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Special Reports Last Updated: Mar 15th, 2007 - 00:28:27

Free trade agreements spur immigration
By Gina-Marie Cheeseman
Online Journal Contributing Writer

Mar 15, 2007, 01:14

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NAFTA is an acronym that should be mentioned every time the corporate media reports on the illegal immigration issue. It stands for the North American Free Trade Agreement, which established a free-trade zone in North America. Signed by the United States, Canada, and Mexico in 1992, it took effect on January 1, 1994, but immediately lifted tariffs on the majority of goods produced by the three participating nations, and called for the gradual elimination of most trade barriers over a 15-year period.

Touted as a means to lift Mexico out of poverty, NAFTA has actually driven it further into poverty. According to the Economic Policy Institute�s 2001 report, �Mexican wages have decreased 27 percent since NAFTA, while hourly income from labor is down 40 percent.� Free trade did not benefit the Mexican economy because by definition free market trade includes privatization, which in turn eliminates state subsidies and controls, and almost never includes redistribtion.

The 2001report by the Economic Policy Institute also found that when Mexico began NAFTA negotiations it had �noncompetitive production costs . . . due to higher prices for inputs such as diesel and electricity, higher financial costs, and higher marketing costs (due to deficient infrastructure in highways and warehouse storage . . . among other factors).�

John Warnock, economist and author of The Other Mexico: The North America Triangle Completed, defines free trade as being �about private investment rights.� Warnock cited a World Bank Report from March 2006 where it is mentioned that the poorest 10 percent of the population earns only 1.5 percent of the total Mexican income, but the richest 10 percent earn 42.8 percent. �The distribution of wealth, which would be very hard to measure, is believed to be much worse.� The March report by the World Bank also claimed that since NAFTA the number of Mexican people that live below the poverty line is �62 percent of the economically active population.� The minimum wage has fallen by 40.7 percent. The Mexican government sets the poverty line at two daily minimum wages for a family with five members, or 80 pesos, about seven dollars.

A startling statistic comes from the Mexican government. Between 1993 and 2000 the disparity between Mexican and American manufacturing wages has increased from $9.6 to $12.1 per hour. Reports by the Organization for Economic Co-operation and Development (OECD) state that wages in Mexico have dropped by 10 percent since 1995 while labor production increased by 45 percent. Work hours have increased from eight to 12 hours a day during the same time period. The number of people working more than 48 hours per week has increased since 1988 from 2.3 million to 9.3 million.

Economists at the National University in Mexico City did a study that cited 13.3 million workers in 2000 earned less than around $3.93 a day. The study also mentions that labor production�s part of the gross domestic product has decreased from 34.16 percent to 30.66 percent.

Free trade has brought a decline in the number of professional jobs. Without unemployment benefits and no healthcare assistance from the government of any kind, Warnock believes, �Neoliberalism and NAFTA have been good for the rich in Mexico and the large corporations. The banks, privately owned and robbed by the Mexican rich, have been bailed out of bankruptcy twice by taxpayers. The illicit drug industry flourishes and is now more important than the oil industry, and free trade and cross-border trucking have made marketing much easier.�

Farming has suffered greatly under NAFTA. The majority of Mexican immigrants in the U.S. were farmers with small plots of land without the access to subsidies and technology of their American counterparts. NAFTA has brought a flood of lower-cost American goods to Mexico, making it impossible for Mexican farmers to compete. In a book, titled Stolen Harvest, author Shiva Vandana believes trade agreements import more food (and also export it) without first being allowed to meet the needs of the people, then local farmers are often undersold and driven out of business and national currencies earned do not get to circulate within that society. Hunger increases as a result.�

In an autumn 2002 article in the Wilson Quarterly, writer Amy Chua stated, �Throughout Latin America, educational reform, and equalization of opportunities for the region�s poor indigenous-blooded minorities are imperative if global markets are to benefit more than just a handful of cosmopolitan elites.� Or as Joseph Stiglitz, economic professor at Columbia University and winner of the Nobel Prize for Economics, puts it, �Trade liberalization puts downward pressure on unskilled wages (and increasingly even skilled wages), increasing inequality in more developed countries. Countries trying to compete are repeatedly told to increase labor-market flexibility, code words for lowering the minimum wage, and weakening worker protections. Competition for business puts pressure to reduce taxes on corporate income and on capital more generally, decreasing funds available for supporting basic investments in people and the safety net.�

The pro-immigration rallies of May 2006 involved, among many others, the sons and daughters of illegal immigrants. The result of the corporate media�s failure to provide context is a lack of understanding by the majority of Americans about the true cause of Mexican immigration into America. Renowned economist James K. Galbraith wrote in the July/August 2006 issue of Mother Jones, �Signs and speakers declared that many immigrants didn�t want to come to America. They were forced to, by the Latin American debt crisis, by NAFTA and the liberalization of trade in corn, which threw millions of poor Mexican farmers off their land. (Now the same will happen to Central America, with CAFTA.) It was predictable. Food goes south, people come north; the migrants are the victims, not the architects, of globalization.�

Another renowned economist, Jeff Faux, founder of the Economic Policy Institute, calls NAFTA the �nihilist nightmare of unregulated capitalism.� Joel Rogers, University of Wisconsin professor and contributing writer for The Nation magazine, claims, �Neo-liberalism declares unfettered business domination our best bet for material well-being.�

The moniker free trade is not exactly appropriate. As scholar and author Noam Chomsky puts it, �It�s called free trade, but it�s just a particular variety of protectionism designed by the principal architects of policy in pursuit of the vile maxim, just as Adam Smith said. It�s all written there in The Wealth of Nations, if you read the actual text, instead of the politically correct version given to you. And he�s exactly right, and that�s the way it translates into the modern period.�

Economist Jane D�Arista traces the free trade movement back to 1971 when President Nixon ended the Bretton Woods agreement, which resulted in a new international monetary system where payments are made by private banks in dollars instead of gold, thus creating a dollar-centric international monetary system. This had led to �export-led growth� which has the tendency to �suppress domestic wages and regulatory standards.� If a country can�t afford to pay for imports or attract foreign investment, it has to export more than it imports �to one or a few countries that issue the global means of payment.� The countries that must do this adopt policies that depress wages and exchanges rates. D�Arista calls for a �new international monetary system that can open access to international trade and investment for all nations on equal terms by allowing all currencies to be used in cross-border as well as domestic transactions.�

In a July 2005 article, journalist David Bacon wrote about the impact of NAFTA on the labor movement in Mexico. �Protection contracts and charro unions are the primary system of labor control for foreign corporations that have built factories on the border. This system allows them to pay extremely low wages, even by Mexican standards, and to maintain dangerous and even illegal working conditions, with little fear of organized worker resistance.� The term �charro� union comes from the 1920s Mexican labor leader who dressed like a charro (cowboy).

Thousands of contracts in Mexico are �arrangements of mutual convenience among corrupt unions, the government and foreign investors who own the factories,� according to Jes�s Campos Linas, the dean of Mexican labor lawyers. Big payments are regularly made under NAFTA contracts to union leaders. Wages in manufacturing have significantly decreased. For example, automotive workers in Mexico earned one-twelfth of what American automotive workers made in 2000, but in 1980 they earned one-third of American automotive workers� wages.

Factories, called maquiladoras, were established along the border in order to create a �border zone� where protections are not in place for labor unions, health, safety, and environmental laws. In Bacon�s article, he claimed, �By 2001, more than 2,000 such factories were employing more than 1.3 million people, and border cities like Tijuana and Ju�rez had mushroomed into industrial urban centers with over a million residents each.� Thirty-five percent of all new employment in manufacturing was in maquiladoras, which pay low wages. A report by the Latin American Working Group reported that �the purchasing power of the minimum wage fell by 17.9 percent through 1999.�

Certain American industries benefit from the protectionism of NAFTA. In a speech at the University of Virginia in 1993, Chomsky said that one of the main goals of the American government in regards to NAFTA is �to increase protection for things in which the US has an advantage . . . intellectual property.� In other words, new technology, �the technology of the future� is what the U.S. wants to protect.

Central American Free Trade Agreement

NAFTA is only the beginning of free trade agreements between the U.S. and other governments. The Central American Free Trade Agreement (CAFTA), ratified by both houses of Congress during the summer of 2005 and signed by President Bush, would include the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. In order to be operational, it must be ratified by all participating nations. Costa Rica is the only country that has not ratified CAFTA.

CAFTA is seen as a stepping-stone to the Free Trade Agreement of the Americas (FTAA), which would include every Latin American country (except Cuba) and the U.S. The FTAA itself is a stepping-stone to the Multilateral Agreement on Investment (MAI), which would include the countries in the western and eastern hemispheres.

CAFTA does not contain worker or environmental protections. It ignores the standards set by the International Labor Organization, and requires only that participating countries enforce existing laws. In Central America, laws for workers are far from adequate. The U.S. Trade Representative�s (USTR) CAFTA Policy Brief claims that, �The enforcement of labor laws in the region needs more attention and resources.� (p.2)

The Free Trade Americas Agreement (FTAA) would encompass the United States and every Latin American and Caribbean country, except Cuba, totaling 34 countries.

Central America and the Dominican Republic make up the second largest U.S. export market behind Mexico, and is the 10th largest U.S. market worldwide. There is an economic chasm between the U.S. and Central America the size of Texas. The combined gross domestic product (GDP) of Central America is equal to less than 0.5 percent of the U.S. GDP.

Central American farmers are concerned that they will not be able to compete with U.S. exports. Two-thirds of the Central American population rely on agriculture for employment.

The Pew Hispanic Center estimates 22 percent of undocumented workers are from Central America. If NAFTA is any indication, the implementation of CAFTA will increase the number of immigrants from Central American countries, who will end up being exploited as cheap labor for both corporations and farmers.

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