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).

(c)2004 San Francisco Chronicle

URL:http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2004/01/14/EDG3548NNO1.DTL