Globalization and NAFTA Caused Migration from Mexico

Linking Trade and Immigration

U.S. trade and immigration policy are linked. They are part of a single system, not separate and independent policies. Since NAFTA’s passage in 1993, the U.S. Congress has debated and passed several new trade agreements—with Peru, Jordan, Chile, and the Central American Free Trade Agreement. At the same time, Congress has debated immigration policy as though those trade agreements bore no relationship to the waves of displaced people migrating to the U.S., looking for work. Meanwhile, heightened anti-immigrant hysteria has increasingly demonized those migrants, leading to measures to deny them jobs, rights, or any equality with people living in the communities around them.

To resolve any of these dilemmas, from adopting rational and humane immigration policies to reducing the fear and hostility towards migrants, the starting point must be an examination of the way U.S. policies have produced migration—and criminalized migrants.

Trade negotiations and immigration policy were formally joined together by the Immigration Reform and Control Act (IRCA) of 1986. Immigrants’ rights activists campaigned against the law because it contained employer sanctions, prohibiting employers for the first time on a federal level from hiring undocumented workers and effectively criminalizing work for the undocumented. IRCA’s liberal defenders argued its amnesty provision justified sanctions and militarizing the border,⁵ as well as new guest worker programs. The bill eventually did enable more than 4 million people living in the U.S. without immigration documents to gain permanent residence. Underscoring the broad bipartisan consensus supporting it, the bill was signed into law by Ronald Reagan.

Few noted one other provision of the law. IRCA set up a Commission for the Study of International Migration and Cooperative Economic Development to study the causes of immigration to the United States. The commission held hearings after the U.S. and Canada signed a bilateral free trade agreement, and made a report to President George H.W. Bush and Congress in 1990. It found that the main motivation for coming to the U.S. was poverty. To slow or halt the flow of migrants, it recommended that “U.S. economic policy should promote a system of open trade … the development of a U.S.-Mexico free trade area and its incorporation with Canada.” But, it warned, “It takes many years—even generations—for sustained growth to achieve the desired effect.”

The negotiations that led to NAFTA started within months. As Congress debated the treaty, then-Mexican President Carlos Salinas de Gortari toured the United States, telling audiences unhappy at high levels of immigration that passing NAFTA would reduce it by providing employment for Mexicans in Mexico. Back home, he made the same argument. NAFTA, he claimed, would set Mexico on a course to become a first-world nation.⁶   “We did become part of the first world,” says Juan Manuel Sandoval of Mexico’s National Institute of Anthropology and History. “The back yard.”⁷

Increasing Pressure

NAFTA, however, did not lead to rising incomes and employment in Mexico, and did not decrease the flow of migrants. Instead, it became a source of pressure on Mexicans to migrate. The treaty forced corn grown by Mexican farmers without subsidies to compete in Mexico’s own market with corn from huge U.S. producers, who had been subsidized by the U.S. Agricultural exports to Mexico more than doubled during the NAFTA years, from $4.6 to $9.8 billion annually. Corn imports rose from 2,014,000 to 10,330,000 tons from 1992 to 2008. Mexico imported 30,000 tons of pork in 1995, the year NAFTA took effect. By 2010, pork imports, almost all from the U.S., had grown over 25 times, to 811,000 tons. As a result, pork prices received by Mexican producers dropped 56%.⁸

According to Alejandro Ramírez, general director of the Confederation of Mexican Pork Producers, “We lost 4,000 pig farms. Each 100 animals produce 5 jobs, so we lost 20,000 farm jobs directly from imports. Counting the 5 indirect jobs dependent on each direct job, we lost over 120,000 jobs in total. This produces migration to the U.S. or to Mexican cities—a big problem for our country.”⁹ Once Mexican meat and corn producers were driven from the market by imports, the Mexican economy was left vulnerable to price changes dictated by U.S. agribusiness or U.S. policy. “When the U.S. modified its corn policy to encourage ethanol production,” he charges, “corn prices jumped 100% in one year.”¹⁰

NAFTA then prohibited price supports, without which hundreds of thousands of small farmers found it impossible to sell corn or other farm products for what it cost to produce them. Mexico couldn’t protect its own agriculture from the fluctuations of the world market. A global coffee glut in the 1990s plunged prices below the cost of production. A less entrapped government might have bought the crops of Veracruz farmers to keep them afloat, or provided subsidies for other crops.

But once free-market structures were in place prohibiting government intervention to help them, those farmers paid the price. Campesinos from Veracruz, as well as Oaxaca and other major corn-producing states, joined the stream of workers headed north.¹¹ There, they became an important part of the workforce in U.S. slaughterhouses and other industries.

U.S. companies were allowed to own land and factories, eventually anywhere in Mexico. U.S.-based Union Pacific, in partnership with the Larrea family, one of Mexico’s wealthiest, became the owner of the country’s main north-south rail line and immediately discontinued virtually all passenger service.¹² Mexican rail employment dropped from more than 90,000 to 36,000. Railroad workers mounted a wildcat strike to try to save their jobs, but they lost and their union became a shadow of its former self.

According to Garrett Brown, head of the Maquiladora Health and Safety Network, the average Mexican wage was 23% of the U.S. manufacturing wage in 1975. By 2002, it was less than an eighth. Brown says that after NAFTA, real Mexican wages dropped by 22%, while worker productivity increased 45%.¹³

Attracting Investors, Repelling Workers

Low wages are the magnet used to attract U.S. and other foreign investors. In mid-June, 2006, Ford Corporation, already one of Mexico’s largest employers, announced it would invest $9 billion more in building new factories.¹⁴ Meanwhile, Ford closed 14 U.S. plants, eliminating the jobs of tens of thousands of U.S. workers. Both moves were part of the company’s strategic plan to cut labor costs and move production. When General Motors was bailed out by the U.S. government in 2008, it closed a dozen U.S. plants, while its plans for building new plants in Mexico went forward without hindrance.¹⁵ These policies displaced people, who could no longer make a living as they’d done before. The rosy predictions of NAFTA’s boosters that it would raise income and slow migration proved false. The World Bank, in a 2005 study made for the Mexican government, found that the extreme rural poverty rate of around 37% in 1992-4, prior to NAFTA, jumped to about 52% in 1996-8, after NAFTA took effect. This could be explained, the report said, “mainly by the 1995 economic crisis, the sluggish performance of agriculture, stagnant rural wages, and falling real agricultural prices.”¹⁶

By 2010, 53 million Mexicans were living in poverty, according to the Monterrey Institute of Technology—half the country’s population.¹⁷ The growth of poverty, in turn, fueled migration. In 1990, 4.5 million Mexican-born people lived in the U.S. A decade later, that population more than doubled to 9.75 million, and in 2008 it peaked at 12.67 million. Approximately 9.4% of all Mexicans now live in the U.S., based on numbers from Pew Hispanic. About 5.7 million were able to get some kind of visa; but another 7 million couldn’t, and came nevertheless.¹⁸

From 1982 through the NAFTA era, successive economic reforms produced migrants. The displacement had already grown so large by 1986 that the commission established by IRCA was charged with recommending measures to halt or slow it. Its report urged that “migrant-sending countries should encourage technological modernization by strengthening and assuring intellectual property protection and by removing existing impediments to investment” and recommended that “the United States should condition bilateral aid to sending countries on their taking the necessary steps toward structural adjustment.” The IRCA commission report acknowledged the potential for harm, noting (in the mildest, most ineffectual language possible) that “efforts should be made to ease transitional costs in human suffering.”¹⁹

In 1994, however, the year the North American Free Trade Agreement took effect, U.S. speculators began selling off Mexican government bonds. According to Jeff Faux, founding director the Economic Policy Institute, a Washington, DC-based progressive think tank, “NAFTA had created a speculative bubble for Mexican assets that then collapsed when the speculators cashed in.”²⁰ In NAFTA’s first year, 1994, one million Mexicans lost their jobs when the peso was devalued. To avert a flood of capital to the north, then-U.S. Treasury Secretary Robert Rubin engineered a $20 billion loan to Mexico, which was paid to bondholders, mostly U.S. banks. In return, U.S. and British banks gained control of the country’s financial system. Mexico had to pledge its oil revenue to pay off foreign debt, making the country’s primary source of income unavailable for the needs of its people.

As the Mexican economy, especially the border maquiladora industry, became increasingly tied to the U.S. market, tens of thousands of Mexican workers lost jobs when the market shrank during U.S. recessions in 2001 and 2008. “It is the financial crashes and the economic disasters that drive people to work for dollars in the U.S., to replace life savings, or just to earn enough to keep their family at home together,” says Harvard historian John Womack.²¹

Immigrants, Migrants, or Displaced People?

In the U.S. political debate, Veracruz’ uprooted coffee pickers or unemployed workers from Mexico City are called immigrants, because that debate doesn’t recognize their existence before they leave Mexico. It is more accurate to call them migrants, and the process migration, since that takes into account both people’s communities of origin and those where they travel to find work.

But displacement is an unmentionable word in the Washington discourse. Not one immigration proposal in Congress in the quarter century since IRCA was passed has tried to come to grips with the policies that uprooted miners, teachers, tree planters, and farmers. In fact, while debating bills to criminalize undocumented migrants and set up huge guest worker programs, four new trade agreements were introduced, each of which has caused more displacement and more migration.