Summary:  A version slightly different than the following essay was presented last September 9^th at the, “First National Gathering on Free Trade Agreements and Rural Development”, carried out by the Faculty of Agronomy at the University of San Carlos, Guatemala in Guatemala City.  In the essay, the promises made 11-12 years ago to Mexico, when the government of Carlos Salinas de Gortari tried to “sell” the benefits of the agreement to a skeptical Mexican public, are compared, with the results 10 years after the beginning of its coming into force, putting emphasis on the effects on agriculture.  This retrospective and analysis of the results in Mexico are pertinent today in Central America – five countries in the region have negotiated a Free Trade Agreement – Central America/United States of America (FTA-CAUSA) which now has to be ratified by the legislatures.

Introduction

The title of this essay reflects exactly what was requested of me a few weeks ago for this lecture, however, it contains a large contradiction in the sense that what has occurred in the rural sector of Mexico since NAFTA came into forces is anything but development.  We could even speak of an “un-development”, an anti-development if you will, because what has been happening in rural Mexico, not only in the 10 years since NAFTA but also in the 20 some years of applying neoliberal policies, has been nothing less than disastrous.  In short, in rural Mexico there are greater levels of malnutrition, poverty, abandonment, migration, loss of genetic diversity for many native crops in the country and in the region, principally with respect to corn, invasion of transgenetic products whose effects on humans are still unknown, and, for the country as a whole, loss of food sovereignty, the loss of sovereignty period -- in summary a large litany of elements that support the assertion that the result of NAFTA in rural areas is a disaster.  

It is worth clarifying:  the disasters of NAFTA go beyond the rural areas, touching other aspects of Mexico’s economic life, definitely in the political and even in cultural aspects as well.  However, here we will restrict ourselves to commentaries related to rural issues.  It is also worth saying that the situation that we will discuss shortly is not the work of NAFTA exclusively but it responds to a general abandonment that began as passive indifference (what the French call the laisser passer, laisser faire – live and let live) on behalf of the Mexican state toward this sector since the 40s, when the same state resolved to prioritize the nation’s industrialization, using the rural sector as a lever for industrialization but at the expense of the countryside.  What was once passive abandonment became an aggressive harassment beginning in the late 80s when, for ideological reasons nourished by neoliberalism, the state declared war on Mexican campesinos, if they weren’t “up to snuff” and didn’t manage to compete in the international markets.  The neoliberal blinders that are worn even today by many Mexican bureaucrats, despite the abundant evidence that betrays the lie of the supposed benefits of NAFTA, impedes their ability to see what is more than evident.  Except for a small sector, which some sources calculate as being no more than one thousand people and big businesses, who have benefited from NAFTA, [1] rural Mexico and the Mexican campesino agonize in a slow death that also consumes the vestiges of food sovereignty in the nation.

Unkept Promises

It isn’t difficult to return to earlier years when NAFTA began with vigor in Mexico, and the government launched a certain campaign to convince the people on the effects that, according to it, trade with the United States and Canada would bring us.  A little time in a newspaper library will help us to remember the promises, the slogans of the moment:  that Mexico was on the “threshold of the first world” and that it only needed the push that NAFTA would give it to reach that status; that NAFTA would convert the inefficient campesino land parcels into highly productive and commercial parcels; that the campesino who wasn’t “modern”, those that didn’t want to export, would be absorbed as labour for the modern and growing industrial export sector; that the deal would be “sensitive” to the basic Mexican grains, granting them up to 15 years of protection, that there would be strict import quotas with duty tariffs for what exceeded the quotas; that food would be cheaper for Mexicans.  During those years, NAFTA was synonymous with greater exports, greater employment, greater investment, greater quality, better and more foods, decreasing poverty, … etc..

Unfortunately almost all of the promises lacked truth.  But why not say it openly?  They were lies – at the time there were rigorous analyses and studies and economic models, in both Mexico and the United States, that insistently concluded that the results would not be favourable for Mexico.  In the United States at least, they knew perfectly well the strategies, they knew that it would provoke an exodus from the countryside and that there would be more people migrating to the cities and also to the U.S.A..  It is not by chance that in the same year that NAFTA came into force, 1994, the large border patrol operations of the Americans against the migrants began – Operation Guardian – and others that have been in place ever since along with ever increasing number of proposals to guard the southern border, building of walls, installations of sophisticated equipment, diversion of migrants to the inhospitable regions and growing militarization and paramilitarization of the border. [2]

To date, nothing has stopped the wave of Mexican and Central American migration to the United States.  Why?  Because there is no work in our countries.  What will the American authorities do when the aren’t able to stop the immigrants, not even with the rubber bullets that they now use, the use of which was okayed by the same government of Vicente Fox?  When the dilemma for the migrant is to face the rubber bullets in the Arizona desert or the permanent misery of their homeland?

Macroeconomic Results

Looking with greater care at the many promises of NAFTA we see that NAFTA was equated to the longed for state of “development”, and that, and there is no need to insist, they are very similar to the promises that the Central American governments are presently proposing to their peoples with the FTA-CAUSA (Free Trade Agreement – Central America-United States of America). 

First, let’s state what at first appears to be positive: NAFTA has fulfilled two of the promises that it made at the beginning of the 90s:  NAFTA has brought more investment to the country and it has meant greater exports from Mexico (which is not to say, “Mexican” exports).  The statistics are clear.  Regarding exports, Mexico today exports double what it was exporting in 1993, the year before NAFTA began (US$61 billion in 1994; US$158 billion in 2001).  With respect to private investment, the statistic is three times greater than it was in 1993 (US$4.5 billion per year on average between 1988-1993; US$13 billion per year on average between 1994-2002).

And, in effect, there are some, though few, NAFTA “winners”.  For example, agri-industries such as breweries and tequila producers, vegetable and tropical fruit producers and packagers for export, importers of meat and grains (with Maseca and Minsa at the top), importers of fruit and goods and also the refreshment industry.  They are part of the thousands of companies or people that have prospered in the rural sector under NAFTA – in contrast to the millions who have been left “losers”.

Let’s look for a moment at the general economic results, at the level of the entire Mexican economy in order to put the virtues and vices of NAFTA into context.  The look that we’ll do takes in two important moments:  in one part, the period of liberalization or opening of the economy which in Mexico began in the early 80s; for the other part, the period in which NAFTA has been in force beginning on January 1^st, 1994.  Both periods extend to present day.  In both the period of opening and the period of NAFTA, the growth of the Mexican economy has plummeted.  Since the robust per capita growth of 3.4% for more than 30 years, from 1945-1975, the years known as the “Mexican miracle”, economic growth has almost ceased.  From 1985-2000, the statistic for per capita growth is less than 1%.  With respect to exports, it may well be that Mexico has converted itself into one of the greatest exporting countries of the world.  It is eleventh among all the economies.  But it is also necessary to state that the country imports more than it exports, translating into a chronic commercial deficit.  In 2003, the deficit reached $14.5 billion.  That is to say, 4.3 times more than the federal budget for rural areas in that same year.

So far with NAFTA, just for the purchase of foods, Mexico spent $78 billion – a statistic that is greater than the public debt of the nation (US$74 billion).  This mostly deals with foods that Mexico used to produce and that now must be imported.  Regarding employment, there were great expectations that NAFTA would create employment but there has been a net loss in job creation.  That is to say that average job creation was greater in Mexico before NAFTA than after.  In his recent report to the nation last September 1^st, president Vicente Fox boasted of the creation of half a million jobs during the three years of his administration.  But he omitted to say that in order to have space for the youth that year after year enter the work force, the economy should generate approximately 750 000 jobs each year.  That is to say that during Fox’s rule thus far, the economy should have generated some 2 250 000 jobs.  The statistic of half a million new jobs pales in comparison.  Moreover, the majority of the jobs generated in those years were in the informal sector where laws don’t always apply and minimum salary is not guaranteed.  Speaking only of the countryside, the Secretary of Labour (STPS is its Spanish acronym), indicates that since NAFTA came into force, 1 780 000 jobs have been lost, 600 000 of them related to basic grains. 

Real salaries are lower than ever.  Minimum wage decreased 23% in real terms (regarding its buying power) since NAFTA came into force and 60% since 1982.  Contractual salaries decreased 55% since 1987, 12% since NAFTA.  Sixty percent of employees do not receive any of the services authorized by Mexican law; 33% of the economically active population (EAP) are in the informal sector.

All of this translates into greater poverty.  The number of homes in poverty has grown 80% since 1984 and more than 60% of the population live in poverty.  In Chiapas, where the crisis of the price of corn has overcome that of coffee, it is estimated that 70% of the population live in extreme poverty.  Speaking specifically of the rural population, 80% of the rural population live in poverty and more than 50% of them in extreme poverty.

But not only is poverty worse.  Inequality has worsened.  The Gini coefficient went from .43 to almost .5 since 1984 putting Mexico among the most unequal countries in the hemisphere and in the world.

The litany of sadness doesn’t end here:  in regards to the environment, the government estimates that the cost of environmental degradation (which has accelerated during NAFTA) in 2003 equaled 10% of the Gross Domestic Product, or some US$36 billion.  Let’s compare this to the growing gross economy of US$9.4 billion in 2003.

And the cheap food that NAFTA was going to bring us?  We finish this large list of tribulations saying that that promise was no less than cheap demagogy.  From 1994 to 2002, basic food prices rose 257% while the prices to the food industry producers rose 185%.  That is to say that imports put greater pressure on the prices of primary agriculture products than on those of the consumer.

In summary, the country today is poorer, more polarized, more unemployed and hungrier than 10 or 20 years ago.  Neoliberal policies simply don’t work in our country and thanks to NAFTA, today the state lacks the political-economic instruments to rectify the mothership’s path in a way favourable to the Mexican people as a whole.  NAFTA is more than a free trade agreement.  It is much more.  It is not primarily an agreement about trade but rather part of a huge movement in the restructuring of the rules of the economic game in favour almost exclusively of transnational companies and developed countries.  Recall that the opening or freeing of the Mexican economy began long before (a decade before) NAFTA.  Since the 80s, before the deal, successive Mexican governments have lowered tariffs, reduced government subsidies, reducing the role of the government in the strategic direction of the economy and the development of the country.  What NAFTA came to do was simply accelerate the liberalization and put chains in place so that no subsequent government, especially one with progressive leanings, could change the rules.

Even in 1988, the Mexican people had resented the effects of liberalization, principally due to the loss of hundreds of thousands of jobs and for the substantial deterioration of the purchasing power of one’s salary.  There were presidential elections that year and the Mexican people voted against the road of liberalization that the ruling PRI (the Party of Institutionalized Revolution) had begun, doing their utmost for a plurality of votes in favour of the leftist opposition, Cuauhtemoc Cardenaas.  Nonetheless, in one of the most shameless electoral thefts in Mexican history (and there have been many), when the vote computing system “collapsed” on the night of elections, Cardenas was denied the victory.

The democratic outcome of 1988 was twisted but the alarm had been sounded, especially in Washington – this “danger” could present itself again down the road.  Given this eventuality, there was a lack of chains to assure the continuation of the neoliberal project – something beyond the whims of whichever president, especially the option that the Americans had fought against, that of a leftist and nationalist such as Cardenas.   NAFTA began to be negotiated between the United States and Mexico scarcely a year after the electoral theft of 1988.

The Situation of the Mexican Countryside

Today the Mexican countryside employs 22% of the work force of the nation.  Corn has been, since time immemorial, and it continues to be today, the principle crop of the countryside, occupying 60% of cultivated lands and 60% of all agricultural production.  Corn is the total or partial sustenance of 18 million Mexicans.

To understand the situation of corn today in Mexico, let’s look at another one of the promises lavished out in the months prior to the ratification of NAFTA, in the sense that the deal would protect the “sensitive”, strategic crops of the country.  Once again, demagogy.  After scarcely two years of NAFTA’s enforcement, the Mexican government unilaterally decided not to charge the duties that through the rules of the very same NAFTA, were their right to charge.  At the insistence of whom?  With what motives?

To please the big Mexican agri-companies, Maseca and Minsa, then president, Carlos Salinas suspended the charging of duties, thus permitting them access to huge quantities of cheap corn.  But corn that is cheaper than Mexican corn not only for the endowment of factors particularly favourable to the U.S. but principally because of the subsidies that the American government grants its producers to such an extent as to constitute, and it still constitutes, a serious case of “dumping”.  Certainly, as we have seen before, Maseca and Minsa positioned themselves among the small elite of winners from the agreement, making flours from cheap American corn, as the price of tortillas increases without pity as the Mexican government has eliminated subsidies for their consumption.

The biggest losers of this avalanche -- the avalanche of tonnes of corn -- were the campesinos of the country.  Eighteen million campesinos suffered the effects of prices that plummeted by 45% due to this violent upset.  At the same time the government lost, as it pleased, billions of dollars that it could have charged in applicable duties on import quota excesses, calculated to be US$2.9 billion for corn and US$77 million for beans.  The problems continue:  the Mexican government, so as not to displease the U.S.A, has also renounced any kind of control over the kind of corn imported and so in fact, it exercises very little control over the agricultural products coming from that country.  Specifically in the case of corn, tonnes of transgenetic corn has come into the country, mixed with normal corn despite the unknown effects of these varieties of transgenetics on human health.  What is well known is that transgenetic corn contaminates the varieties of native corn and threatens to eliminate them, spoiling the careful selection over thousands of years that the indigenous peoples have done to create varieties especially adapted to distinct microclimates.  The importing of transgenetics has resulted in a homogenization of the varieties, with the consequent effects of depending on seeds sold by transnational companies, the loss of food sovereignty and the risk of plagues that could wipe out homogeneous plantings. 

The total lack of care by the Mexican government toward the importation of American products contrasts what happens on the flip side.  Mexican producers encounter everything from restrictions sanitation restrictions to legislative or executive declared embargos which are at the margin of the spirit of NAFTA, though often they are also from the same law.  The Mexican government’s abandonment of the Mexican countryside which has accelerated since NAFTA again contrasts with the protection, support and most importantly for us, the subsidies that the American government grants to field producers in their country, in particular to agri-exporting companies.  By way of example, in 2003, the “Farm Bill” authorized 70% more support to producers in the U.S.A..  In fact, corn is the crop that receives the most support from the American government.  In 2000, subsidies for the grain added up to US$10.1 billion dollars.  That is, by way of an example, 10 times more than the total budget of Mexico for agriculture.  Researchers who specialize in this theme have calculated the annual subsidy passed from the American government to companies that export only to the Mexican market, to be US$105-145 million.  Again, by way of example, this number – US$105-145 million – surpasses the total income of the 250 000 corn producers in the state of Chiapas. 

It is with good reason then, that corn exports from the U.S. to Mexico have multiplied by 3X since NAFTA came into effect, hoarding 33% of the national market.  And it is with reason that Mexican producers find themselves living in misery.  Given subsidies of a similar magnitude, any reference by Mexican bureaucrats to the supposed “inefficiency” of our campesinos compared to American producers would also transform into demagogy. 

Further statistics that expose the depth of the hole that Mexico dug with NAFTA:  Before NAFTA in 1993, Mexico imported 8.8 million tonnes of grain and oils.  In 2002, it was already importing more than 20 million tonnes of these same products.  It’s the same for statistics related to meat, temperate climate fruit and other primary and secondary products (rice, wheat, dairy products, tobacco, vegetable oils, animals, even coffee – Mexico being one of the most important producer of this drink in the world).  More than exporting agricultural products, Mexico is importing them with open arms, by the tonne and the result is there for anyone who wants to see:  the displacement of national producers, the increase in unemployment, the disappearance of food sovereignty and the destruction of an important part of the physical infrastructure of the nation.

For Central America, the truth is, the perspectives on FTA-CAUSA don’t look promising.  It’s always the FTA-CAUSA, with more details, fewer details, but always maintaining a similarity in its conception with NAFTA.

Survival Strategies

In rural Mexico, NAFTA has been negative for everyone except for a small group of one thousand individuals and companies that belong to the club of winners.  Nonetheless, those whose livelihood is farming in Mexico are struggling against forces that seek to separate them and indigenous peoples from the control of natural resources and uses that they presently prevent.  In the first place, their land is wanted but so to is control over biodiversity, lumber, water, energy sources and other primary materials.  For the sake of surviving this assault, rural peoples have developed strategies for the state of Chiapas that I will briefly expound here with the understanding that the specific details would vary according to the region of the country to which it relates. 

a)      Expansion of the agricultural frontier particularly in basic grains and other products for self-consumption.  This expansion is happening in places that are increasingly marginal and, in general, with very poor yields per hectare.  But to attempt self-feeding and far from the fluctuations of the market, all that is produced is consumed and used;

b)      The planting of various products for sale and/or exportation that will give a modest income, be it coffee, or other non-traditional products (flowers, “exotic” or “introduced” fruits, macadamia nuts, etc.);

c)      Expansion of the ranching frontier in the hands of indigenous campesinos, again on marginal lands and with low profits but that in the end generate a minimum income;

d)      The making use of the natural resources around them (particularly the forests) by the rural peoples, even though there is no way to guarantee their sustainable exploitation in the long run;

e)      The migration of at least some in the rural family to urban spaces in Mexico and in the Unites States.

For many campesinos and indigenous communities in Mexico, the motto is clear:  Land is not to be sold.  For many campesinos and indigenous peoples, staying and making the land produce, even if its just for survival for the middle term, is the most reliable security in life given the oscillations of the market and the insistence of the companies and the government that they be dispossessed. 

Future

In December 2002, a campesino movement of huge proportions was produced throughout the country to reject NAFTA leading to the concentration of hundreds of thousands of small and medium-scale producers in the central park of Mexico City.  The movement, known as, “The Fields Won’t Take Any More”, managed to unite forces among four blocks and present a single document to the government, adopting a single negotiation strategy with the government.  The National Accord that arose as a synthesis of the dialogue tables between campesinos and the government, put forward the following points:

·         The renegotiation of NAFTA

·         Food sovereignty as a main principle and axis of all agri-food and commercial policy

·         Multi-year proposals

·         Structural reform of policies related to rural sectors

·         The fulfillment of the San Andres Accords (agreed to and signed by the Zapatista Army of National Liberation)

·         Defense and valuing of the heritage territories of ejidos, communities and indigenous peoples. 

Although the presence of campesino organizations more aligned with the government divided at the end of this important movement, weakening the accords achieved with the government as they were not able to jointly demand promises and terms, the original demands are an excellent starting point to undo the damages done to the rural areas and society as a whole by NAFTA.  The National Accord, without doubt, will once again be in the agenda in the next federal elections in 2006.

Conclusions

Mexico negotiated a bad free trade deal, horrible if we concentrate on the parts related to the rural sector.  NAFTA, as said earlier, instituted many aspects that were quite far removed from strictly trade, that have had damaging repercussions for many other fields.  Chapter 11 in particular grants unheard of rights to transnational companies through which they can launch a complaint against national governments for any law, standard or ruling that interferes with the realization of “projected profits”.  There are already many cases of companies that have objected to measures through the tribunals of NAFTA and that, in secret processes, have been resolved in their favour.  To qualify national laws and standards as “indirect expropriation” that, out of obligation, must be compensated, Chapter 11 has been devastating to environmental, labour and social laws and even to the democratic process not only in Mexico but in each of the three nations that participate in NAFTA.  Chapter 11 is also having an “anticipated censuring” effect.  That is, the legislative powers at all levels are abstaining from passing laws that protect the environment, workers and culture for fear that it could provoke action on behalf of some transnational company. 

But the problem is not in the accords that are signed but in the mentality with which they are celebrated.  If this mentality communes with the general precepts of neoliberalism or, under a different name, the Washington Consensus, the result is almost assured:  the immense base of the poor on the social pyramid will not obtain any benefit and, as we’ve been experimenting in Mexico for the past decade, the situation will get worse. [3]

At the heart of the matter, what also lies between the defenders of free trade and those who oppose the free trade deals as they are they exist today, is a fight between two visions of what development is.  One vision packages development as the expansion of capital, the presence of large companies, particularly transnationals and the jobs, technology and capital that they supposedly bring.  This perception is elitist and excluding and it denies all possibility of directing or orienting the economy to the benefit of the majority of the nation-state, much less incorporating its opinion.  It is the famous trickle-down theory of supposed “benefits” toward the base, thanks to the activity of the peak.

The other vision, oriented toward the social, is not only fed by its opposition to the above but by the record of all of the countries today called, developed, or “First World”,  which had a marked interjection by the state in the determining of policies to benefit various sectors of the population.  For example, through policies of industrialization and through the determination of requirements of debt relief for foreign investment.  Today NAFTA denies the state the possibility of such policies or requirements, truncating the path of all countries to development, to strengthening their interior before opening their borders.  No developed country had to contend with the burdensome deadweight that free trade agreements represent to our countries. 

In rural Mexico, these two visions of the world and of the future are found at opposite ends.  On one hand the dominant vision today, which in simplistic terms can be expressed as the final price and only in the final price -- a supposed comparative advantage in the production of goods and services.  The other vision recognizes the multi-utility of agriculture and that the role of agriculture is more than the production of agricultural goods at the lowest price possible.  We all hope that agriculture secures innocuous, high quality goods while protecting the environment, caring for limited resources, preserving the rural countryside and contributing to the development of rural areas including the generation of employment opportunities. [4]   That is to say, “agriculture not only produces goods in the reduced sense but it also generates services for society that have a value not remunerated in the prices of food and primary materials.” [5]

It’s been said on other occasions.  The expansion of trade is not an end unto itself.  In the best of times trade with other countries can be used to strengthen economies.  But “free” trade with its restrictions and revision is a blank check extended to transnationals so that they can do what they want and it will produce the effect that it’s had on Mexico and we dare say, it will be repeated in Central America:  “free” trade will not rectify the inequalities that already exist, it will not undo them and it will not make them go away, more likely just the opposite will occur and they’ll be deepened.  Before freeing trade, we need healthy and educated nations and people living in dignified conditions with healthy economies oriented to the internal or regional markets, generators of employment, that no longer drain the work force toward the exterior.  In these cases, fair trade, not just “free” trade, that compensates the deep asymmetries between the rich and poor nations, can be an effective element for greater prosperity of the human condition.

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