Freer Trade, Fewer Jobs for Mexico in NAFTA

Yoshie Furuhashi furuhashi.1 at osu.edu
Wed Nov 19 08:15:50 MST 2003


*****   New York Times   November 19, 2003

Report Finds Few Benefits for Mexico in Nafta
By CELIA W. DUGGER

As the North American Free Trade Agreement nears its 10th
anniversary, a study from the Carnegie Endowment for International
Peace concludes that the pact failed to generate substantial job
growth in Mexico, hurt hundreds of thousands of subsistence farmers
there and had "minuscule" net effects on jobs in the United States.

The Carnegie Endowment, an independent, Washington-based research
institute, issued its report on Tuesday to coincide with new trade
negotiations aimed at the adoption of a Nafta-like pact for the
entire Western Hemisphere. Trade ministers from 34 countries in the
Americas are gathering now in Miami.

The report seeks to debunk both the fears of American labor that
Nafta would lure large numbers of jobs to low-wage Mexico, as well as
the hopes of the trade deal's proponents that it would lead to rising
wages, as well as declines in income inequality and illegal
immigration.

Though sorting out the exact causes is complicated, trends are clear.
Real wages in Mexico are lower now than they were when the agreement
was adopted despite higher productivity, income inequality is greater
there and immigration has continued to soar.

"On balance, Nafta's been rough for rural Mexicans," said John J.
Audley, who edited the report. "For the country, it's probably a
wash. It takes more than just trade liberalization to improve the
quality of life for poor people around the world."

The Carnegie findings strike a much more pessimistic note than those
of a World Bank team that concluded in a draft report this year that
the trade accord "has brought significant economic and social
benefits to the Mexican economy.". . .

The Carnegie report argues that the growth in manufacturing resulting
from the trade agreement was largely offset by lost employment among
rural subsistence farmers, who were adversely affected by falling
prices for their crops, especially corn - a problem intensified by
the Mexican government's decision to lower tariff barriers to
American-grown corn even more rapidly than the agreement required.

"This is a trade pact which opened the U.S. economy to Mexico very
profoundly, including years when the United States experienced its
best growth in decades," Ms. Polaski said. "Yet we can't see a clear
net increase in jobs in Mexico. You'd expect strong growth. You
wouldn't have expected to need a magnifying glass to find it."

The trade agreement also reinforced and magnified changes in Mexico's
rural economy - brought on by a broad array of other policies - that
are damaging the environment, according to Scott Vaughan, an
economist who recently left Carnegie to head the environmental unit
at the Organization of American States. For example, he contends that
the agreement has accelerated the shift to large-scale,
export-oriented farms that rely more heavily on water-polluting
agro-chemicals and use more irrigated water compared with producers
of similar crops for the Mexican market.

<http://www.nytimes.com/2003/11/19/international/americas/19NAFT.html>   *****

--
Yoshie

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