NAFTA Revisited

Back in the early 1990s, when NAFTA was being debated, I was in favor of the agreement. It seemed to promise more jobs in the three countries involved: Canada, the United States, and Mexico. Now, more than 30 years after NAFTA’s implementation on January 1, 1994, it is obvious that NAFTA has not worked out as envisioned.

I live in Arizona, a state that borders Mexico, so I know much more about NAFTA’s effect on the USA and Mexico than I do about its effect on Canada. I have read that Canadian industry has prospered under NAFTA, but the USA and Canada already had very liberal trade relations before NAFTA, so it is questionable if NAFTA added any additional impulse to the growing Canadian economy.

As far as both Mexico and the USA are concerned, NAFTA has not lived up to its promise. NAFTA was supposed to lift Mexico out of its third-world economic status and provide the country with a vibrant middle class. That hasn’t happened. True, many Mexican businesses have prospered under NAFTA, but ordinary Mexicans are worse off now than they were before NAFTA.

NAFTA plus liberal trade agreements between the USA and other low-wage have caused a drastic decline in well-paying manufacturing jobs in the United Sates. About the only US manufacturing business that are still prospering are those that have automated, eliminating untold numbers of formerly high-paying jobs. Those manufacturing businesses are labor intensive have almost all moved operations overseas or outsourced their manufacturing to foreign companies.

 Apple is one of the most egregious examples. It designs products that people want to buy almost everywhere in the world, but it manufactures next to nothing. Its manufacturing is mostly outsourced to Foxconn, a Taiwanese company whose manufacturing plants are in turn mostly located in China.

Mexico has not fared well under NAFTA either. True, the country has gained manufacturing jobs, but Mexican factory workers must compete with workers in countries such as China, Vietnam, and Bangladesh. Most Mexican manufacturing jobs do not pay enough to lift workers out of abject poverty. Many Mexican factory workers slave away for the equivalent of roughly $4,20 US a day. A person may be able to survive on such small wages in Mexico, but that person cannot lead a dignified life much less support a family.

Pre-NAFTA, rural Mexicans eked out a living as small farmers. Post-NAFTA, Mexico has been inundated with subsidized US agricultural products, and small farming no longer pays. People who were once able to lead a decent rural life could no longer survive in the countryside or in small villages. They had two choices. They could move to the cities and slave away for starvation wages in factories manufacturing goods for the US market, or they could immigrate illegally to the USA. Yes, NAFTA triggered the massive influx of undocumented immigrants to the USA in the past decades.

Agriculture is still a vibrant industry in Mexico, of course, but it is now just that: An industry. Mexican agriculture has been taken over by large operations that employ workers at wages that barely enable them to survive. Small farmers cannot compete against these large corporations.

NAFTA-induced poverty is also responsible for much of the organized crime activity in Mexico, which at times spills over into the United States.

If NAFTA were the only trade agreement that the USA had, perhaps Mexico would be much better off. As US manufacturing moved to Mexico, there may have been a competition for workers that would have raised raises and caused Mexico to prosper. But, as stated above, Mexican workers must compete with people who are willing to work for much less in even poorer countries in Asia. Clothing manufacturing, for example, has not only almost completely disappeared in the USA, it has also largely disappeared in Mexico. Mexican workers cannot compete with the low wages in Bangladeshi textile mills.

It is too late to fix NAFTA, but we still have time to scrutinize other trade agreements such as the pending Transpacific Partnership (TPP). Such agreements are generally good for large corporations. They are generally bad for workers in all countries involved. I would like to see American trade policy aimed at improving the lot of workers and not aimed at improving the lot of corporations at the expense of ordinary people.

Now the crass advertising. One of the purposes of this blog is to publicize two of my books. Their covers are shown in the blog’s left sidebar, and if you click on one of the covers, you’ll be connected to the book’s page on Amazon. Both books have received good reviews. One is a factual account of my 2015 hike along the Camino de Santiago de Compostela in Spain. The other is a novel about a psychopath who is elected president of the United States. Although the second book is fiction, it is perhaps too close to reality for comfort.