Wednesday, July 21, 2010

NAFTA & Political Economy of Immigration

NAFTA & Political Economy of Immigration

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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 rate of international immigration. Specifically, in Mexico the effects of neoliberal structural-adjustment programs in the 1980s, NAFTA in the 1990s, and the ongoing Security and Prosperity Partnership have produced successive waves of Mexican migrants to the United States.

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 and 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.

The Backdrop

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, had 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 mass protests against the pillars of the global economic order in Seattle. Similarly, NAFTA was 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. In the New York Times, hardly hostile to state and corporate power, Tim Golden reported, "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 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 peasant communities. As noted by Noam Chomsky in Profit Over People: Neoliberalism and Global Order, such 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." 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.

Before the formal establishment of NAFTA, Mexico had been successfully co-opted by key purveyors of the neoliberal paradigm, including the U.S. government, IMF, World Bank, and WTO. Evelyn Hu-Dehart acknowledges in her Globalization and Its Discontents that NAFTA should be seen as one stage, albeit a major stage, in a larger process of restructuring the Mexican economy, a process still underway. The first wave of reforms began during the financial crisis of 1982, amid the developing world debt crisis, with Mexico joining the GATT in 1985, NAFTA in 1994, and culminating in the Bush administration's Security and Prosperity Partnership (SPP). Plans for Mexican integration into the global economy pre-dated 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, deregulation of industry and finance, and removal of state-provided social services.

By the mid-1960s, the United States and Mexico had established the Border Industrialization Project, which created a multitude of now-infamous assembly plants (maquiladoras) along Mexico's northern border. The preferred model for production in the era of globalization, these Export-Processing Zones were essential for transferring cheap consumer products (apparel, electronics, auto parts etc.) to those living in the affluent global core. Agricultural Devastation

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, indigenous Indian populations 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 percent according to World Bank figures. In line with World Bank/IMF prescriptions, Mexican agricultural production shifted 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 its agricultural output. A country with a proud tradition in farming and agriculture now suffered increasing rates of hunger and malnutrition, with over half the people lacking access to basic necessities. According to the Department of Agriculture, exports from Mexico grew at an astonishing annual rate of 9.4 percent between 1994 and 2001, while annual U.S. agricultural exports to Mexico grew to $12.7 billion by 2007. 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. As NAFTA and earlier reforms eliminated price supports and state food subsidies in Mexico, the U.S. government set up huge protections by subsidizing industrial corn production. 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. Similarly subject to the whims of the global market, and with state assistance banned by NAFTA, Veracruz coffee growers were devastated by a global coffee glut.

Falling Manufacturing Wages

In Happily Ever NAFTA?, John Cavanagh and Sarah Anderson document how, from 1993-1996, real manufacturing wages fell 20 percent. In 1999, wages in the maquiladoras were about $1.74, considerably lower than the rest of Mexican manufacturing with average wages of $2.12. Manufacturing became totally dependent on foreign consumer markets, with over 85 percent 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. 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 had disappeared to China and Southeast Asia by 2003. 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." Tortilla production is now monopolized by the Mexican oligopoly Grupo Maseca.

Bacon notes that under the pre-NAFTA Mexican economy, foreign automakers like Ford and GM were required by law to purchase some materials for production from local Mexican producers. Post-NAFTA new laws prohibited 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." Over half of all U.S. trade with Mexico consists of intrafirm transactions of the type described above.

According to Cavanagh and Anderson, Mexican air pollution more than doubled under NAFTA, while Mexican government environmental expenditures have fallen 45 percent 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.

According to Bacon, by the mid-1990s, 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. 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 negative consequences for labor and the environment.

Militarizing the Border

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. In an op-ed in the LA 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, a process which Rockefeller accurately identifies as originating in Pinochet's Chile.

Projects of this scale produce inevitable backlash, part of 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 1970s on through the 21st century, from South America's Southern Cone to Russia to China to North America, these policies have necessitated the use of force and coercion to protect both the state and other vested interests from popular revolt.

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 SPP, a highly secretive regional security initiative launched between President Bush, Vicente Fox, and Canadian Prime Minister Paul Martin in 2005. Quietly launched by the Bush administration, 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 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 now about protecting a regional economic model.

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
  • to create a regional security plan based on "pushing its borders out" into a security perimeter that includes Mexico and Canada

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 recent elections of center-left governments. Post 9/11, a massive industry was spawned around the creation of the Department of Homeland Security and, increasingly, defense/security/intelligence. Disaster-response matters are now outsourced to the private sector (firms like Boeing, GE, Lockheed Martin, Blackwater, etc.).

Plan Mexico

The latest step forward is Plan Mexico (also known as the Merida Initiative), passed by Congress, and signed into law by Bush in June 2008, which allocates $400 million to Mexico for 2008-09. The original plan foresees about $1.4 billion over a 3-year period to the Mexican military, police, and judicial systems for training and equipment. Plan Mexico is an adjunct to 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 a scheme to militarize North America, including widespread border and domestic surveillance and expansion of the private prison complex, allegedly to combat 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 Laura 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 necessitated 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.

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 percent of the entire package goes to defense companies for the purchase of 8 Bell helicopters (at $13 million each, with training, maintenance, and special equipment) for the Mexican Army and 2 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 for 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, counter-terrorism work, and to other agencies including the Migration Institute for the establishment of a database on immigrants. The U.S. government allots $37 million of the packet to itself for administrative costs.

War on Drugs Model

For the Bush administration, the war on drugs model has 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. This global police 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 answer is relatively simple. NAFTA finalized the restructuring of the Mexican economy that began in 1982. As Mexico was "locked in" to the neoliberal economic model, peasant farmers and assembly plant workers sought economic refuge in the country directly to the north, the center of the world's economy. As "free" market policies pressured the state into cutting budgets for social services, Mexican communities were left with few options. Displacement of Mexican workers is the defining legacy of NAFTA-era Mexico while U.S. industries benefit from "illegal" migrants who demand much less than their U.S. 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.

NAFTA and the SPP should be seen as stages in larger plans for the expansion of corporate and state control over economic, social, and political life in North America. 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. 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.

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