Goshen News, Goshen, IN

Business

January 2, 2014

NAFTA hasn't closed Mexico's wage gap

(Continued)

Before NAFTA, Mexico was a closed, state-dominated economy reeling from debt and the underlying problems of Mexican farms — low productivity on small plots. That had set up a perfect storm of mass unemployment.

The trade accord, globalization and foreign investment did help create jobs, albeit low-paid ones.

At supermarkets, shoppers are now familiar with everything from cranberries to chai and lemons (as opposed to the Mexican lime) that few had tasted before the treaty tore down trade barriers and tariffs between Mexico, Canada and the United States.

Consumer goods and clothing that were trendy among Mexico’s wealthy are now available to everyone, with more products and choice, especially among electronics appliances and cars.

Coutino recalls that “before, in Mexico, it was a question of social status to have a pair of imported sneakers, they were very expensive ... now the majority of Mexicans can have these things that were once considered luxuries.”

Mexicans remain ambivalent: A recent Universal newspaper/Buendia-Laredo poll showed that while about half would approve the trade pact if it was proposed again today, about 34 percent would reject it. The rest had no opinion. The margin of error was 3.5 percent.

There is no turning back. The three North American countries are pushing to become even more economically integrated. With Mexico’s newly passed energy reform allowing private investment in the county’s oil sector, they aim to make the continent energy independent as well.

NAFTA is almost forgotten in the latest controversial free-trade effort, the Trans-Pacific Partnership, a negotiation among 12 countries, including NAFTA’s three, to open trade between Asia and the Americas.

Opposition to the TPP is reminiscent of the dire predictions when NAFTA was being negotiated in the early 1990s.

At the time, NAFTA opponents predicted millions of U.S. jobs would move south, and labor and farm groups forecast a mass exodus from the Mexican countryside. But as a 2010 Congressional Research Service report said, “Most studies after NAFTA have found that the effects on the Mexican economy tended to be modest at most.”

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