NAFTA and the Political Economy of Mexican Immigration


            International migration is not, strictly speaking, a new phenomenon. However, in recent decades, the ascendancy of the global economy and the (short-lived?) triumph of neoliberal economics produced a parallel ascendancy in the rates of international immigration. More specifically, in Mexico the affects of neoliberal structural-adjustment programs in the 1980’s, NAFTA in the 1990’s, and the ongoing Security and Prosperity Partnership have produced successive waves of Mexican migrants to the United States. How has this economic restructuring in Mexico affected Mexican migration to the north? From riots in Mexico’s southern provinces to private policy planning sessions in Washington, the issue of Mexican migration has captured the attention of all affected parties.

            Within the country in which NAFTA was conceived and designed, the United States, mainstream discussion looks to domestic realities like education and cultural attitudes as the impetus behind Mexican migration, perhaps because an honest analysis is far too incriminating. For those who see socio-cultural realities as inextricably connected to the prevailing economic paradigms of that particular society, Mexican migration is directly related to NAFTA and broader economic restructuring in Mexico. As trade negotiations and immigration policy were formally joined in the Immigration Reform and Control Act of 1986, the Commission for the Study of International Migration and Cooperative Economic Development was created to study the causes of immigration to the United States, to offer advice on how to filter and contain it. The commission’s first report to President Bush in 1990 found that the primary motivation for migrating north was economic. It is from this premise that we should discuss Mexican migration.

            A reminder of the backdrop against which NAFTA was implemented is crucial for understanding the broader implications for both Mexico and the United States. The globalization campaign, of which NAFTA is one stage, has been met with popular protest and mass resistance all over the world. Popular movements against the corporatist crusade to globalize the doctrines of laissez-faire began in the global South, eventually penetrating the affluent core of the global economy and climaxing (as of yet) in the mass protests against the pillars of the global economic order in Seattle. Similarly, the implementation of NAFTA was met with, and implemented in spite of, general public opposition. Typically, dissent and thoughtful criticism of the expected consequences of NAFTA were silenced in the United States, with rare but revealing exceptions. As President Salinas toured the U.S. explaining why NAFTA would set Mexico on a path toward first-world status, an analysis by the Office of Technology Assessment, a research bureau of Congress, concluded that NAFTA would likely harm the majority of the North American population. Negotiations moved forward with this well in mind, and recommended modifications for socializing the benefits of the agreement beyond narrow sectors of finance and investment were ignored.(Chomsky 102) Even in The New York Times, hardly hostile to state and corporate power, Tim Golden reported that “Economists predict that several million Mexicans will probably lose their jobs in the first five years after the accord takes effect.”

            In the southern provinces like Chiapas and Oaxaca, where the vast majority live on the land, native Indian populations rose up in mass resistance to NAFTA reforms in January 1994. The Zapatista uprising coincided directly with the enactment of NAFTA, and attracted worldwide solidarity in defiance of policies that clearly sought to undermine Mexican sovereignty. A major motivator for the uprising was President Salinas’s decision to repeal Article 27 of the constitution of the Mexican Revolution, which had established thousands of pueblos with inalienable community land-holdings called ejidos. As the centerpiece of Mexico’s post-revolutionary land redistribution reforms, this integral part of the Mexican social safety net was the ultimate symbol for social justice in the peasant communities. As noted by Noam Chomsky in a chapter on the Zapatista uprising, these barriers to unfettered implementation of neoliberal reforms were detected in a 1990 Latin America Strategy Development Workshop in Washington: “a ‘democracy opening’ in Mexico could test the special relationship by bringing into office a government more interested in challenging the U.S. on economic and nationalist grounds.”(Chomsky 105) Mexican democracy was seen from the beginning as a primary threat to the architects of NAFTA, for reasons that are abundantly clear upon examination of the record.

            As Evelyn Hu-Dehart acknowledges in her Globalization and Its Discontents, NAFTA should be seen as one stage, albeit one major stage, in a larger process of restructuring the Mexican economy, a process still underway to this day. The first wave of reforms began during the financial crisis of 1982, amidst the developing-world debt crisis, with Mexico joining the GATT in 1985, NAFTA in 1994, and finally culminating in the Bush administration’s Security and Prosperity Partnership (SPP). Plans for Mexican integration into the global economy long pre-date NAFTA. Essentially, Mexico was to integrate into the New World Order through the standard neoliberal formulas: export-oriented growth models, removal of trade/investment barriers and price controls, sweeping privatization of the public sector and deregulation of industry and finance, and a removal of the state from involvement providing social services and economic development. By the mid-sixties, the United States and Mexico had established the Border Industrialization Project, a scheme creating a multitude of the now-infamous assembly plants called maquiladoras along Mexico ’s northern border. The preferred model for production in the era of globalization, these Export-Processing Zones, essential for delivering cheap consumer products (apparel, electronics, auto parts etc.) to those living in the affluent global core, now dominate the manufacturing landscape of the Pacific Rim and the broader global periphery.(Hu-Dehart 245-6) We see, then, that before the formal establishment of NAFTA, Mexico had been successfully co-opted by the usual suspects, the purveyors of the neoliberal paradigm: the U.S. Treasury Department, IMF, World Bank, and WTO.

            More than any other sector, agriculture in Mexico has been devastated by NAFTA. Agriculture is integral to Mexican heritage and cultural values. For thousands of years, the indigenous Indian populations have lived and worked on the land, primarily as subsistence farmers, providing for local families, communities, and markets. The decade preceding NAFTA had seen sharp increases in poverty rates, with more than two million new rural poor produced as a result of reforms. By 1998, the rural poverty rate had reached 82% according to World Bank figures.(Cavanagh 58) In line with World Bank/IMF prescriptions, Mexican agricultural production shifted away from traditional subsistence towards crops for export, including animal feed and other cash crops, much to the benefit of giant agribusiness firms and foreign consumers. Post-NAFTA , Mexico began exporting their agricultural output, all in a country with a proud tradition in farming and agriculture, suffering increasing rates of hunger and malnutrition, and over half the people lacking access to basic necessities. According to the Department of Agriculture, exports to Mexico grew at an astonishing annual rate of 9.4%. Between 1993-2000, NAFTA opened up Mexico to an 18-fold increase in corn imports.(Cavanagh 58) By 2007, annual U.S. agricultural exports grew to $12.7 billion. As employment in agriculture declined, productive lands were abandoned, and Mexico began to import massive amounts of food and other basic necessities, suffering the consequences of global market volatility.

            In Displaced Peoples: NAFTA’s Most Important Product, David Bacon discusses how NAFTA forced Mexican farmers/producers of yellow corn to compete in their own local markets with corn grown in the United States by industrial agribusiness operations, subsidized by the public sector through the U.S. farm bill. The hypocrisy is painfully obvious, yet totally ignored in mainstream discussion and media analysis. It is no aberration from recent history that in this case, the purveyors of the Washington Consensus blatantly ignore their own laissez-faire doctrines (because of their obvious inadequacies in promoting development), which they relentlessly impose upon the weak nations of the world. As NAFTA and earlier reforms eliminated price supports and state food subsidies in Mexico, the U.S. government erected huge protections by subsidizing industrial corn production, crippling Mexican farmers. Traditionally, through The National Popular Subsistence Company (Conasupo), the Mexican government bought corn at subsidized prices, turned it into tortillas (a staple in Mexican households), and sold them at state-franchised grocery stores at low prices. NAFTA eliminated Conasupo, and rural Mexican farmers went hungry trying to compete with American firms who were saturating the local markets with imported crops. Now subject to the whims of the global market, and state assistance banned by NAFTA, Veracruz coffee growers were devastated by a global coffee glut that plunged prices down below productions costs. It is conditions like these that eventually erupt in the form of civil unrest and social decay.

            In Happily Ever NAFTA? John Cavanagh and Sarah Anderson document how NAFTA has undermined various sectors of the Mexican economy, and disadvantaged the vast majority of the population. Mexico’s maquiladoras have received worldwide criticism for human rights violations, low wages, ecological abuse, and violent systematic assaults on labor and unions. Urban populations suffered similar disasters as the rural communities. From 1993-1996, real manufacturing wages fell 20%. In 1999, wages in the maquiladoras were about $1.74, considerably lower than the rest of Mexican manufacturing with average wages of $2.12. The Secretary of Commerce in Mexico praised the wages as an inducement for foreign investment. Indeed they are, just as is repression of labor, lax environmental regulations, and a general orientation of public policy towards the interests of business and capital. Manufacturing became totally dependent on foreign consumer markets, with over 85% of exports and a majority of imports dependent on the American market. Between January 2001 and March 2002, over 500 maquiladoras shut down due to the U.S. recession.(Engler 1) Industries became victims of external economic downturns, capital flight, and the search for even cheaper labor. While NAFTA did create 700,000 jobs in the maquiladora plants by 2000, 300,000 of them disappeared to China and Southeast Asia by 2003. Despite claims that cheap U.S. grain imports would lower consumer prices, the opposite occurred. With the demise of the Consupo stores and price supports, the prices of tortillas more than doubled after the adoption of NAFTA, leading to the “tortilla riots”, and tortilla production is now monopolized by the Mexican oligopoly Grupo Maseca. Some proponents claim that, at least in crude quantitative terms, Mexican GDP experienced some growth in the latter part of the nineties. However, when viewed in a historical context, Mexico experience average annual growth of 6.6% or more between 1950 and 1980. After adopting the neoliberal “growth” model and integrating into the global economy during Mexico’s “lost decade” of the 1980’s, the Mexican economy experienced its lowest growth rates after NAFTA took effect (2.4% between 1994 and 2003).

            David Bacon notes that under the former Mexican economy, successfully restructured by the Mexican debt/financial crisis and later NAFTA, foreign automakers like Ford and GM were required by law to purchase some materials for production from local Mexican producers. NAFTA prohibited laws requiring foreign producers to use a minimum percentage of local content for production of goods, allowing the auto giants to supply their assembly lines with parts from their own subsidiaries, usually located in other countries. Thousands of Mexican auto workers lost their jobs in the process. As a report by the Economic Policy Institute noted, “NAFTA also prohibited governments from imposing restrictions such as local content requirements and local R&D sourcing and provided an expansion of investor rights in the investment chapter, thus reducing the costs and risks associated with foreign investment.”(EPI 20) In fact, over half of all U.S. trade with Mexico consists of intrafirm transactions of the type described above, with virtually no connection to the Mexican economy. These NAFTA provisions exacerbate the Mexican trade deficit. Domestic output often requires disproportional input, the materials of which must be imported, resulting in a situation in which growth of Mexican GDP correspondingly expands the Mexican trading deficits. According to Cavanagh and Anderson, Mexican air pollution more than doubled under NAFTA, while Mexican government environmental expenditures have fallen 45% since 1994. Chapter 11 NAFTA provisions allow foreign (primarily American) investors to sue governments directly in highly secretive arbitration panels unaccountable to the public, for any acts or regulations that might diminish their bottom line. Mexico was forced to pay a California firm $17 million for denying the company a permit to operate a hazardous waste facility in an ecologically sensitive location.

            A major objective of NAFTA and other deceptively mislabeled “free”- trade agreements was to privatize the public sector, which in Mexico employed millions of workers across the country. According to Bacon, by the mid-nineties, the majority of publicly-owned mines in Mexico had been sold off to Grupo Mexico, owned by the powerful and wealthy Larrea family. A steel mill in Michoacan was bought by the Villareal family, while the public telecommunications firm was sold to the wealthiest person in Mexico, Carlos Slim, the same oligarch who recently bailed out The New York Times.(Bacon 25) After having driven the city’s bus system into extreme debt, former Mexico City mayor Carlos Hank bought the same public transit system he had destroyed at public auction after NAFTA. Wealthy narrow centers of power in Mexican society were not the only beneficiaries of these privatization schemes. In partnership with the Larrea family, American-based Union Pacific absorbed Mexico’s primary north-south railway systems and immediately eliminated passenger service. In pursuit of ever-decreasing production costs, railway employment in Mexico fell drastically. After NAFTA, American firms now own and operate Mexico’s ports and shipping terminals, with the usual consequences for labor and the environment.

            In 1994, the first year of NAFTA reforms, the Mexican economy collapsed when the peso was devalued without warning by nearly 50%. To prevent massive capital flight and sell-off of Mexican bonds, Treasury Secretary Robert Rubin arranged a $20 billion loan to Mexico , paid to bondholders, the most of which were by then major U.S. banks. Not only was the Mexican banking system now under the control of foreign capital, but as a condition for the loan, Mexico was forced to use its state oil revenues to pay off foreign debt,  eliminating the primary source of revenue for social services. The financial crisis precipitated a 6.2% plunge in GDP in Mexico in 1995. Between 2000-2005, as the final phases of NAFTA were implemented Mexico lost 1.5 million jobs. It is no coincidence that, a few days after the passage of NAFTA, the Senate passed sweeping “anti-crime” legislation, militarizing the Mexican-American border and establishing the foundations for an emerging North American security-state.

            As media attention around NAFTA eventually faded, the broader campaign of continental economic integration charged on. After all, NAFTA was and is still one major part of a larger process of consolidating a global economic system in service of Western multinationals. As David Rockefeller described it, “a whole new vision of economic organization…This revolutionary process started with the profound economic transformation undertaken by Chile [under Pinochet]. It accelerated rapidly with Mexico’s decision to join the General Agreement on Tariffs and Trade; to unilaterally reduce tariffs; and finally to work toward a radically new trading system with the signing of NAFTA. This not only brought Mexico into the game … it also held out the promise of extending the new trading system to the entire hemisphere.” In an op-ed in the L.A. Times, Henry Kissinger called NAFTA “the single most important decision that Congress would make during Mr. Clinton’s first term…the most creative step toward a new world order taken by any group of countries since the end of the Cold War … not a conventional trade agreement but the architecture of a new international system.” The NAFTA model was to be the prototype for bilateral and multilateral trading systems in the era of globalized capital, policies integral to what Naomi Klein dubbed the “shock doctrine”, and a process which Rockefeller accurately identifies as originating in Pinochet’s Chile.

            Projects of this scale produce inevitable backlash, what economists prefer to call “externalities”. As the fabric of social life decays, communities begin to disintegrate, and people begin to seek out any means of survival. Once the neoliberal project is underway, in any given society, critical security and military infrastructure is often necessary for containment and suppression of the victims-the general population. From the 1970’s on through the twenty-first century, from South America’s Southern Cone to Russia to China to North America, extreme laissez-faire policies have necessitated the use of force and coercion to protect both the state and other vested interests from popular revolt. In light of these historical developments, the establishment of the Security and Prosperity Partnership (SPP) begins to display a rather chilling logic. Before Mexico entered NAFTA proponents of the accord proclaimed that its growth inducing properties would curb the flow of northbound migration, providing an incentive for people to stay. Unsurprisingly, the opposite happened. When NAFTA was signed, there were 2.4 million undocumented Mexicans in the U.S. More recent data shows that number at 4.8 million, and the total number of Mexican-born people in the U.S. doubled to 9 million by 2000. Over 600,000 Mexicans migrated north in 2002 alone. Mexican migration has increased so much that remittances have become something of a lifeboat for the Mexican economy. NAFTA was to be extended to the realm of security and defense via the SPP, a highly secretive regional defense initiative launched between President Bush, Vicente Fox, and Canadian PM Paul Martin. Quietly launched by the Bush White House, the SPP circumvents elected legislatures, media scrutiny, and general public oversight entirely. In this sense, it is not a treaty or law (which would require consent of the public), but a loose network of interests collaborating behind closed doors as a means of not only enhancing the architecture of NAFTA, but as a way of institutionalizing the infamous Bush National Security Strategy of 2002, the most hegemonic expression of American power since the Monroe Doctrine. Thomas Shannon, the U.S. Assistant Secretary of State for Western Hemisphere affairs, described the SPP’s purpose with revealing candor: “To a certain extent, we’re armoring NAFTA.” Mexicans and other Latin Americans have learned that adopting the U.S.-promoted neoliberal economic model—with its economic displacement and social cutbacks—comes with a necessary degree of force, but this was the first time that a U.S. official had stated outright that regional security was no longer focused on keeping the citizens of the United States, Canada, and Mexico safe from harm, but was now about protecting a regional economic model.(Carlsen 1)

            Washington had three fundamental objectives embodied in the SPP: to create more advantageous conditions for transnational corporations and remove remaining barriers for the flow of capital and cross border production within the framework of NAFTA; to assure secure access to natural resources in the other two countries, especially oil, which had yet to be fully privatized in Mexico; and to create a regional security plan based on "pushing its borders out" into a security perimeter that includes Mexico and Canada. (Carlsen 1) The SPP is perhaps best understood as the application of Defense Department logic and security-related capital/resources towards the consolidation of North American economic restructuring. Through the SPP, the Bush administration sought to push its North American trading “partners” into a common front that would assume shared responsibility for protecting the United States from external threats, promoting and protecting the free-trade economic model, and bolstering U.S. global control, especially in Latin America where the State Department sees a growing threat due to the election of center-left governments. Born in the era of the “War on Terror”, integral to the SPP are private sector security/defense interests, high-tech infrastructure, the massive U.S. intelligence apparatus, counter-terrorism doctrines, and the “War on Drugs” approach to social decay. Perhaps more important are the industries and firms these institutions represent. Post 9/11, a massive industry was spawned around the creation of the Department of Homeland Security, and increasingly, defense/security/intelligence and disaster-response matters are outsourced to the private sector (firms like Boeing, GE, Lockheed Martin, Blackwater etc.).

            The latest step forward in achieving “deep integration” in regional security is Plan Mexico. This U.S. initiative, passed by Congress on June 26 and signed into law by Bush, allocates $400 million to Mexico for 2008-09. The original plan foresees about $1.4 billion over a three-year period to the Mexican military, police, and judicial systems for training and equipment. The Merida Initiative, or Plan Mexico as it is known, is an adjunct to the SPP with the expressed intent of arming Mexican security forces in order to protect the “shared economic space” of North America. Hiding behind an empty gesture to combat the deadly drug trade along the Mexican-American border, the Bush administration set in motion an Orwellian scheme to militarize North America; citizen identification requirements, widespread border and domestic surveillance, and expansion of the private-prison complex to account for increasing illegal immigration and underground criminal networks. The counter-terrorism/drug-war model elaborated in the SPP and embodied later in Plan Mexico encourages a crackdown on grassroots dissent to assure that no force, domestic or foreign, effectively questions the future of the system. As Lauren Carlsen notes in her report for the Center for International Policy, “all of these programs are directed to the goals of supply interdiction, enforcement, and surveillance—including domestic spying. This military model has proved historically ineffective in achieving the goals of eliminating the illegal drug trade and decreasing organized crime, and closely related to an increase in violence, instability, and authoritarian presidential powers.” By extending NAFTA into regional security, Washington decided—and the Mexican government conceded—that top-down economic integration necessitates shared security goals and actions. Given the huge imbalance of economic and political power between Mexico and the United States, this meant that Mexico had to adopt the foreign policy objectives and the destabilizing, militaristic counter-terrorism agenda of the U.S. government. (Carlsen 3)

            Under the rubric of "Counter Narcotics, Counter Terrorism, and Border Security" the initiative would allocate $205.5 million for the Mexican Armed Forces. Over 40% of the entire packet goes to defense companies for the purchase of eight Bell helicopters (at $13 million each, with training, maintenance, and special equipment) for the Mexican Army and two CASA 235 maritime patrol planes (at $50 million each, with maintenance) for the country’s Navy. Most of the $132.5 million allocated to Mexican law enforcement agencies also lines the pockets of defense companies for purchase of surveillance, inspection, and security equipment, and training. The Mexican Federal Police Force receives most of this funding, with Customs, Immigration, and Communications receiving the remainder. The rest of the 2008 appropriations request is comprised of $112 million in the "Rule of Law" category for the Mexican Attorney General’s Office and the criminal justice system. This money is earmarked for software and training in case-tracking and centralizing data. The initiative would also give $12.9 million to the infamous Mexican Intelligence Service (CISEN) for investigations, forensics equipment, counterterrorism work, and to other agencies including the Migration Institute for establishment of a database on immigrants. The U.S. government allots $37 million of the packet to itself for administrative costs.

            The scope of the Regional Security Cooperation Initiative demonstrates that it goes far beyond a joint war on drugs and cements into place failed policies on immigration enforcement, militarization of the border, economic integration policies, counterterrorism attacks on civil liberties, and the intromission of security forces into social policy and international diplomacy.

For the Bush administration the war on drugs model served to lock in pro-corporate economic policies and U.S. military influence in the region. When the United States exports its "war on drugs" it becomes a powerful tool for intervention and pressuring other nations to assume U.S. national security interests as their own (Plan Colombia, for example). This global policeman role creates dependency on the U.S. military and intelligence services and militarizes diplomacy. The Pentagon takes the lead in international policy, while relegating international law and diplomacy to a distant second place.

            What does this all mean for Mexican migration to the U.S.? The answers are relatively simple. NAFTA finalized the restructuring of the Mexican economy that began in 1982. As Mexico was “locked in” to the neoliberal economic model, economic opportunity for the vast majority of the people began to disappear. Peasant farmers and assembly plant workers sought economic refuge in the most logical place: the country directly to the north, and the center of the world’s economy. As “free” market policies pressure the state into cutting budgets for social services, Mexican communities are left with few options. Displacement of Mexican workers is the defining legacy of NAFTA-era Mexico, and U.S. industries depend upon “illegal” migrants who demand much less than their American counterparts in terms of wages, benefits, and legal protections. In 2001-2002, while the American economy was shedding millions of jobs, Mexican migrants arrived in staggering numbers. Currently, the vast majority of international migration in the global economy is forced migration. It is the responsibility of the global community to provide communities with viable alternatives, to provide people with the right not to migrate. It would be the height of absurdity to expect better results in the future from policies with a proven record of failure.

            NAFTA and the SPP, subsumed under which are various programs, should all be seen as stages in larger plans for the expansion of corporate and state control over economic, social, and political life in North America. The SPP is an organic outgrowth of of NAFTA. These policy developments of the previous two decades have established a continental economic system and the necessary rules to govern it: private corporate control with the force of the state at its disposal. NAFTA had disastrous affects on the general population in Mexico; the SPP is a response to those disastrous affects, and provides both corporate and state sectors of power with the necessary capabilities for dealing with increasing rates of social decay and the inevitable northbound migration it produces. The criminalization of Mexican immigrants, essentially adopting the counter-terrorism/war-on-drugs approach to addressing the issue, is a recipe for continued failure. Without repealing the systemic reforms established by NAFTA and earlier structural adjustments, actively resisting the radical militarization of North America via the SPP, and establishing self-sufficient Mexican communities, we can expect northbound Mexican migration to continue unabated. Whether or not we continue to pursue a path of economic decay and authoritarian control is, as always, a matter entirely within the realm of our control. 


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