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Free workers, not free trade.

A shopping center in a wealthy Mexican neighborhood overflows with US brand products. A small jar of Skippy peanuts butter for $2.70. A sixpack of Budweiser for $5.70. Half a litre of STP car wax for $3.50. Various models of Black and Decker toaster ovens for between $92 and $162. An Atari XE Video Game System for $189. Wives of corporate and government officials pile up their purchases at the cash registers and pay with Visa or Mastercard.

Across the street, dozens of men are hard at work, building yet another store for the well-to-do. They make $3.80 per day. For lunch, they eat a few tortillas and beans. After work, many will spend an hour or more riding a public bus home to an outlying colonia. Their homes are likely to have no running water, as only half of Mexican households do. Part of their earnings will go to buy basic supplies for their children's schools--chalk, light bulbs, glass for broken windows -- that the government says it can't afford to provide.

Open for business

These are the contradictions of Mexican life in an era of free trade. For a decade, Mexico has acceded to pressure from US corporations to open its borders to investment and imports and to maintain a "friendly" business environment. The result has been grinding poverty and disease for the great majority of citizens, juxtaposed to First World wealth for a small elite.

Now, Presidents Bush and Carlos Salinas and Prime Minister Mulroney are planning a trinational free trade agreement (FTA) which would magnify the changes of the last ten years. The FTA negotiations have provoked a national debate in Mexico, with opinion clearly divided along class lines.

"Protectionism is depriving Mexican companies of valuable technology links, and US corporations of the vital work force that exists south of the border," proclaimed one of Mexico's largest banks, Banca Serfin, in advertisements saying it "wholeheartedly endorses" an FTA.

In contrast, Mexico's independent labour movement argues that "Mexico needs free workers, not free trade."

"We are already living with the effects of the free trade philosophy," said Alfredo Dominguez, a leader of the Authentic Labour Front (FAT). "It means total freedom for the transnational corporations. What they want is no democratic unions, no environmental regulations, no requirements to pay a living wage, and no political democracy."

A Mexico-US-Canada FTA would be the climax, said Dominguez, of a process of "denatioanalization" which picked up speed with the so-called "debt crisis" in the early 1980s. Mexico's rulers had borrowed billions of dollars from US banks and US-backed international lending agencies with the promise to repay with income from newly discovered oil reserves. Some of the loan money was used for public works projects to maintain social peace without redistributing wealth. Billions went into the foreign bank accounts of officials of the Institutional Revolutionary Party (PRI) which has ruled Mexico for the past 62 years.

After oil prices fell in 1982, the International Monetary Fund, World Bank, and private banks cut off new loans to cover the old ones until Mexico agreed to open its economy to greater control by US corporations. In keeping with those agreements, Mexico issued new rules that allow 100 per cent foreign ownership of corporations in most sectors, where previously foreign investment was prohibited in some sectors and limited to a 49 per cent share in others. At least 25 major economic sectors either have been or will be deregulated. More than 900 publicly owned corporations in key areas such as steel, petrochemicals, mining, transportation, communication, banking, and food production, packing and distribution have been opened to private, including foreign, investors. Import tariffs which previously reached a maximum of 100 per cent were cut to a trade-weighted average of about 11 per cent, and quotas were removed for 97 per cent of imported items.

A combination of wages controls, tax "reform," and other economic policies increased the percentage of the annual gross national product which went to owners of capital from 48 per cent to 65 per cent, while the percentage going to wage earners dropped from 41.7 per cent to 27.7 per cent. The buying power of the minimum wages dropped from more than $7 per day to less than $4 per day.

"This substantial redirection of the role of the state in the Mexican economy signals to investors and traders that Mexico means business," applauded Gerard Van Heuven, spokesman for the US-Mexico Chamber of Commerce.

Taking advantage of the new conditions, the number of US-owned assembly plants -- known as "maquiladoras" -- which use cheap labour in Mexico to produce for the US market soared from fewer than 600 in 1979 to nearly 2,000 today. The number is growing at a rate of more than 15 per cent per year, or an average of more than one new plant opening every working day. Today, the top three private sector exporters from Mexico to the US are Chrysler, Ford, and General Motors.

Making it permanent

Yet US corporations are not satisfied. They have testified in the US Congress that they want a formal FTA to remove remaining restrictions on foreign investment in such sectors as petroleum, banking, insurance, agriculture, and transportation; complete the process of deregulation and privatization; and gradually remove remaining tariffs and trade quotas.

Perhaps most importantly, they seek to codify their gains of the past ten years in order to provide protection from possible political change in Mexico. Most of those breakthroughs were accomplished by executive decree by a ruling party that is on shaky political ground, apparently resorting to massive vote fraud in order to "win" the 1988 presidential elections and a series of subsequent state and local elections. The opposition Party of the Democratic Revolution (PDR), whose leader, Cuauhtemoc Cardenas, is widely viewed as having actually been elected president in 1988, does not support most of the recent economic policy changes. An FTA would, in the words of the US International Trade Commission, provide "some assurance that the executive regulations were permanent, and could not simply be easily changed by the next Mexican administration."

Mexican elite to profit

All this sounds fine to some Mexicans -- primarily those who are getting their share of the spoils of economic integration through partnerships and joint ventures with US companies. For example, the Mexican glass company known as Vitro which was invited to US congressional hearings to give the "Mexican perspective" on the FTA has joint ventures with Ford, Samsonite, Whirlpool, Ingersoll-Rand, and Owens-Corning Fiberglas.

Other joint ventures by US and Mexican corporate interests involve takeovers of the more than 900 companies the government is privatizing. Chase Manhattan Bank now co-owns Mexicana Airlines along with Mexican corporate investors. Southwestern Bell has taken over the country's phone company along with a Mexican conglomerate which already had joint ventures or franchise agreements with Dupont, B.F. Goodrich, Philip Morris, Hershey's, and Denny's.

The blurring of interests between US and Mexican elites is further illustrated by the multiple roles that individual officials play. Salinas' top adviser for international trade, for example, is Claudio X. Gonzalez, chairman of the Mexican affiliate of the US paper products giant, Kimberly Clark.

For Mexico's big corporations, binational joint ventures are a way to not only increase profits but also to squeeze out small and medium-sized competitors. In addition, negotiation of an FTA provides a context in which to demand changes in Mexican labour laws which, while poorly enforced, contain important rights won in the revolution of 1917. Current laws "work against productivity and competitiveness in the international economy," according to the National Chamber of Industries, which adds that new tax breaks will be needed to help business compete in a free trade environment.

Salinas and his corporate allies say Mexicans will benefit from an FTA because increased investment from the US, Canada, and other countries will mean new jobs. That, the president says, will allow Mexicans to find work at home instead of immigrating north: "With a free trade agreement, Mexico will export products, not people."

In addition, says Salinas, Mexican companies will be forced to become more "competitive" when foreign firms have greater freedom to operate in the country.

No development with

low wages

But Mexican opponents of free trade argue that an FTA will not deliver the benefits Salinas and the corporations promise because it is based on maintaining low wages and unhealthful working conditions in order to attract foreign capital.

"The transnationals" free trade strategy might bring Mexico a few more $4 per day jobs, but that is not a strategy for genuine development," said Jose Santos Marinez, a leader of the Mexican Ford Workers Democratic Movement. "As long as we are not paid enough to buy products that other workers make, the jobs there are will not be contributing to the creation of more jobs."

Martinez points out that the maquiladora program has provided an average of 40,000 new jobs annually during the past decade, while the influx of young people into the work force means that the country needs about one million new jobs per year. The added maquiladora jobs certainly didn't result in a reduction of illegal immigration. In fact, they attracted more people from Mexico's countryside to the border cities, many of whom later headed north rather than try to survive on 50 or 60 cents per hour. Indeed, turnover among maquila workers averages 10 per cent per month (or more than a complete work force changeover every year), according to the National Bank of Mexico. Despite a decade of foreign investment, more than 50 per cent of Mexicans able and willing to work are unemployed or underemployed.

The $13 per hour difference in what transnationals pay in wages and benefits in Mexico and in the US or Canada means that, in 1990 alone, more than $20 billion left the country as a workers' subsidy to corporate profits, according to the Unified Union Front (FSU), a coalition of more than 60 independent unions and democratic opposition movements. Had that money been paid as wages in Mexico, it could have been used to create new jobs through a stronger internal market.

With wages so low, "production in Mexico has been re-oriented toward goods and services for export or for those few who have money, rather than toward meeting the needs of the people," notes Alberto Arroyo of the Mexico City research center, SIPRO. For example, the country has a deficit of six million housing units, according to government figures. Yet, given the low purchasing power of the typical family, big capital is only interested in constructing tourists hotels and luxury developments.

Critics of an FTA argue that domination by US transnationals will hardly make Mexican firms more competitive. In the agricultural sector, for example, small farmers and cooperatives are being told to compete with US transnationals which "annually receive subsidies of more than $50 billion" from their own government, according to Prof. Jorge Calderon of the National Autonomous University of Mexico.

"Mexico has the natural resources and economic infrastructure to provide its people with an adequate standard of living," Calderon said. "Yet, our country imports more than 10 million tons of agricultural products per year--one-third of the population's food needs. This will not be corrected by greater transnational penetration in our countryside and the indiscriminate authorization to import grains even during our own harvest times, a situation which a free trade agreement would make permanent."

Organizing for alternatives

Mexican PRD leader Cardenas told the British Columbia Federation of Labour convention last year that, instead of an FTA, his party favors a trinational North American "development agreement" that would "be based on common standards for labour, social, and environmental rights." In addition, it would "guarantee the sovereign rights of each nation to develop its own natural resources, particularly oil, to meet the needs of its people."

Cardenas has also said that any agreement for free movement of goods and capital ought to assure freer movement of people between countries. The balance of power between labour and transnational corporations would change dramatically, he argues, if there were fewer immigration restrictions to make Mexican workers feel they had to accept low pay on both sides of the border.

According to other FTA opponents, Mexico should not be abandoning government programs that functioned poorly because of corruption and inefficiency, but reforming them to meet social needs.

"A democratic government would have to seriously review the denationalization and privatization of publicly owned companies," said Prof. Calderon. "In the rural sector, what is needed is to strengthen control by campesinos [farm workers and peasants] over public institutions and companies, improve their efficiency and productivity, and significantly increase economic and technological support [they receive]."

Achieving any reversal of the economic policies of the transnationals and the three North American governments obviously depends on building a strong, trinational grassroots movement. During the past year, progressives in the three countries have increased efforts to identify common concerns:

* Last October, the Unified Union Front co-sponsored a conference on free trade with the Pro-Canada Network (PCN), at which the two coalitions resolved to establish a bilateral commission to coordinate further cooperation.

* PCN representatives and Mexican opposition political activists joined the AFL-CIO and US environmental organizations in a January media event against free trade in Washington, D.C.

* Later the same month, Canadian, Mexican, and US labour and social activists met in St. Paul, Minnesota, to help organizations there plan creation of state-wide coalition against free trade.

* In February, two PCN activists attended a Forum on Free Trade with nearly 50 Mexican labour, environmental, women's and religious organizations, where groups resolved to hold a high-profile, anti-FTA event in Mexico City in the spring.

Last year, the Canadian Auto Workers hosted a visit by Mexican Ford Workers and later sent a representative to a "Common Interests" conference with US and Mexican counterparts. Those contacts led to unprecedented, coordinated workers' protests in all three countries on Jan. 8 to oppose free trade and support democratic labour movements in Mexico.

The common challenge for progressives in the three nations, say Mexican activists, is to make sure that conferences and delegations lead to more joint actions like the Jan. 8 protests and to broad public education campaigns like the one organized by Canadian organizations during the US-Canada FTA negotiations.

"Let's see, if the Canadians distributed one million copies of their attack on free trade, and if Mexico's population is three times theirs, that means we'll need three million copies of our own free trade flyer," said one activist at February's Forum on Free Trade. Most people in the room laughed instinctively, not at their colleague's reasoning, but at the thought of raising the necessary money from a nation of people who make $3 or $4 per day.
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Title Annotation:Mexico-US-Canada free-trade agreements
Author:Witt, Matt
Publication:Canadian Dimension
Date:Apr 1, 1991
Words:2462
Previous Article:May Day 1999.
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