The Mexican government doesn't really care about us," says Jesds Herndndez, a Mexican migrant worker in Tijuana. "We are routine- ly ripped off by Mexican police and beaten by the U.S. Border Patrol, and our government just makes state- ments without doing much to protect our rights....With NAFTA, their concerns are somewhere else, like the number of Corona beer cases exported to the United States..."' In the first two years of NAFTA over two million jobs (one sixth of all jobs in the "modern" sector) were lost in Mexico, as the country's productive apparatus col- lapsed following the quick liberalization of trade. Mexico's productive capacity was devastated, as the BY CARLOS A. HEREDIA nation's small and medium-sized businesses could not endure tough competition from large foreign corpora- tions. Trade liberalization has meant the deepening of the dual economy: while large subsidiaries of transna- tional companies that cater to foreign markets have flourished, many Mexican firms that sell to domestic consumers have gone under. In fact, manufacturing wages in Mexico are now below the levels of 1981, prior to the economic liberalization drive. After two and a half years of free trade, domestic consumer debt is at an all-time high in Mexico. Over seven million Mexicans are in arrears in their home mortgages, car loans and/or direct credits. The financial system is in virtual collapse, as the banks cannot collect the money they lent in the midst of the borrowing and spending spree that followed the passage of NAFTA. The government has pumped over 12% of its GDP into the private banks, but the Mexican banking system is NACIA REPORT ON THE AMERICAS Carlos A. Heredia is an economist with Equipo PUEBLO, a Mexican nongovernmental organization. He is the director of PUEBLO's regional development project in the state of Tamaulipas. 34REPORT ON LATINO LABOR still in trouble. It is caught in a vicious cycle in which it can't lend more The growing money until it gets paid on old debts. polarization in both But it can't get paid on old debts without countries lends lending more money because the private sector is broke. weight to the thesis In the United States, the economy that NAFTA was may be "booming," but the gap between rich and poor is the basically designed to greatest in over a generation. As for facilitate investment family income, U.S. Latino workers have and capital flows in been working longer hours for lower real wages. They have the region, and to experienced a gener- al downward shift maintain a pool of out of better-paying jobs into low-wage cheap and available employment, with an increasing per- centage of people labor, working for less than poverty-level wages. 2 They have been affected by downsizing, flexible production and mi- gration. To make things even worse, social programs have been cut, while health care budgets are also being slashed. The failure of the Mexican and U.S. governments to deliver on the glowing promises of NAFTA has con- firmed the warning often raised in the NAFTA debates that the trade pact would further polarize both societies. It has also lent weight to the thesis that the agreement was basically designed to facilitate investment and cap- ital flows in the region, and to maintain a pool of cheap and available labor in both countries. NAFTA benefits have been reaped by companies able to concentrate production and marketing in an integrat- ed way in both the United States and Mexico. A small number of U.S. companies have increased their invest- ments in the Mexican economy, most dramatically in the automobile industry and, increasingly, in the finan- cial sector. In the first two years of operation under the new rules of NAFTA, Mexico's 15 foreign banks made a profit of $1.3 billion. This represented 41% of Mexican bank profits in 1995. These banks cater to a select group of fewer than 500 of Mexico's largest com- panies, which together control most foreign trade. Just three of these fifteen banks-Citibank, JP Morgan and the Spanish bank, Santander-accounted for 81% of those profits. Among Mexicans, the trade pact's obvious winners have been the owners of recently privatized compa- nies-the billionaires who heeded the call of former president Carlos Salinas de Gortari and campaigned for the trade agreement. Many of them have since made it to Forbes magazine's list of conspicuous billionaires. In 1995, the combined wealth of Mexico's 15 richest indi- viduals was $25.6 billion dollars-the equivalent of 10% of the country's estimated GDP. Practically all of the companies owned by these bil- lionaires have partners in, export to or render services in the United States. They control key industries, such as telephone and telecommunications, banking, mining and air transportation. Most have been close business associates of the family of former president Carlos Salinas. The most affluent of them, Carlos Slim-the owner of Tel6fonos de M6xico--increased his net worth from $3.7 billion in 1994 to $6.1 billion in 1995. He was granted a protected monopoly by the Salinas govern- ment for six years after the phone company was priva- tized in 1991. When we get out of the privileged big business circle, however, things change significantly. According to a study jointly released by the Mexican Confederation of National Chambers of Commerce and the government statistics agency, NAFTA had negative repercussions for 60% of commercial establishments in Mexico. 3 These businesses reported problems with "unfair competition" (small local and regional retailers being displaced by large U.S. firms, such as Wal-Mart), import and export licenses (discretionary nontariff barriers imposed by the U.S. customs service to prevent Mexican goods from entering the United States), and the low quality of for- eign merchandise (cheap Southeast Asian imports that enter Mexico through the United States). NAFTA, and the economic globalization of which it is a part, has reshaped the U.S. Latino and Mexican workforce. In Mexico, two thirds of the economically active population-25 million out of a total of 36 mil- lion workers-survive on informal activities, without access to social security and with little possibility of advancement. Only 9.37 million Mexicans have regular paid jobs in the private sector, and just under 2 million are employed by the government or public agencies. According to the government, 6.7 million Mexicans joined the labor force between 1988 and 1995, but only VOL XXX. No 3 Nov/DEC 1996 35REPORT ON LATINO LABOR 750,000 paid positions were created, most of them in the export -mainly maquiladora-sector. 4 There is a growing gap between prices and salaries in Mexico. According to a study by the Labor Congress (CT) during 1995, the cost of the basic basket of goods deemed necessary for a family of five rose 60%, while the minimum wage only increased 31%. Furthermore, government surveys indicate that the number of people unemployed and underemployed (those who work less than 35 hours per week) rose from 7.7 million at the time of the December 1994 peso devaluation to 10.2 million in December, 1995. This represents an increase from 20.8% to 26.4% of the workforce. 5 In the aftermath of the peso devaluation, it has become an article of ruling-circle faith that Mexico will export its way out of the economic crisis, and that NAFTA will ensure that this happens. In fact, in the last 18 months, bilateral trade between the United States and Mexico has resulted in a substantial Mexican sur- plus. In 1996, it is expected that Mexico's total exports will top $100 billion of which over 80% will be exports to the United States. This represents a 20% increase per year over the last two years. The trade surplus is expect- ed to be about $9 billion. The truth, however, is that exports have surged only because there is a dramatically reduced domestic market in Mexico. Practically none of the companies that increased exports have augmented their level of output; they are simply selling abroad what they cannot sell at home. This trend, together with the steep fall of the peso, has generated this trade surplus. During 1995, exports concentrated sharply as only 2.7% of all exporting companies (750 of a total of 27,000) were responsible for four fifths of all Mexican exports. 6 Three sectors of the economy-electronics, automobiles/parts, and machinery/precision instru- ments-account for 67% of all exports. Well over half of the trade surplus comes from the maquiladora sector. The Mexican government strongly suggested that the maquiladora model was going to be phased out once NAFTA was in place, but the opposite has taken place. The maquila plants continue to represent an enclave along the northern border, where over two thirds of the plants are located. Only 2.1% of their inputs are bought inside Mexico. As of August 1996, there were 3,188 maquiladoras, which employed over 800,000 workers, as opposed to less than half that number in 1988.7 In Mexico, the free-trade deal was promoted by an alliance of corporate chieftains, government officials and politicians of both the party in power, the Institutional Revolutionary Party (PRI) and the opposi- tion National Action Party (PAN). The official unions, which represent 90% of unionized workers and are tight- ly tied to the government and the ruling party, offered unconditional support for the agreement. By contrast, the center-left Party of the Democratic Revolution (PRD), the country's third- largest party, criticized NAFTA, arguing for a dif- ferent type of economic integration, as did the inde- pendent unions and the so- called "democratic cur- rents"-groups inside official unions who oppose the leadership but are large- ly powerless. In the United States, U.S. Latino labor leaders faced a difficult dilemma during the NAFTA debate. On the one hand, they wanted to establish or rein- force links with their Mexican colleagues south of the border. On the other hand, they wanted to be on good terms with the Mexican government. The Mexican Trade Ministry often invited U.S. Latino Many U.S. Latino labor leaders supported the trade pact, insisting that working through the side agreements and the NAFTA institutions would compensate for a less-than- perfect pact. labor leaders on tours to Mexico, where they were pampered by their hosts. The understanding was that they could not organize with their Mexican counterparts. Regarding their relations with the U.S. Government, the issue for Latino labor leaders has always been to weigh the benefits that accrue from supporting the pre- sent Administration. Apart from the majority of the Cuban-exile community in Florida, most Latino com- munities (including Cuban-Americans in New Jersey) have favored the Democratic Party and its policies. In this context, many of them supported the trade pact, insisting that working through the side agreements and the NAFTA institutions would compensate for a less- than-perfect pact. Although in the aftermath of its passage, some anti- NAFTA groups on both sides of the border continued to campaign for the trade pact's abrogation, two and a half years into NAFTA, outright opposition to it no longer seems feasible. Groups from a variety of ideological positions have come to accept that, like it or not, we have to live with NAFTA. There are, however, in the words of political analyst Jorge G. Castafieda, ways to "amend, improve or postpone numerous chapters in the agreement." 8 Castafieda suggests the reopening of negotiations on such issues as compensatory financing and development funds, dispute settlement, the phasing NACILA REPORT ON THE AMERICAS 36REPORT ON LATINO LABOR Immigrant Mexican fish-packing workers in California explode in applause as the results are announced r of the union representation . out of tariffs on agricultural imports, and most impor- tant for the purposes of this essay, migration, which from the outset was left out of the agreement. The recent new U.S. legislation on undocumented workers has certainly hurt the bilateral relationship, although it remains highly unlikely it will seriously hamper the northward flow of Mexican migrant work- ers. Mexican workers are continuing their migration to the United States, regardless of the ever-tougher immi- gration stance north of the border. The relevant variable for migrants is the wage disparity between the two countries-a disparity that has substantially increased after the most recent peso devaluation. As of October 1996, for example, the minimum wage was almost 12 times higher in the United States ($4.75 an hour) than in Mexico ($0.41 an hour). It is an open secret that the labor of undocumented Mexicans subsidizes the economy of the U.S. Southwest, as well as the service sectors of Chicago and New York City. The importance of these subsidies is underscored by the refusal of U.S. policymakers to normalize the flow of migrant workers. An agreement signed in 1974 between the governments of Canada and Mexico, for example, allows Mexican agricultural workers to go to Canada temporarily to work on the harvests each year. During the first year of the accord, 203 Mexican workers took advantage of the agreement. Today, the annual average is 5,000 workers. The U.S. government has refused to sign a similar accord with Mexico, because it would raise the cost of farm labor, since the flow of undocumented workers saves U.S. com- panies billions of dollars per year. But this is totally de-linked from NAFTA. Although there is a bipar- tisan consensus in the United States that the cur- rent hysteria against Mexican migrant workers will recede once the November 1996 presiden- tial election is behind us, many in the labor move- ment-on both sides of the border-feel the U.S. government will never accept the inclusion of migration and labor rights in an expanded trade agreement. There seems to be no chance for a European Union-style compact, which would facilitate evolution toward a common mar- ket-and a common labor market. There remains, however, a strong possibility of strengthening and enforcing the labor-protection side agreement of NAFTA. Here, there is a great need which is illustrated by a recent report from the Women's Rights Project of Human Rights Watch. 9 The report denounces violations of human and labor rights against women who look for jobs or who work in the maquiladora industry along the Mexico-U.S. border. According to the report, in the plants of companies such as General Motors, General Electric, Zenith, Panasonic, Sanyo and AT&T, women are routinely subjected to questions on the use of contraceptives and their sexual habits. They are forced to resign when they get preg- nant. "When we start working at a factory, we go through a physical medical examination, as the company wants to make sure we are fit to work," says a woman work- ing for a maquiladora in the border state of Coahuila. "However, they don't do health check-ups as we leave a factory to see how we are. I have an ear infection. Working postures are uncomfortable. You're either sit- ting or standing for the full eight hours. We're now working with plenty of chemicals that are not allowed in the United States because of their effects, and VOL XXX, No 3 Nov/DEC 1996 37REPORT ON LATINO LABOR because the instructions on handling them are written in English, the women do not know what they're work- ing with. People are never given severance pay when fired. We have no safety whatsoever. The law states we should get compensated for work-related illnesses, but hospitals will never admit we get sick because of our work."10 eyond NAFTA, a greater priority of the U.S. government is to insure that the economic liber- alization policies remain in place. That is why it will not pressure the Mexican government to enforce its labor laws even though Mexican workers are routinely fired-by domestic and transnational companies alike-for engaging in "unauthorized union activity." The narrow focus on trade liberaliza- tion also explains why both Michel Camdessus, Managing Director of the International Monetary Fund (IMF), and U.S. Treasury Secretary Robert Rubin routinely say that Mexico is doing "surpris- ingly well," and empha- size the need to continue the fiscal policies put into place since the crisis erupted. Wall Street investment bankers also seem to be content with the relative Cesar Chavez addresses the press at a United Farm Workers demonstration in Bakersfield, California in 1991. The demon- stration called for enhanced reg- ulation of pesticides used in the fields. stability of the peso/dollar exchange rate, the gains in the Mexican Stock Exchange and the hefty profits reaped by foreign capital in Mexico. None of them dis- cuss how the Mexican people are doing, nor why under NAFTA the Mexican economy is not growing when it is supposed to be booming. To a large degree, there is a consensus among eco- nomic and political elites on the kind of economic policies to be implemented in the region. And this consensus has led to an increasing subordination of Mexican policymaking to the dictates of the Washington. Since the Clinton Administration's February 1995 bailout package was approved, the number-one priority of economic policy in Mexico has been the servicing of Mexico's debt to the U.S. Government and the IMF. Of course not everyone concurs that the Mexican economy is doing surprisingly well. "It is obvious NAFTA has brought neither the economic prosperity nor the flowering of human rights and workers' rights that was promised," says Pharis Harvey, Executive Director of the Washington, D.C. based International Labor Rights Education and Research Fund (ILRERF). Harvey has been an advisor on several petitions to the National Administrative Office (NAO)-the agency established by the U.S. Labor Department under one of the NAFTA side agreements to hear labor complaints related to the trade agreement. On one such petition, in October 1994, the NAO ruled that there was no evi- dence the Mexican government had failed to enforce its labor laws in the dis- iLssadl somllle 40 pro- union workers at Mexican There has plants of the U.S. corpo- rations General Electric steady-thoug and Honeywell. So while the side agree- growth of cr ments have given workers labor sol on both sides of the bor- der a forum, they have not There have be been an effective tool for improved labor-law en- Of exchanges bet forcement. In practice and U.S. Lati they have proven to be unenforceable when the who work in the political wills of the gov- ernments involved have and, incre been lacking. None- for the same ( theless, they are frequent- ly appealed to. Claudia Luengas, of the National Association of Democratic Lawyers in Mexico City, believes that the lack of an independent judiciary and the blatant disrespect of the rule of law by labor tribunals in Mexico move Mexican workers to look for other means of redress outside of the country. In this context, some groups have deemed it preferable to go beyond Mexican courts and address dispute reso- lution through multinational panels established by the side agreements. The Mexican government has fre- quently expressed displeasure at these procedures, and the paradox has emerged that a government which favors economic liberalization and the free flow of investment capital disapproves of the internationaliza- tion of conflicts derived from economic liberalization. "Sometimes it is our own Mexican bosses who are the worst exploiters, and we have to take our case to the United States (or in the case of Sony, to Japan) to make the Mexican government listen to us," says Martha Ojeda, who was fired from a Sony maquiladora in the border city Nuevo Laredo because of her organizing work. "If we only demonstrate in Mexico, they will suppress the movement, and it will become inconse- quential; but if we spread the information abroad, the government will have to pay dearly for the deterioration of the [false] law-abiding image it has been trying to give itself through an expensive public relations cam- paign."" And beyond the seeking of redress through interna- tional appeals, there has been a steady-though cau- tious-growth of cross-border labor solidarity. There have been a number of exchanges between Mexican and U.S. Latino workers who work in the same indus- try and, increasingly, for the same corporation. U.S. Latino trade union leaders have ventured south to get been a h cautious-- "oss-border idarity. en a number :ween Mexican no workers same industry asingly, :orporation. acquainted with the experi- ences of their fellow Mexican workers in the telephone and telecommunications, textile and garment, automobile, and public service industries. The best known individual case of cross-border cooperation between U.S. residents and Mexicans who work for the same corporation is that of Ford Motor Company. On several occasions, Ford workers from the United States have supported free union elections in the Cuautitlin plant of the giant auto maker. At this point, three condi- tions will have to be met before higher levels of understanding between Mexican and U.S. Latino workers can be attained: democratization of the labor unions, political alliances between unions and other organized sectors of the population and a leadership that looks beyond geographical borders. The more representative the unions become at home, the better equipped they will be for cross-border initiatives and for joint endeavors in this era of globalization. Although recent changes in the top leadership of the AFL-CIO seem to favor a closer relationship between U.S. (particularly Latino) and Mexican workers, until the Mexican "Berlin Wall" of government control over unions falls, it will be difficult to establish solid cross- border links between unions. 1 2 The "unionism without borders" will have to wait until free unions become a reality in Mexico. And north of the border, only when Latinos in the U.S. become able to exert an electoral force that is at least comparable to their demographic weight will their initiatives on labor and other issues gain relevance. Downward Mobility: Mexican Workers After NAFTA 1. Jesus Hernandez (name has been changed), a Mexican migrant worker in Tijuana, to El Financiero, (Mexico City), April 15, 1996. 2. Richard J. Barnet and John Cavanagh, "The Planetary Workplace: New Challenges for Working People of Color," Civil Rights Journal, 1996. 3. Mexico Update, Equipo PUEBLO (Mexico City), April 16,1996. 4. La Jornada (Mexico City), July 12, 1996. 5. Figures are from La Jornada (Mexico City), March 4, 1996. 6. Figure given by Enrique Vilatela, the director of Bancomext, Mexico's export-import bank, in La Jornada (Mexico City), July 15, 1996. 7. Raul Llanos Samaniego, "Son importados ia mayoria de los insumos en las maquiladoras," La Jornada (Mexico City), August 24, 1996. 8. Jorge G. Castaieda, "El TLC y las relaciones M6xico-Estados Unidos," in Various Authors,Los compromises con la nacion (Mexico City Plaza y Janes, 1996), pp. 61-79. This is also the transcript of a speech delivered in Mexico City on April 11, 1996. 9.Alejandro Romero Ruiz, "Hostigamiento y represi6n contra mujeres en las maquiladoras," in La Jornada (Mexico City), August 22, 1996. 10.Maria Sanchez (her real name has been changed), a worker at Confecciones Monclova, interviewed by Sedepac's Maquiladora Project, quoted in Patricia Amat y Le6n, Ajuste Estructural: Debate y Propuestas, Lima, Peru, April 30, 1996. 11.Author's interview, May 23, 1996. 12.The election John Sweeney as president and Ron Blackwell as director of campaigns; both of these leaders come from the pro- gressive wing of labor.
