The Fallout from NAFTA

As Mexican President Fox plays host to President Bush next week, one wonders if the two leaders have any honest, frank discussions. If they did, here is how a conversation about the 10th anniversary of NAFTA might go:

“So George, did you know that when NAFTA was signed there were 2.4 million undocumented Mexicans in the U.S., yet now that number has more than doubled to 4.81 million. (1) The total number of Mexican-born people in the U.S. also doubled to about 9 million from 1990 to 2000. (2)”

“That’s true Vicente, because your hard-working people were attracted by all the wonderful jobs we created in the late 1990s.”

“But then George how do you explain that as the U.S economy shed millions of jobs in 2001 and 2002, these two years were the biggest ever for illegal migration with more than 600, 000 Mexicans going north in 2002 alone (3).”

“We’re trying to stop them illegals, Vicente. Since the implementation of Operation Gatekeeper the number of U.S. border patrol agents has jumped from just over 3000 in 1993 to some 9000 in 2002. (4) Heck, we even built a huge fence all across southern California.”

“I know George, but that only forced migrants into the Arizona desert. This year during the hot summer months about 200 people died trying to cross it (5). Some say it is the worst border in the western world and the deadliest across land anywhere. And another thing, your increased clampdown has made it even more profitable for the so-called “coyotes” who help migrants across the border. The money available in the “coyote” trade has spurred an increasingly violent network of organized crime that has some comparing the border control situation to the futile war on drugs.”

“Well Vicente, I’m not sure what to say, except that this whole NAFTA thing hasn’t worked so well for us either.” Then President Bush could go on to tell his Mexican counterpart that in the early 1990s, 10 years after Mexico’s 1982 peso devaluation and the beginning of the country’s neoliberal economic restructuring, the flow of “illegal” migrants had become a political issue in the U.S.. So, before Mexico entered NAFTA proponents of the accord proclaimed that its growth inducing properties would curb the flow of northbound migration. The argument put forth was that NAFTA would boost Mexican growth, which would create jobs and with more jobs Mexicans wouldn’t need to seek work in the U.S.

NAFTA did create hundreds of thousands of (Maquiladora) jobs, mostly in the north of the country. By 2000 some 700 000 Maquiladora jobs were the result of NAFTA but by 2003 300 000 of those jobs had disappeared due to the downturn in the U.S economy and more importantly Chinese competition (6).

The reasons for migration then probably lie in the effects NAFTA and its economic liberalization agenda have on the country’s economy. Let’s be clear NAFTA has benefited some. Mexico has had a major increase in billionaires. Large segments of the country’s business elite and professional classes have done well. And certainly a few multi-nationals aren’t complaining. Unfortunately, most Mexicans aren’t members of these sectors of society.

Compared to Maquiladora job creation NAFTA’s first decade saw some 2.5 million Mexican farmers driven from their land by a flood of subsidized U.S. food and reductions in their own subsidies. (7). Also, since the agreement took effect, real wages for Mexican manufacturing workers have dropped 13.5% (8) Mexico’s economy has done so well that money sent home (remittances) from the U.S. has surpassed tourism and foreign direct investment as the second biggest source of foreign currency to the country after the oil sector. Over 1 billion a month was being remitted in the first half of 2003, nearly 30% more than 2002. (9)

To put this number into perspective lets add the likely combined wages of all 700 000 Maquiladora jobs created during the first seven years of NAFTA. Assuming 700,000 workers work 50 hours a week for 52 weeks a year at $1.47 per hour the total amount brought into the Mexican economy is $2.68 billion. So the growth of remittances in fact dwarfs the increase in wages from the Maquiladora sector.

After a decade of NAFTA the remittances from increased economic migration, which NAFTA was supposed to curb, are what’s keeping the Mexican economy afloat. “So George can we talk about re-working that agreement.”

YVES ENGLER can be reached at

1. NY Times Dec.27 2003

2. Globe and Mail Jan.3 2004

3. Wall Street Journal Oct 10 2003

4. Wall Street Journal Oct 10 2003

5. Globe and Mail Sept. 20 2003

6.NY Times Dec.27 2003

7. Liberation Jan 1 2004

8.USA Today Dec 31 2003

9. Financial Times Sept 19 2003



Yves Engler’s latest book is Stand on Guard for Whom?: A People’s History of the Canadian Military.