In 1992, México entered their first Free
Trade Agreement (FTA). Prior to that time, México operated as a closed and
"protected" economy that led to a country with a heavily government owned
economy and a largely noncompetitive private economy that was stagnant.
The 1992 FTA was with Chile was followed by the 1994 NAFTA agreement.
That was the biggie. Since that time México has become the country with
the largest number of FTAs in the entire world. As of 2001, there were 41
FTAs on file in México. Since that time, we have made more including a
Persian Rug FTA with Iran and even with countries in North Africa for
products that I can't even guess. But how has all of this affected the
Mexican economy and its people?
Let's look at the effect of NAFTA, as this was and still is the most
far-reaching FTA. First, México's exports rose sharply, mainly to the US.
In addition México's GDP rose greatly, even with the 1995 "peso crises"
(that cannot be faulted to NAFTA). But a closer look tells another story.
Up to 1998, the share of workers in salaried jobs and benefits fell
sharply. The trend has not been reversed. The only real growth economy
here is in the "informal" sector that pays no benefits pays no taxes and
is non-regulated. Estimates of the size of this sector run from 30% to 50%
of the entire Mexican economy. The distribution of this increased GDP has
only caused a greater spread between the "haves and have-nots".
Between 1994 and 1999 foreign, new and intrafirm investment all
dropped. The only gainer was maquiladora investment. That is the "in bond"
assembly plants along the northern border that sells cheap labor for
assembling made elsewhere products for shipment outside México. And the
trend is leveling off now as more of this goes to Asia. On top of this,
while exports have gone up, México's imports have risen even more sharply
given the lowering of protectionist import duties. And the flood from
China has risen to a tsunami.
Beside the effect on the manufacturing sector, what has happened in
the agricultural sector is greater. How can a Mexican farmer with a couple
of acres and a burro compete with the modern agricultural business on a
level playing field? It is also of note that while most countries
"developing" into modern economies have experienced a migration from the
farms to the cities, México has not. The urban labor market is flooded
with job seekers even at the low earnings level. All labor income
categories are down from 1991. There is no room for the displaced farmers
in the cities. But there are many farming communities with no able-bodied
men left in them. The have all gone north to you know where.
Agreements like NAFTA are like opening a door to a country like
México. But going through that door to reap the benefits requires making
structural changes in the country. NAFTA opened up a door and with that
gave a limited grace period for México to make these changes. México did
not. We took no steps to aid in the transition.
In mid-August Secretary of Social Development Josefina Vázquez Monta
revealed a study by the World Bank that stated that the levels of poverty
in México in the 11 years after 1994 are actually worse now. The Fox
administration has refused to publish this report. Which makes me wonder
if Josefina still has a job now. Of course, this gives the NAFTA bashers
fuel but realize that it is not as much the treaty itself, but the lack of
implementation here that is to blame.
The European Union transition, while having problems, at least took
steps to aid the poorer countries coming in and instituted freedom of
labor movement across borders. This did not happen here. And look at China
who is using the "cheap labor" route as a temporary means to create a
strong internal economy. That is what will bring China the most benefits
in the future after the cheap labor pattern wears out. México has never
understood that. We are still on the cheap labor route. In fact, if
anything, we are on a cheaper labor route, fighting a war with Asia that
México has already lost.
This brings us to an astounding survey from the highly respected Pew
Hispanic Center just published. We should remember that México is a highly
patriotic country. Before 9/11, there were far more flags flying daily in
México than the US. And before school starts, the students always sing the
national anthem. And I would say that today, we have as many flags flying
as in the US now. Deep down, most Mexicans love their country.
The Pew survey was based on results from 120 locations in México.
Let's start with a shocker: in February, 41% of across the board Mexicans
would live in the United States if they "had the means and opportunity" to
do so. This number went up to 46% in May. In other words, almost one-half
of all Mexicans would consider bugging out of México for the US! And 20%
"are willing to consider the idea of going to the US without legal
authorization".
Even more interesting is that these feelings also include those who
are earning well above the minimum wage level and have either high school
of college education. In other words, the Mexican middle class is of the
same mind. To quote Pew: "What that tells us is that thinking about
immigration as a demographic or a wage differential doesn't make sense . .
. quality of life and law and order are just as important". This is
something for Mexican politicians to be proud of???
We are looking at a migration pressure not seen in the modern world
since the Cold War days. And that should also tell structurally blind
politicians on BOTH sides of the border to wake up and understand what is
going on.
A US legal visa system that has a quota for Mexicans at the same
level as with Nepal makes no more sense than a continuation of the cheap
labor path (and a continued broken government structure) in México.
Wake up and smell the bacon frying.
_____________________________________
Richard N. Baldwin T., a HispanicVista.com (http://www.hispanicvista.com/)
contributing columnist, lives in Tlalnepantla, Edo de México. E-mail at:
R1041643422@aol.com
By
Richard N. Baldwin T. /HispanicVista.com