to be higher in fats and added sweeteners.ā TheĀ New York TimesĀ similarly reported late last year thatĀ NAFTAĀ hadĀ transformed MexicoĀ āin a way that would saddle millions with diet-related illnesses.ā
Meanwhile, in a sad irony that speaks to the inequality and disparities provoked byĀ NAFTAĀ and related policies, someĀ 8,000 Mexicans die of malnutritionĀ every year.
What Mexico Needs Instead ofĀ NAFTA
Any new integration model for North America should be based on justice, equality, democracy, peace and care of the environment.
Mexico needs trade agreements that include binding labor chapters, support small and medium companies and donāt rely on suppressing wages. Complex, anti-democratic investor privileges should be excluded.
Instead of greater deregulation, Mexico should push for a new agreement of cooperation and complementation in North America, one that strengthens our internal economy, devolves food sovereignty and self-sufficiency, elevates the rights of workers and the environment and diversifies our relations with the world.
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1 Comment
Honest and knowledgeable Intellectuals like Manuel Perez Rocha are fortunately paving the way to the many transformations the Country needs in terms of economic justice and true democracy. This electoral year is an opportunity not to to be missed.