Still Massive Inequalities, Still Stagnant Wages in Northern Mexico: A borderlands perspective on the polarizing presidential campaign and the president’s remarks about Mexico and NAFTA

Presented by Kathy Staudt at the August 17, 2017 Town Hall, “El Paso and Ciudad Juárez after 23 Years of NAFTA,” Café Mayapan, El Paso, TX.

I.Background

Since NAFTA went into effect in 1994, both Mexico and the U.S. expanded their Gross Domestic Product (GDP) and experienced good, though uneven rates of economic growth.  In our borderlands, the number of jobs grew enormously in Ciudad Juárez, now at over 250,000 maquiladora workers, however with most earning take-home pay of less than US$50 per week. 

Trump ran an anti-Mexico, anti-Mexican, and anti-NAFTA campaign.  He stressed the loss of U.S. manufacturing jobs, despite the Trump family’s use of low-cost labor outside the U.S. in the global economy.  El Paso experienced the largest NAFTA-related job losses, as officially certified with names and total numbers compared to other parts of the United States. 

Trump’s call to “repeal NAFTA” and establish a “border tax” threatened many constituencies that depend on heavy investment in what is called “integrated supply-chain production” in all three countries.  After the inauguration in January, many national, state, and border businesses ran scared over the threats, but they mobilized quickly with allies in Trump’s cabinet, especially the Departments of Agriculture and Commerce.  Initially, Mexican leaders reacted defensively using rhetoric about diversifying their economy, trading elsewhere, and reducing their dependency on the United States.

U.S. Trade Representative (USTR) Lighthizer’s political appointment was approved in May and the so-called “NAFTA Modernization” process began while the president expressed unstable opinions about this and other topics.  The Citizens Trade Watch labor and environmental coalition re-emerged once again, just as it did to help defeat the Trans-Pacific Partnership (TPP). The coalition is not against trade or trade rules, but rather in favor of FAIRER trade rules.  “Replace NAFTA” is their key phrase (see sticker).  Yet few in the coalition address the extremely low wages of Mexican workers, even though the 10:1 legal minimum wage differential will obviously incentivize more corporations to create jobs in Mexico’s low-wage economy.  Even Mexico under PRI leadership does not prioritize higher wages for their workers.

One of the few voices heard last year on the wage issue was Pope Francis who visited the borderlands in February.  He said (translated) “God will hold accountable the slave owners of our days.”

With an early June deadline, the USTR received 12,000 comments on NAFTA (mine was one of them!).  In late June, the USTR held three days of hearings.   I went through the list of testifiers and found that businesses represented more than 95% of the 141 names and affiliations.  The first round of negotiations began yesterday (August 16), with more rounds to come in Mexico and Canada.  If a proposed agreement is developed, it must make its way through the U.S. Congress (House and Senate) and White House, a daunting political process matched in the other two countries.  Mexico will elect a new president in mid-2018, and if MORENA wins, Mexico could withdraw from NAFTA.

II.Two Relevant Points from my Research on Border Inequalities

My latest book, Border Politics in a Global Era: Comparative Perspectives*, contains far too much material to present here, but I will share two key points from the analysis.  In October, I will make presentations about the book: one at the El Paso Museum of History, October 12 at 7 pm, and the other at the UTEP Library Blumberg Auditorium October 16 at 1:30 pm. 

For the book, I developed a database of 300 land borders and created a metric called “Borderland Inequality Ratios” using 2016 GDP per capita, PPP (Purchasing Power Parity), constant US$ figures.  To my surprise, the U.S.-Mexico borderlands was one of the bottom 40 most unequal borderlands in the entire world.

I also compared Borderland Inequality Ratios over time, from 1975-2014.  The U.S.-Mexico ratio fluctuates slightly but mainly remains constant except that inequalities have increased somewhat since NAFTA.  If NAFTA had created fairer trade rules, we should have seen greater shared prosperity and reduced inequalities.  NAFTA did no such thing. 

Even the El Paso retail trade is affected by extremely low wages.  Approximately 15% of shoppers come from Ciudad Juárez and spend ~$980 million annually, according to economist Tom Fullerton.  If Mexican workers’ wages increased, not only would we see better living conditions, but also greater spending on this side of the border, thus spreading and sharing prosperity. 

III.A Grim Scenario?  There IS hope amid uncertainty.

If NAFTA negotiations are stalled or countries withdraw, several questions should be posed for our borderlands region.  What happens to those 250,000+ maquiladora workers and their daily food and shelter needs?  Many have migrated to the northern border.  Will they return home (but to what jobs?)? Will they migrate elsewhere?   In Mexico’s upcoming presidential election, MORENA’s economic development strategy will offer an alternative to the PRI and PAN.  Will they win?  Mexico’s presidency is won with a plurality of popular votes, not a majority and certainly not with an Electoral College formula like the U.S. that can undermine the popular vote.

So things may appear grim for replacing NAFTA with a fairer trade deal.  We know that business people have privileged voices in the USTR-managed NAFTA negotiations.  However, environmental activists and working people can pursue other strategies in upcoming months, such as the following.

                *Talk to friends here and especially elsewhere about the dangers of a NAFTA Modernization process that privileges business over workers, including workers in Mexico.  Material is available from organizations like www.ReplaceNAFTA.org , www.GlobalTradeWatch.org, and www.Citizens.org .  The materials provide detail on proposed threats to us all that others on this panel discuss, including a dispute-settlement process that only corporate lawyers resolve (which can undermine local and state democratic protections for food and against pollution) and changes in Rules of Origin requirements (which could have the effect of a border tax).  As some of the trade-watch people say: “No deal is better than a bad deal.” 

                *Acknowledge and work with friends of labor and the environment in Mexico and Canada.  Panelist Cemelli de Aztlan attended a Mexico City conference of transnational activists and read from their resolution.  (See picture; see posters from May Day.)

                *Work on the upcoming mid-term elections of 2018 to change the ‘cast of characters’ in the U.S. Congress.  Go to candidate town-hall meetings.  Meet with candidates to relay concerns firmly and with civility.  As important, talk to friends elsewhere about participating in the upcoming elections to change the cast of characters in Congress, perhaps even shifting the party majority. 

                *Write OpEds and use social media to speak to the wider majority of voters and activists.  Move beyond speaking only to those who agree with you.  Remember that alternative economic development strategies exist. 

The mid-term election is crucial for changing the cast of characters--representatives and lobbyists--who drive inequality in the U.S. and the North American region.  Even the Republican majority in Congress is worried, some of them distancing themselves from the president.  And business people have begun to be wary too, resigning from manufacturing and CEO councils (that Trump ultimately dismissed) and raising ethical concerns about leadership.

Much depends on people’s voices and actions, not merely registering to vote but organizing, conversing intensively and actually voting.  Remember that there IS power in numbers.  We need far more strong border voices:  You have a voice - use it!

*Kathleen Staudt, Border Politics in a Global Era…(2017), available from https://rowman.com/ISBN/9781442266186, online bookstores, and the UTEP bookstore at the October 16 event.