Free Trade & Mexican Workers: Recipe for Disaster

by on April 19th, 2007

A factory in my hometown of Fresno which makes the Quickie wheelchair moved part of its fabricating and welding division to a plant in Tijuana. Only about ten workers are affected in the Fresno factory and the company told The Fresno Bee, Fresno’s only daily newspaper, they were moved to the customer service division. However, Fresno Bee’s article failed to mention an important acronym, NAFTA, and the effects it has had on Mexican workers, let alone an important word in Tijuana, maquiladoras.

NAFTA stands for the North American Free Trade Agreement which established a free-trade zone in North America. Signed by the United States, Canada, and Mexico in 1992, it took effect on January 1, 1994, but immediately lifted tariffs on the majority of goods produced by the three participating nations, and called for the gradual elimination of most trade barriers over a 15-year period.

Touted as a means to lift Mexico out of poverty, NAFTA has actually driven it further into poverty. According to the Economic Policy Institute’s 2001 report, “Mexican wages have decreased 27% since NAFTA, while hourly income from labor is down 40%.” Free trade did not benefit the Mexican economy because by definition free market trade includes privatization, which in turn eliminates state subsidies and controls, and almost never includes redistribtion.

The 2001 report by the Economic Policy Institute also found that when Mexico began NAFTA negotiations it had “noncompetitive production costs… due to higher prices for inputs such as diesel and electricity, higher financial costs, and higher marketing costs (due to deficient infrastructure in highways and warehouse storage…among other factors).”

Factories, called maquiladoras, were established along the border in order to create a “border zone” where protections are not in place for labor unions, health, safety, and environmental laws. The website defines maquiladoras as “foreign-owned assembly plants in Mexico.” The Fresno-based factory which moved part of its wheelchair manufacturing to Tijuana is a maquiladora. American companies move their factory production to Mexico to save money. In other words they can pay a Mexican worker far less than an American worker. The rich get richer and the poor get poorer, as the saying goes.

John Warnock, economist and author of The Other Mexico: The North America Triangle Completed cited a World Bank Report from March 2006 where it is mentioned that the poorest 10% of the population earns only 1.5% of the total Mexican income, but the richest 10% earn 42.8%. “The distribution of wealth, which would be very hard to measure, is believed to be much worse.”

The March report by the World Bank also claimed that since NAFTA the amount of Mexican people that live below the poverty line is “62% of the economically active population.” The minimum wage has fallen by 40.7%. The Mexican government sets the poverty line at two daily minimum wages for a family with five members, or 80 pesos, about seven dollars. A startling statistic comes from the Mexican government. Between 1993 and 2000 the disparity between Mexican and American manufacturing wages has increased from $9.6 to $12.1 per hour.

Reports by the Organization for Economic Co-operation and Development (OECD) state that wages in Mexico have dropped by 10% since 1995 while labor production increased by 45%. Work hours have increased from eight to twelve hours a day during the same time period. The number of people working more than 48 hours per week has increased since 1988 from 2.3 million to 9.3 million.

Economists at the National University in Mexico City wrote a study that cited 13.3 million workers in 2000 earned less than around $3.93 a day. The study also mentions that labor production’s part of the Gross Domestic Product has decreased from 34.16% to 30.66%.

During the first month of this year a Fresno county town endured an immigration raid where 65 undocumented workers were arrested. Fresno County has a high rate of Mexican immigrants. How many people reading the Fresno Bee article about a factory moving part of its production to Mexico realized the correlation between exploitation and immigration?

Gina-Marie Cheeseman