The Costs of NAFTA

On the 1st of January 1994, The North American Free Trade Agreement (NAFTA) between the USA, Canada and Mexico came into effect. At the time, proponents of the agreement, such as then US President Bill Clinton, claimed that it would ‘lift all boats’. However, 11 years later, these promises seem empty. NAFTA has lifted some boats but many people throughout the three nations have been made worse off.

Under NAFTA, all three nations had to drop their restrictions on agricultural imports. Subsidies to small farmers had to be dropped, but the US government was still allowed to give multi-billion dollar subsidies to giant agri-business corporations, such as Cargill, ADM and Conagra. It is not surprising that these corporations lobbied hard for NAFTA.

Small US farmers, who were not subsidised, found it impossible to compete with these corporations. Between 1995 and 2002, the US lost 38,310 small farms. NAFTA and its precursor, the US Canada Free Trade Agreement (CUFTA), have had a similar effect on Canadian rural communities. Between 1996 and 2001, Canada lost 11 percent of its family farms. Meanwhile, US agri-business corporations have used the agreements to consolidate their control of the Canadian agricultural market. Canada’s largest farming co-ops Saskatchewan, Alberta, Manitoba and United Grain Growers have all been taken over by Agricore United, of which ADM has a large shareholding.

NAFTA has had an even worse effect on rural communities in Mexico. The Mexican market was flooded with subsidized US corn and maize imports, which were dumped at a price less than what it would cost a Mexican farmer to produce. As a result, an estimated 1.5 million Mexicans farmers have been forced off the land. These farmers then have to travel into the cities to compete for an ever decreasing amount of jobs with poor pay and conditions or make the dangerous (usually illegal) journey across the US border.

The process of small ‘inefficient’ farms being out-competed by large ‘efficient’ agribusiness corporations was supposed to make food cheaper for consumers. However, in all three NAFTA nations the price of basic foodstuffs has increased. In Mexico, the price paid to farmers for their produce has dropped by 70 percent, but the price of the nation’s staple food, corn tortillas, has increased by 50 percent in Mexico City and even higher in rural areas. Figures put out by the US Census Bureau showed that the Consumer Price Index (real prices for food eaten at home in the US) rose by 22 percent between 1994 and 2002.

Maize was first domesticated by indigenous Mexicans 9000 years ago. Over 41 distinct varieties of corn are grown in Mexico. This biodiversity is being lost as agribusiness corporations replace diverse plots with monocultures.

In order to sign up to NAFTA, Mexico’s then President Salinas removed Article 27 from Mexico’s Constitution. Article 27 dates from Mexico’s post revolutionary constitution of 1917. It broke up the Hacienda system under which large areas of land were owned by a few absentee landlords, forcing thousands of campesinos (peasants) into starvation or to become debt slaves to the landlords. The broken up tracts of land were to be turned into ejidos, which are communal farms run by campesinos in poor communities.

To many campesinos, especially the indigenous people of Mexico’s poorest state, Chiapas, the repeal of Article 27 destroyed any chance they’d ever have to farm their own land. Ejidos could now be privatized. To the Zapatista Army of National Liberation (EZLN), an organization set up to fight for the rights of indigenous people this was the final straw. Subcomandante Marcos, the Zapatista’s poetic, ski masked, pipe smoking spokesman, declared NAFTA to be “a death certificate for the Indian peoples of Mexico”. The Zapatistas chose the 1st of January 1994 as the day of their uprising to coincide with the introduction of NAFTA.

Zapatistas, armed with wooden rifles, pitch forks, the odd assault rifle and machetes briefly occupied several cities and towns in Chiapas before the Mexican military launched a brutal crackdown. Villages sympathetic to the Zapatistas were bombed and at least 150 people died in fighting between the Zapatistas and the military. The 60,000 Mexican troops in Chiapas, backed by paramilitaries, continue to attack innocent civilians in a campaign of ‘low intensity warfare’ to this day.

The flood of rural people forced off the land coming to Mexico’s cities, coupled with the large scale unemployment caused by the NAFTA related privatization of state assets, made wages and conditions in factories worse. Maquiladoras, large areas of factories dedicated to producing goods for export, proliferated along the US border. David Bacon, the author of the book The Children ofNAFTA states that in Torreon “It takes 1500 pesos a week to provide for a family of four. A normal maquiladora worker makes about 320 – 350 pesos”. This means young children have to leave school to find work just so their families can afford basic necessities.

In 1999 the Border Committee of Woman Workers in Mexico reported that since 1994 manufacturing wages had fallen by 20 percent according to official figures. Furthermore, a study by the Economics Faculty of the Autonomous University of Mexico found that Mexican salaries have lost 81 percent of their buying power in the last 20 years.

Following NAFTA, many US and Canadian firms took advantage of the poor working conditions in Mexico by outsourcing their production to save on labour costs. To encourage more foreign investment, the Mexican government and owners of maquiladoras have kept wages low and conditions poor. If workers ask for better pay they’re threatened that their companies will move their jobs overseas.

One of the most controversial parts of NAFTA is the investor dispute settlement process in Chapter 11 of the agreement, which allows foreign investors to sue governments. Chapter 11 has been used at least 30 times by multinational corporations to sue governments which have made environmental and workers’ rights legislation deemed to be bad for profits.

In August 2000, the Mexican government was ordered to pay US 16.7 million dollars to the California based Metalclad Corporation. Metalclad had been denied a permit to open a hazardous waste treatment and disposal site by the provincial government of San Luis Potosi. Under the hazardous waste site was a stream which provided water to the local community. In order to protect public safety, the provincial government turned the area into an ecological reserve. Under NAFTA’s rules this was considered an ‘expropriation of Metalclad’s potential earnings’. will keep you updated about different kind of news about the best voluntourism organizations. Instead of lifting all boats, NAFTA has made a small elite extremely wealthy while making the majority of the people of Mexico, Canada and the USA considerably worse off.


Leave a Reply

Your email address will not be published.