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News :: Globalization |
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On The Eve Of The FTAA, Study Shows Mexico Is Worse Off After NAFTA |
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by New York Times
(No verified email address) |
19 Nov 2003
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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. |
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Report Finds Few Benefits for Mexico in Nafta
November 19, 2003
By CELIA W. DUGGER for the New York Times
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 bank's economists argue that Mexico would have been
worse off without the agreement as the country struggled to
recover from a deep financial crisis in the mid-1990's and
that the income gap between Mexico and the United States is
smaller than it would have been otherwise.
Luis Servén, research manager for Latin America at the
bank, said in an interview that he disagreed with the
Carnegie report's contention that the trade agreement had
hurt small subsistence farmers. He also said that the
higher productivity Mexico had achieved in the Nafta years
was ultimately the only route to higher wages there.
The intensity of the debate about the agreement's
consequences is likely to grow with the approach of the
pact's 10th anniversary in January as pro- and
antiglobalization forces marshal arguments to influence
negotiations for a Free Trade Area of the Americas and for
a new bilateral trade deal between the United States and
Central America.
Carnegie's policy experts stop short of contending that
Mexico would have been better off without the agreement.
"Mexico would have been better off with a better Nafta,"
said Sandra Polaski, a senior associate at Carnegie who was
director of economic research at the Nafta labor
secretariat from 1996 to 1999.
The authors of the report say developing countries have
much to learn from Mexico's mistakes in the Nafta deal.
Trade negotiators for Central and South American countries,
they said, should bargain for more gradual tariff
reductions on corn, rice and beans - the staples of
subsistence farming - to give peasants time to adjust to
tough competition from large, highly efficient and heavily
subsidized American farmers.
Carnegie's researchers also say developing countries should
push international donors and rich countries to finance
transitional assistance for the retraining of workers and
farmers displaced by global competition.
Developing countries should also seek greater leeway to
promote the use of domestic suppliers in manufacturing over
imported components - a step that would increase job
creation, the authors say.
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?ex=1070260706&ei=1&en=99648cde47964d67
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See also:
http://www.nytimes.com/2003/11/19/international/americas/19NAFT.html?ex=1070260706&ei=1&en=99648cde47964d67
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