NAFTA failed Mexico: Carnegie think tank

On Dec. 9 the Carnegie Endowment for International Peace, an influential Washington, DC-based think tank, released “Rethinking Trade Policy for Development: Lessons From Mexico Under NAFTA,” a study on the effects of the North American Free Trade Agreement and related neoliberal economic policies on Mexico’s economy. The study found that in the period since the agreement went into effect in 1994, Mexico’s annual per capital growth rate has been slow (1.6% in 1992-2007, compared to 3.5% in 1960-1979) and job growth has been weak, with net losses in agriculture and manufacturing (except for the export-oriented maquiladora sector).

Contrary to the projections of neoliberal economists, NAFTA did not increase investment—foreign investment increases were more than offset by decreases in domestic investment. And less restricted trade with the US has made Mexico “excessively dependent on the United States as an export market, with more than 85% of Mexican exports going to the United States, up from 70% in 1990… For this reason, the current recession is hitting Mexico harder than any other country in Latin America.”

The study’s findings are not new—a joint statement by Canadian, Mexican and US labor federations made many of the same points in August. What is new is the fact that a prestigious US think tank discussed these issues, specifically challenging what the report notes is a widespread assumption in the US “that Mexico was the undeniable winner from NAFTA.” (Carnegie Endowment, Dec. 7; New York Times blog, Dec. 10)

From Weekly News Update on the Americas, Dec. 15

See our last post on Mexico.

  1. Tomas Friedman: deeply wrong on Mexico
    Tomas Friedman weighs in on Mexico’s narco crisis May 1 in his New York Times column—crowing in Utopian terms about NAFTA as if he never got the word about findings such as those above. Friedman writes, characteristically boiling his analysis down to cute catch-phrases:

    Three groups are now wrestling to shape Mexico’s future. I’d call them “the Narcos,” “the No’s” and “the Naftas.” Root for the Naftas.

    The “Narcos” is obvious, and so is the “Naftas”—Mexico’s pro-NAFTA technocratic elite. By the “Nos,” he means what in Mexican political parlance are called the dinosaurios—the old party elite who oppose free-market reform. Again characteristically, Friedman ignores the massive resistance to the NAFTA-fication of Mexico from the working class. Worse, he can’t see that the rise of the Narcos is a direct result of NAFTA. By disenfranchising Mexico’s peasantry from their traditional lands and Mexico’s workers of their state-protected economic niche, NAFTA precipitated the hypertrophy of the narco economy, which inevitably filled the vacuum. This also explains the massive surge in Mexican immigration to the US over the past decade, as we have argued.

    NAFTA-Utopianism of the kind proffered by Friedman was merely wrong 10 years ago. Today, it is embarrassingly myopic.