Sunday, January 26, 2014


Twenty one years ago I was a graduate student living and teaching at the Universidad Autonoma de Queretaro, in central Mexico. It was 1993 and I was working on my first peer reviewed academic article.

Former U.S. President George H.W. Bush had just signed the North American Free Trade Agreement (NAFTA), in 1992. Then President Bill Clinton was in the middle of trying to convince the U.S. Congress that NAFTA was a net plus for America. I was already giving talks on the topic in central Mexico so NAFTA was an easy choice for my first journal article.

The North American Free Trade Agreement (NAFTA) is signed by trade representatives as Mexican President Carlos Salinas de Gortari (1988-94), U.S. President George H.W. Bush (1988-92), and Candadian Prime Minister Brian Mulroney (1984-93) look on.

Mexico's president at the time, Carlos Salinas de Gortari (1988-94), was concerned because the U.S. Senate had not yet ratified the treaty. The U.S. Senate had not done so because the U.S. House of Representatives had not granted fast-track authority, under which Congress can approve or reject a proposed treaty, but can not amend it.

I published the article (it's in Spanish) in one of Latin America's top economic journals in 1994. I was proud of it then and, given what has transpired in Mexico, am especially so now.

I'm providing this as background because the arguments that we're seeing today from the promoters of the Trans-Pacific Partnership (TPP) are almost identical to the same arguments that we saw from the promoters of NAFTA in 1992 and 1993. In fact, because the TPP allows private companies to sue foreign governments over trade restriction complaints, and rewrites many domestic laws, the TPP has been called NAFTA on steroids.

The TPP is currently being pushed by the U.S. Chamber of Commerce because how it strengthens corporate patent laws, encourages U.S. corporations to take jobs overseas, provides the framework to challenge domestic laws designed to reign in Wall Street, and further weakens or allows weak environmental and labor standards to stand.

Oh, and as was the case with NAFTA, the TPP has largely been negotiated behind closed doors.

NAFTAs primary critics - labor and environmental groups - were especially concerned over their inability to participate in the negotiations. They consistently asked: "Sure, trade will be enhanced, and corporations will prosper, but what's in it for us?"

As it turned out, not much.

Originally published November 23, 1993

Fast forward 20 years and we find that over 600,000 U.S. jobs have been lost or displaced as a result of NAFTA - with millions more jobs lost because of favorable legislation for corporate America - while billions in tax income has disappeared as firms took both their jobs and companies abroad. Workers in the United States are now increasingly forced to compete against a workforce whose labor rights are regularly denied or abused, which further depresses wages here in the United States.

All of this is just one part of a larger race to the bottom in the United States.

While many NAFTA proponents argued in the early '90s that NAFTA was a sign that Mexico was on the right developmental path, and would help Mexico develop within a generation, I didn't agree. The article I wrote looked at NAFTA from an entirely different perspective.

Specifically I wrote that without providing the resources to invest in infrastructures, or without providing support for improving the education and training levels of Mexico's workers and its rural peasant class, that NAFTA would not bring development to Mexico. In a few words I suggested that NAFTA would be little more than a corporate Trojan Horse without some form of European-like "transitional aid" to help Mexico compete with the United States.

Without some type of mega-investment in people, infrastructures, and protections for labor I argued that Mexico would not reap the gains that were promised at the time, and that American workers would lose as U.S. jobs went to Mexico. And this is exactly what happened.

In fact, today, apart from increased profits for corporations doing business under NAFTA's umbrella, Mexico's countryside and border regions are beset with violence and drug lordism that have gotten progressively worse over the past 20 years. To be sure, we have seen material advances in several central states in Mexico. But these states have embraced alternative "interior port" infrastructure strategies, which include investing in education and training programs.

Mexico's working class, its rural poor and its most vulnerable, however, have seen few if any benefits from increased trade. Poverty has increased in Mexico. Unemployment is higher today than it was in 1994. And Mexico's total debt, which stood at $138 billion in 1994, is now over $350 billion.

But not everyone in Mexico is doing poorly.

Joaquin "El Chapo" Guzman is Mexico's (actually, the world's) top drug lord, and was ranked as one of the richest men in the world by Forbes magazine. Taking advantage of low pay and few job opportunities in Mexico, Chapo Guzman can hire and bribe the best talent throughout Mexico. He is also considered a folk hero by many because of the projects he helps fund. His fame and influence in the drug industry is such that he is now considered Public Enemy #1 in Chicago.

Joaquin "Chapo" Guzman named Public Enemy #1 in Chicago.

So, while NAFTA's promoters promised development and prosperity for all, what actually transpired in Mexico since NAFTA was signed has been increased profits for U.S. corporations in Mexico. But the flip side of that coin are increased kidnappings, record narco-trafficking activities, and poverty in perpetuity for the vast majority of Mexicans since 1994.

All of this is important for one simple reason. When today's critics of TPP tell you that free trade treaties don't bring promised results - and point to lost jobs in America and a weakened middle class - there's a track record here that we need to consider.

It should also be noted that Latin America saw the results of NAFTA in real time during the '90s. It's one of the reasons they rejected the Free Trade for the Americas in 1998 (to be sure, the Republicans were also opposed to the FTA treaty, but that's another story for another day).

In all cases, U.S. corporations know what happened after NAFTA. It's one of the reasons they're now pushing so hard for the Trans-Pacific Partnership (TPP). It will further depress wages and weaken the hand of labor in America, which will help make corporate America even more money.

I've seen this story before. We've all seen this story before. And it definitely doesn't end "happily ever after" for America's middle class. The TPP is a Trojan Horse designed to weaken labor, and should be opposed.

- Mark

UPDATE: Here's one small victory.

UPDATE (3-3-14): Here's what Congressman Alan Grayson (D-Fl) thinks about the TPP after getting a look at the latest TPP document.

1 comment:

Anonymous said...

Thanks Dr. Martinez. My family was a casualty of NAFTA. It's important that the same doesn't happen to others.