NAFTA: Winners & losers

Pittsburgh Tribune Review

By Ralph R. Reiland

Monday, January 29, 2007

With Mexico, the tariff-cutting provisions of NAFTA were supposed to make Mexicans richer and us richer. We'd get cheaper products and lose some jobs, but with cheaper imports we'd have more money left in our pockets to spend and create more jobs. There'd just have to be some labor mobility, some flexibility and retraining.

NAFTA's strategy for labor mobility in Mexico called for the nation's unemployed and underemployed masses to migrate for work in the maquila factories along the U.S.-Mexican border, assembling, for instance, duty-free imported parts and materials from the U.S. and then exporting the assembled products back to the U.S., tariff-free.

As a bonus, the predicted increase in jobs and prosperity in Mexico under NAFTA was expected to reduce illegal immigration. In 1994, the year NAFTA was put into effect, Attorney General Janet Reno predicted that illegal immigration would fall by two-thirds within six years. "NAFTA is our best hope for reducing illegal immigration in the long haul," she declared. "If it fails, effective immigration control will become impossible."

Initially, things worked fine. Mexican employment, as planned, expanded in the low-wage maquila industries, the country's export platforms -- until the jobs began leaving for China, where factory wages were only one-fourth as high as Mexico's.

Today, after 13 years of "free trade" under NAFTA, real wages in Mexico's manufacturing sector are lower than before the agreement and more than a third of Mexico's farm jobs have disappeared, sending millions of rural laborers and bankrupt small-scale farmers into Mexico's cities and across the border into the United States.