NAFTA's Legacy for Mexico: Economic Displacement, rnLower Wages for Most, Increased MigrationrnNAFTA Devastated Mexico's Rural Sector and Increased PovertyrnThe North American Free Trade Agreement (NAFTA) was sold to the people of all three countries with rngrand promises. Mexicans were promised NAFTA would raise their wages and bring Mexicans' rnstandards of living closer to the United States and Canada. Instead, after 24 years, real wages in Mexico rnare down from already low prern-rnNAFTA wages, two million Mexicans engaged in farming lost their rnlivelihoods and lands, tens of thousands of small businesses have gone bankrupt as American bigrn-rnbox rnretailers moved in, and poverty remains widespread. And, Mexican taxpayers have paid foreign rninvestors more than $204 million in compensation following Investorrn-rnState Dispute Settlement attacks.rnPrior to NAFTA, 21.4 percent of rnMexico's population earned less than rnthe minimum income needed for food, a rnshare that has barely budged in the 24 rnyears since NAFTA's implementation. rnToday, over half of the Mexican rnpopulation and over 60 percent of the rnrural population still fall below the rnpoverty line, contrary to the promises rnmade by NAFTA's proponents. On the rn10rn-rnyear anniversary of NAFTA, the rnWashington Postrnreported: "19 million rnmore Mexicans are living in poverty rnthan 20 years ago, according to the rnMexican government and international rnorganizations." rnBefore NAFTA, Mexico only imported rncorn and other basic food commodities if local production did not meet domestic needs. NAFTA rneliminated Mexican tariffs on corn and other commodities. NAFTA terms also required revocation of rnprograms supporting small farmers. But NAFTA did not discipline U.S. subsidies on agriculture. The rnresult was disastrous for millions of people in the Mexican countryside whose livelihoods relied on rnagriculture. Amid a NAFTArn-rnspurred influx of cheap U.S. corn, the price paid to Mexican farmers for the rncorn that they grew fell by 66 percent, forcing many to abandon farming. From 1991 to 2007, about 2 rnmillion Mexicans engaged in farming and related work lost their livelihoods. Mexico's participation in rnNAFTA was conditioned on changing its revolutionaryrn-rnera Constitution's land reforms, undoing rnprovisions that guaranteed small plots (rn"ejidosrn") to millions of Mexicans living in rural villages. As corn rnprices plummeted, indebted farmers lost their land, which newly could be acquired by foreign firms that rnconsolidated prime acres into large plantations.rnAccording to a New Republic exposé: "as cheap American foodstuffs flooded Mexico's markets and as rnU.S. agribusiness moved in, 1.1 million small farmers rn-rnand 1.4 million other Mexicans dependent upon rnthe farm sector rn-rnwere driven out of work between 1993 and 2005. Wages dropped so precipitously that rntoday the income of a farm laborer is onern-rnthird that of what it was before NAFTA." The exposé noted rnthat, as jobs and wages fell, many rural Mexicans joined the ranks of the 12 million undocumented rnimmigrants competing for lowrn-rnwage jobs in the United States. rnThough the price paid to Mexican farmers plummeted after NAFTA, the newly deregulated retail price of rntortillas rn-rnMexico's staple food rn-rnshot up 279 percent in the pact's first 10 years. This contradicts free rntrade theory, which predicts that gains from liberalization come on the import side as all consumers enjoy rnlower prices, while injury only occurs to those in sectors directly displaced by imports. But, NAFTA rnincluded service sector and investment rules that facilitated consolidation of grain trading, milling, baking rnand retail. So in short order the relatively few remaining large firms dominating these activities were able rnto raise the prices paid by Mexican consumers and reap extra profits as corn costs simultaneously rndeclined. This problem is ongoing; Recent reports show that U.S. exports of corn, wheat, soybeans and rnrice are all sold below production costs, devastating Mexico's agricultural sector.
Photo by Niccolò Caranti, CC BY-SA 4.0.
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