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After 10 years of NAFTA, Mexico still waiting for jobs

Monday, January 5, 2004

ANAPRA, Mexico -- Ten years ago, the border slum of Anapra was a sea of shacks made of packing crates and car parts. Families stored scarce water in discarded industrial drums, and illegal electricity hookups started fires and sometimes electrocuted residents.

The North American Free Trade Agreement, implemented Jan. 1, 1994, was supposed to change places like Anapra, bringing more jobs and higher wages, reducing the need for Mexicans to head north.

The jobs came -- an estimated 500,000, mostly at foreign-run assembly plants known as maquiladoras -- but they often left again for China, or wherever wages were lower. And while NAFTA brought some progress to this sprawling slum, separated from El Paso, Texas, by a chain-link fence, many see themselves stuck in no-exit, unstable jobs, and many outside the industrial hubs have been forced to leave their farms or emigrate to the United States.

Mixed results

The mixed results are evident in Anapra. Tiny concrete and brick homes -- built one room at a time on wages from factories -- have largely replaced the shacks, and they have electricity now, and water. But the streets remain unpaved and sewage lines haven't been connected yet.

The trade agreement certainly has helped Mexico -- the country has been able to triple its exports, turning a 1993 trade deficit of $1.66 billion with the United States into a $37.1 billion surplus by 2002.

"Our industry is three times as big as it was before NAFTA, and that's because of free trade," said Sandra Santamaria of Mexico's National Apparel Industry Chamber.

But many say Mexico failed to take advantage of the export boom to improve education, streamline bureaucracy and cut down on crime. The country didn't do much to encourage factories to use Mexican suppliers, instead settling for the assembly of imported components.

Now, many of the assembly plants are moving out to take advantage of cheaper salaries in China and Central America, and Mexico is struggling to bring higher-paying jobs to replace them.

Observers find other problems with NAFTA, saying Mexico has lost much of its control over its own economy as a result of the trade pact.

Mexico went from a largely state-controlled economy where the government subsidized farmers and inefficient factories, to a wide-open free market economy where the weakest businesses perished. What the country gained was a sudden influx of subsistence-level industrial jobs that over time proved to be a poor counterweight for the lure of migration.

NAFTA also hasn't done much to improve labor rights in Mexico, where absentee union bosses still sign contracts behind workers' backs.

Wages in the best-paid export plants average about four times the minimum wage of nearly 44 pesos, the equivalent of $3.85 per day. But salaries are not keeping up with gains in productivity, and wage differences between Mexico and the United States are getting wider, not narrower, the Washington-based Carnegie Endowment for International Peace said in a report on NAFTA.

Since 1993, Mexico's minimum wage has fallen about 10 percent in dollar terms. Its purchasing power has fallen by almost half over the last decade, according to the Mexican Labor University.

Considering it all -- the rising unemployment and his unchanging paycheck, balanced against his family's two-room house built with years of hard labor -- Ortega concludes, "it's all the same old, same old. Not much has changed here."

Many now say it was deceptive to tout NAFTA as a solution to long-standing problems like poverty and migration. U.S. government estimates of the number of undocumented Mexican migrants in the United States rose from 2 million in 1990 to 4.8 million in 2000.

"The idea that free trade ... can control existing migration flows in the short-to-medium term is clearly wrong," the Carnegie Endowment report stated.

Still, the jump in migration was largely due to strong demand for workers in the U.S. market -- not NAFTA.

And NAFTA is often blamed for things that it had little to do with -- like the supposed "Americanization" of daily life in Mexico, where Wal-Mart is now the biggest retailer, but hand-made tortillas are still sold by Indian women outside the stores.

Consumers have benefited from the pact, notes Arturo Lomeli of Mexico's Association for the Defense of Consumer Rights. In 1993, Mexicans had to choose between two models of Mexican-made compact cars; today, there are dozens, including imports.

There are more imports than before in a variety of goods -- everything from microwave popcorn and movies to computers and Christmas trees. Shoppers no longer have to go to unreliable clandestine vendors to buy smuggled imported goods, or settle for shoddy, locally produced imitations.

The pact has also changed Mexico's social and financial landscape. More than 1 million of the nation's 9 million active farmers have migrated to towns and cities. Their small plots of worn-out land could barely compete in Mexico, much less with more efficient, bigger U.S. farms and their heftier subsidies.

Many Mexican farmers took up other kinds of work, or migrated north.

"If it wasn't for the export industry, the number of Mexicans going abroad would have been even greater," said Angel Villalobos, Mexico's assistant economy secretary. "NAFTA didn't cause the problems in the Mexican countryside, and if we closed off the economy tomorrow, it wouldn't solve the problems."

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On the Net:

Carnegie Endowment for International Peace, www.ceip.org/

U.S. government site: http://www.usembassycanada.gov/content/c...


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