Mexico Feels Woes of Free Trade with U.S.

By Fusion Staff  |  December 17, 2013 | 6:06pm
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Dropping prices for the most-eaten food in a country don’t seem like they could could lead to poverty. But the North American Free Trade Agreement (NAFTA) between the U.S., Canada, and Mexico nears its 20th anniversary in 2014. And reflecting on NAFTA can easily call that assumption into question.

The NAFTA agreement did away with tariffs between the countries, opening up trade in a way the region had never seen. Since 1990, U.S. exports of corn to Mexico have risen 413 percent, which has made the deal a winning situation for the U.S. agricultural industry.

Yet all the American corn that is flooding the Mexican marketplace is being bought for under-market prices, thanks to the federal subsidies that the U.S. federal government gives the agricultural sector. Between 1995 and 2012, the U.S. federal government paid out $84.4 billion in corn subsidies, according to the Environmental Working Group.

The market result is that Mexican corn farmers are finding it impossible to sell their product for profit in the marketplace—the US subsidies, coupled with free trade, have effectively made raising corn a loser’s game. Some blame this effect for up to 2 million lost Mexican jobs. As added insult, consumer food prices have actually risen during the same period, leaving about 20 million Mexicans living in “food poverty.”

“The generalized truth is that when you remove barriers, you remove costs [and] you increase competitiveness and productivity, and the economy benefit broadly,” said Joshua Meltzer, fellow at the Brookings Institution in an interview with DNA. “The question remains—-how do these economic gains get distributed within [these] economies?”

Even in the U.S., the negative impacts of free trade are unevenly felt in some industries. Because of its warm climate, Florida has a natural advantage when it comes to selling tomatoes domestically. But the flood of Mexican imported tomatoes at that time of year is all but wiping out the Florida industry—-which is historically a huge piece of the state economy.

In Mexico, however, the balance is desperately out of whack. Since the beginning of NAFTA, areas like Chiapas that have recently seen around 50,000 residents fleeing to the US annually.

Ever since NAFTA went into effect, the level of immigration from Mexico to the U.S. has seen historic levels. About half a million Mexicans have migrated to the U.S. seeking work annually over the period, though the numbers has dropped recently. And as the amount of people living in poverty and in transit increases, it only “facilitates smuggling arms and illegal substances,” the New York Times points out, signaling other adverse effects NAFTA might be having on both countries.

“But one recognizes that immigration is a form of trade,” Meltzer told DNA.

So we have to wonder what we are trading, host Derrick Ashong concluded in the interview. “Corn for people?”

Daniel Rivero is a producer/reporter for Fusion who focuses on police and justice issues. He also skateboards, does a bunch of arts related things on his off time, and likes Cuban coffee.

 
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