Freedom Socialist • Vol. 26, No.1 • February-March 2005

October 2004 march in Teotihuacan at the Pyramid of the Sun against the construction of a nearby WalMart.

To hear U.S. politicians and champions of the free market talk, the Central American Free Trade Agreement (CAFTA) will transform the region into one big land of democracy and opportunity.

But events in Mexico give the lie to all the propaganda about the wonders of neoliberalism and "free trade." Far from creating prosperity, 10 years of the North American Free Trade Agreement (NAFTA) have weakened Mexico's economy, tightened the stranglehold of U.S. corporations, produced a few Mexican billionaires, and lowered wages for everyone else.

Now, China's entry into the World Trade Organization (WTO) and the push for CAFTA threaten to intensify Mexico's downward spiral. President Vicente Fox, who faces reelection in 2006, is under pressure from business folks north and south of the border to discipline labor in order to better compete.

But there's a hitch. NAFTA is spawning rebellion in Mexico — a trend that promises to accelerate as the U.S. extends its free trade empire.

No bottom in sight. If NAFTA has not enhanced opportunity and democracy in Mexico, it has transformed the economy. In 2005, the country is far more dependent on the economic health of the U.S. than it was in 1994, when NAFTA went into effect.

Manufactured goods produced in maquiladoras — factories that produce for the foreign market and primarily employ young women — have replaced oil as Mexico's main export. U.S. companies own 79 percent of these plants. Mexico also imports more than half its goods from the U.S., making it the least diversified economy in Latin America.

When the U.S. economy tanked in 2001, maquiladoras closed, and over 250,000 workers lost their jobs. Now, with the U.S. economy supposedly recovering, Mexico faces a new pressure — China's membership in the WTO.

Capital goes where labor is cheapest. China's low wages, huge workforce, developed infrastructure, and attractive monetary policies make it a lucrative place to set up shop.

Additionally, this year, trade quotas that favor clothing production in Mexico are scheduled to end. Many manufacturers are already threatening to relocate to Asia.

Given cheaper labor elsewhere, stagnant U.S. markets, and poor exchange rates in Mexico, workers there are being told they are too expensive. Investors are calling for greater labor flexibility.

But Mexico's workers already suffer from "flexibility." Half the country lives in poverty. The minimum wage, raised in December 2004 after public outcry, stands at a sub-survival $4 per day.

Enforcement of safety, health and environmental regulations is lax or nonexistent, especially in the maquiladoras. Most unions are company-controlled or are bureaucratic machines closely tied to the government.

The sweatshop conditions and starvation wages of maquiladoras have sparked heroic bids to organize independent unions, but it's an uphill battle. Leaders of these efforts must seek recognition from corrupt government and company-dominated labor boards, and they are routinely fired and blacklisted. NAFTA's labor side agreements are worthless and the process to review violations takes years.

In this light, the success of one independent union in the maquiladora industry is all the more impressive: SITEMEX won recognition at a factory that makes Nike products thanks to an occupation of the plant by its predominantly female workforce and a campaign to garner international support.

The Wal-Marting of Mexico. Family farmers and small businesses in Mexico are faring no better than workers, as they are forced to compete with powerful multinational corporations and U.S. agribusiness.

Wal-Mart is an example of how big U.S. companies are conquering Mexico's consumer market. The anti-union behemoth, notorious for underpricing competitors, is now among Mexico's largest employers. Despite opposition, it is setting up one of its stores within sight of the magnificent Pyramid of the Sun, built around 200 AD.

As well as driving smaller Mexican retailers out of business, the proliferation of mega-merchandisers like Wal-Mart is eliminating fruit and vegetable markets where farmers sell directly to the public. Grocery supermarkets, which made up 20 percent of the market in the 1990s, now dominate. Their demand for uniform produce on a year-round basis is forcing out small farmers who can't compete with the fertilizers, chemicals, and mass-production methods of U.S. agribusiness.

Immigration as survival. As NAFTA impoverishes Mexico, many of its people are migrating to the U.S. out of desperation.

Today, an estimated 5 million undocumented Mexicans live in the U.S. They help keep both their families and Mexico's economy afloat; in 2004 they sent an estimated $16 billion back home.

The economic importance of immigration for Mexico and its people, along with U.S. viciousness toward Mexican nationals, translates into heavy public pressure on Fox to negotiate improvements in U.S. policy. But for all their talk of free markets, U.S. politicians are loath to allow free travel by workers.

In early 2004, Republicans and Democrats floated various immigration reform proposals, most of them involving some form of guest worker plan. These programs, fashioned after the notorious bracero programs of the 1940s to 1960s, enable employers to host Mexican workers for limited amounts of time. But "guest" is a terrible misnomer. Braceros are at the mercy of employers, super-exploited and abused.

Under the old program, $50 billion of the wages owed to braceros went unpaid. Many of these earlier braceros recently protested at Fox's mansion to demand compensation.

Meanwhile, rightwing groups and the U.S. media are whipping up anti-immigrant hysteria. In Arizona, courts recently upheld an initiative that denies health and social services to undocumented workers. And backers hope to get the measure passed elsewhere.

Such scapegoating aids U.S. corporations by deflecting anger away from them and onto the victims of their greed.

Protest is alive and well. But along with misery, NAFTA has created a surge of resistance.

The pact will always be identified with the inspiring rebellion against it by indigenous peoples in Chiapas, Mexico, on New Year's Day in 1994. Since then, protests and public pressure have stymied some U.S. plans to continue increasing the exploitation of Mexico's labor and resources.

According to the Interhemispheric Resource Center, "grassroots rejection" of Plan Puebla Panama has forced Fox to put his grand vision on a slow track.

The plan involves pouring billions of dollars into construction projects and infrastructure improvements to attract more investment in the south of Mexico and in Central America. It has met with consistent and massive protest throughout the region.

Likewise, stiff opposition from labor in Mexico stopped schemes to privatize electricity and initiate labor law "reform." In February 2004, thousands march-ed against privatization in Mexico City. In August and September, workers across the country walked off their jobs to protest neoliberal free trade.

And, despite the difficulty, Mexican workers show no signs of abandoning efforts to form independent, effective unions. With adoption of CAFTA looming, more protest is definitely on the agenda for 2005.

What will help Mexican workers in this coming period is solidarity from organized labor to the north. U.S. corporations are a major source of Mexico's pain, and U.S. workers are in a unique position to take these giants on.