NAFTA 20th Anniversary: 5 Quick Facts About What The Controversial Free Trade Agreement Did For Mexico

Jan. 1, 2014 marks 20 years since the North American Free Trade Agreement (NAFTA), a landmark treaty which tore down trade barriers between the United States, Mexico and Canada, came into effect. Nowhere has it proven so controversial as in Mexico, where trade protections preserving small-scale, low-yield agriculture – which for many lies at the heart of Mexican identity – were largely dismantled, sparking an uprising by the Zapatista rebels in Chiapas. On NAFTA’s anniversary, Zapatista spokesman Subcomandante Marcos wrote in a communique that little had changed in his opinion of the agreement – “[the winter] is as cold as it was 20 years ago” – while the Mexican president who signed the accord, Carlos Salinas de Gortari, said it had proved not to be “the panacea which some wrongly expected” nor “the disaster that some critics insisted on presenting”. Here’s 5 facts about what NAFTA has meant for Mexico.

1. Exports to the U.S. have climbed some 570 percent since 1993.

Traffic of goods across the borders of all three member nations has climbed since then – in the case of the U.S., for example, exports to Canada and Mexico have gone up 201 and 370 percent, respectively. Meanwhile, the value of those goods has leaped 621 percent, to the contrary of what many of NAFTA’s supporters in the US had hoped would happen.

2. The auto industry has expanded there.

Mexico now produces about 3 million vehicles a year, and jobs in the automobile industry have increased 50 percent since 1994. Some of that is due to automakers picking up shop in the U.S., although some of those companies have headed for even cheaper locales in Asia, and meanwhile, other non-North-American carmakers have settled in Mexico for easier access to U.S. markets. Overall, manufacturing jobs have increased in Mexico, though unevenly – both in that large dips have occurred and that those jobs came to the northern states, where there was already infrastructure to support it.

3. The gap in wages for Mexican and American workers in manufacturing has barely budged, and poverty rates in Mexico haven’t much either.

According to the Associated Press, the average wages in the manufacturing industry in Mexico were about 15 percent of U.S. wages in 1997. In 2012, it was only 18 percent.

Poverty has gone from about 53 percent in 1994 to 45.5 percent in 2012, though that’s after a series of fluctuations – the 1995-1996 peso devaluation sent it rocketing up to almost 70 percent, after which it fell to the low forties by the mid-2000s, and during the administration of Felipe Calderon, it rose again while the average household income fell.

4. NAFTA’s plans for corn farmers didn’t work out as expected.

The treaty slashed tariffs protecting Mexico’s corn farmers but left those for American corn farmers intact, driving down the price of corn. According to the New York Times, the authors of the plan had hoped Mexican farmers would switch to growing strawberries and vegetables for export to the United States. Instead, they gave up farming. In 2008, Laura Carlsen of the Center for International Policy told the New Republic that some 2.5 million farmers and agricultural laborers had been driven out of work.

That stimulated immigration to the United States, though it’s not entirely clear to what extent. It was already climbing sharply when the agreement was passed – in fact, it was one of the ways Mexico sold the US on it – and the new manufacturing plants in the north took in many of the people who left the agrarian south.

5. It gave foreign investors extra leverage in environmental disputes.

The AP noted in its article that the treaty set up arbitration panels to which investors could turn – bypassing the courts – when they felt government regulation might be unfairly endangering their business. Usually that meant with regard to the environment. It notes that a development bank which was created by the accord has sunk in over $1.33 billion to finance border projects on drinking water and waste water and sewage treatment, but those remain issues in border towns. Meanwhile, U.S. exports of spent lead-acid car batteries to Mexico for recycling has risen 500 percent between 2004-2011. The New York Times wrote in 2011 that the lead is “often extracted by crude methods that are illegal in the United States, exposing plant workers and local residents to dangerous levels of a toxic metal.”