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NAFTA on the Ground

[ 36 ] January 10, 2012 |

Outstanding piece of journalism by David Bacon, showing how NAFTA has brought North Carolina and Veracruz together, connected by Smithfield Farms trying to screw both places over. Essentially, as North Carolinian outrage over the environmental consequences of giant hog farms grew and as workers sought to unionize the brutal hog disassembly lines, Smithfield used NAFTA to undercut both efforts. Smithfield dumped cheap pork on the Mexican market, undermining Veracruz’s farmers ability to make a living. It then recruited Veracruz workers to enter the U.S. without documents and take low-paying jobs in its packing plants. When those workers started unionizing, Smithfield called INS on itself and had those workers deported. Meanwhile, since local opposition in North Carolina to ever larger hog operations made the company’s continued growth difficult, it began opening gigantic and unregulated hog farms in Veracruz. When local people became sick, the hog plants of North Carolina was one of their only options if they wanted to leave the area.

This is how “free trade” works on the ground. The global 1% may benefit, but most everyone else finds their life more impoverished and more poisonous. From Bacon’s piece:

Smithfield didn’t invent the system of displacement and migration. It took advantage of US trade and immigration policies, and of economic reforms in Mexico. In both countries, however, the company was forced to bend at least slightly in the face of popular resistance. Farmers in Perote Valley have been able to stop swine shed expansion, at least for a while. Migrant Veracruzanos helped organize a union in Tar Heel. Yet these were defensive battles against a system that needs the land and labor of workers but does its best to keep them powerless.

“From the beginning NAFTA was an instrument of displacement,” says Juan Manuel Sandoval, co-founder of the Mexican Action Network Against Free Trade. “The penetration of capital led to the destruction of the traditional economy, especially in agriculture. People had no alternative but to migrate.” Sandoval notes that many US industries are dependent on this army of available labor. “Meatpacking especially depends on a constant flow of workers,” he says. “Mexico has become its labor reserve.”

Raul Delgado Wise, a professor at the University of Zacatecas, charges that “rather than a free-trade agreement, NAFTA can be described as…a mechanism for the provision of cheap labor. Since NAFTA came into force, the migrant factory has exported [millions of] Mexicans to the United States.”

About 11 percent of Mexico’s population lives in the United States, according to the Pew Hispanic Center. Their remittances, which were less than $4 billion in 1994 when NAFTA took effect, rose to $10 billion in 2002, and then 
$20 billion three years later, according to the Bank of Mexico. Even in the recession, Mexicans sent home $21.13 billion in 2010. Remittances total 3 percent of Mexico’s gross domestic product, according to Frank Holmes, investment analyst and CEO of US Global Investors. They are now Mexico’s second-largest source of national income, behind oil.

However, Mexico’s debt payments, mostly to US banks, consume the same percentage of the GDP as remittances. Those remittances, therefore, support families and provide services that were formerly the obligation of the Mexican government. This alone gives the government a vested interest in the continuing labor flow.

For Fausto Limon, the situation is stark: his family’s right to stay in Mexico, on his ranch in the Perote Valley, depends on ending the problems caused by the operation of Granjas Carroll. But he has no money for planting, and he shares the poverty created by meat and corn dumping with farmers throughout Mexico. The trade system that allows this situation to continue will inevitably produce more migrants—if not Limon, then probably his children. The fabric of sustainable rural life at his Rancho del Riego is being pulled apart.

Comments (36)

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  1. c u n d gulag says:

    Kind of ironic that a guy named “Bacon” would write an article eviscerating Smithfield, no?

    I used to drive through Tar Heel (should be called Tar Hell) on my way to and from Fayetteville to Wilmington, NC.

    You would not believe the stench!

    I makes the NJ Turnpike around Elizabeth smell like a florist shop.

  2. david mizner says:

    thanks — great stuff.

  3. Andrew says:

    B-but according to Mark Krikorian, “the problem with NAFTA was not that it promoted trade between the United States and Mexico but that neither country did anything meaningful to make sure that the excess Mexican peasantry moved to Mexico’s cities instead of ours.”

    Somehow mainstream US conservatives manage to incorporate the worst of all worlds imaginable into their various positions. Freedom of movement for goods and capital, militarized borders and detention camps for human beings.

    • c u n d gulag says:

      The biggest problem with NAFTA is that the oligarchical families who run Mexico took the money that was supposed to help industry and provide jobs in Mexico, and instead off-shored their plants and workers to even cheaper countries for greater profit margins – just like their northern Gringo neighbors.

    • Holden Pattern says:

      Somehow mainstream US conservatives manage to incorporate the worst of all worlds imaginable into their various positions. Freedom of movement for goods and capital, militarized borders and detention camps for human beings.

      This is actually the neoliberal position, and has been pretty aggressively critiqued on the basis (among others) that it encourages a race to the bottom in human misery in order to preserve and strengthen the position of incumbent capital. It’s not just conservatives who take this position, though it is conservatives who savor the punishment and pain of the human beings in question.

      • This is actually the neoliberal position

        No it’s not. Not the latter half. Neoliberals generally support immigration reform aimed at legalizing existing undocumented immigrants and providing for orderly legal immigration, at higher levels. Neoliberals are always pushing for more H1B visas, for instance.

        • And often getting attacked for being too pro-immigrant by the anti-immigration activists who actually do support militarized borders and widespread immigration crackdowns.

          There are a lot of different factions representing different opinions on different elements of immigration politics. Some of them work cooperatively, and thus produce compromise positions, and the de facto and de jure outcomes that are generated by confrontations between different factions are also not representative of anyone’s exclusive vision, but are an amalgam.

          • Holden Pattern says:

            Is there even one neoliberal who has any interest in creating a situation in which the freedom of cross-border flow of people is anything close to the freedom of cross-border flow of capital and goods?

            The international neoliberal project is built on the idea that capital SHOULD flow freely in order to arbitrage cross-border labor costs (which are often built in large part on oppression in the lower-cost country, about which we don’t care because they’re not us). The theoretical back half of the bargain — sharing of the profits among the workers of the higher-wage country — never seems to materialize.

            I’m not saying that it’s a desirable outcome to have open borders; certainly it isn’t from the perspective of the rich countries (but as we learned yesterday, universalism of concern for suffering only extends so far). But we should be clear about what’s actually happening — labor costs are being arbitraged across borders for those workers who aren’t politically powerful enough to prevent it, and a mild loosening of immigration rules in the rich countries so that there’s a slightly less vicious local labor arbitrage at the lowest levels (undocumented labor) won’t change that.

            As far as H1B Visas, they’re employment tools to use against native workers, pure and simple, as they are are controlled by the employers. That’s not really loosened immigration — that’s gastarbeiters, or braceros if you prefer.

            • mds says:

              I suspect that HP and jfL are talking slightly past each other. “Neoliberal” is not usually used in the sense of “modern American political liberal”, but in the sense of repackaging “classical liberal” for a new era.

            • Is there even one neoliberal who has any interest in creating a situation in which the freedom of cross-border flow of people is anything close to the freedom of cross-border flow of capital and goods?

              Pretty much all of them, I’d say – and that’s the problem. Human beings should be subject to much less regulation in their travels than good and capital (human beings having rights, after all), but neoliberals seem to treat them as equivalent.

              I don’t disagree with your comments about arbitrage, but they don’t really have much to do with my comment, which is about some supposed affinity neoliberals have for militarized borders.

              As far as H1B Visas, they’re employment tools to use against native workers, pure and simple, as they are are controlled by the employers. That’s not really loosened immigration

              Your conclusion doesn’t follow from your premise.
              Ask the recipient of an H1B visa whether it loosened up restrictions on his immigration.

              Just because you dislike both neoliberal immigration policy and militarized borders doesn’t make them the same thing.

              • Hob says:

                Ask the recipient of an H1B visa whether it loosened up restrictions on his immigration.

                Have you asked one? What did he or she say?

                “Permission to work here temporarily” is not “immigration”. People with H1Bs theoretically have an advantage when it comes to getting residency, because they can apply for the green card while still here on the visa, but the application process now takes so long that that’s not really practical, unless they’re able to get extensions to the length of the H1B– which is totally dependent on the employer.

                Employers like to lobby for increases in H1Bs. That’s because H1Bs are advantageous to employers; nothing to do with any desire for “immigration reform”.

                • Yup, I’ve spoken to quite a few, and based on their continued decision to work here, they are quite clearly pleased at the opportunity to work where they would otherwise not be allowed to.

                  How is this even a debatable point? “Hmmmmm, do people who pack up and move to a new country to earn more money actually think it’s a good thing that there were allowed to do what they wanted to do?”

                  “Permission to work here temporarily” is not “immigration”.

                  Semantic quibbling aside, much of the problems of our immigration system involve temporary workers – people whose intention to work here for a time and then return – whether we’re talking about Mexican farm laborers or Indian engineers.

                  Employers like to lobby for increases in H1Bs. That’s because H1Bs are advantageous to employers; nothing to do with any desire for “immigration reform”.

                  Fortunately, the question of whether or not someone who moves to a new place in order to work will or will not be subject to arrest and persecution can be answered without reference to the purity of the motives of those who oppose that repression.

              • Hob says:

                “How is this even a debatable point? ‘Hmmmmm, do people who pack up and move to a new country to earn more money actually think it’s a good thing that there were allowed to do what they wanted to do?’”

                Yes, your caricature of what I said sure is silly. But what I was responding to was this: “Ask the recipient of an H1B visa whether it loosened up restrictions on his immigration.” The normal definition of “immigration” does not include temporary work visas; H1B is specifically defined as a *non-immigrant* visa. Call that semantic quibbling if you will.

            • Malaclypse says:

              Is there even one neoliberal who has any interest in creating a situation in which the freedom of cross-border flow of people is anything close to the freedom of cross-border flow of capital and goods?

              Brad DeLong. Matt Yglesias.

              • Gisela says:

                Looking fowrard to that interview!Lots of comments here and I didn’t read them all, so sorry if this has already been suggested:My Nr. 1 question for this system is:How much initial funding will be necessary to get into this system and make it work?With paid traffic, you generally lose money before you make money. There’s a learning curve to everything and with paid traffic, that learning curve costs cold, hard cash.I know that it will differ depending on who’s using the system, but a comment and a realistic estimate would be great.Cheers,Shane

  4. Hogan says:

    Even in the recession, Mexicans sent home $21.13 billion in 2010.

    Sounds like Smithfield “Farms” could learn a little something from Grandpa Santorum’s big boss man. Pay them in scrip and that money will never leave the US.

  5. Manju says:

    This is how “free trade” works on the ground. The global 1% may benefit, but most everyone else finds their life more impoverished and more poisonous.

    Surely folks on an academic blog are aware of the massive consensus Comparative Advantage enjoys among Economists. There is so much data backing it up that even the world’s most influential left-wing economist compares folks like you to creationists.

    Paul Krugman to be sure criticizes NAFTA too (he thinks it’s only mildly good). He is not ideologically tied to the free trade position and is even open to limited protectionism. But he would never utter the words above because they are completely detached from the mountains of data upon which the reality-based community relies.

    If that doesn’t convince you to be careful with anecdotal evidence emerging from a publication that once tried to tell us that there was no Ukrainian famine, perhaps the fact that you agree with Pat Buchanan should give you pause.

    • Surely folks on an academic blog are aware of the massive consensus Comparative Advantage enjoys among Economists.

      The work of Ricardo and his descendants deals with aggregate wealth, not distribution, which was the subject of the quote.

    • jalrin says:

      Ricardian comparative advantage, by its own terms, only applies when aggregate demand is great enough that servicing it requires the full use of the long term aggregate supply capabilities of each national economy involved. When this condition is not present, as it has not been in the entire history of NAFTA, it leads to massive distributional problems such as we are seeing now and have ever since NAFTA was enacted.

      • L2P says:

        Excellent point. I think half the pundeconomists wouldn’t have a clue what you’re talking about, though. Supply creates its own demand, buddy!

      • Manju says:

        That’s quote a silver bullet into the heart of Comparative Advantage. But don’t you get concerned when something is too good to be true? I mean, how stupid do you think Paul Krugman is?

        A lot of models assume full employment. That doesn’t make them useless in the real world. It means there is a diminishing rate of return. The further away from full employment you go, the less relevant the model. And in a depressed economy, it’s likely not relevant at all.

    • Bill Murray says:

      Paul Samuelson had some harsh things to say about comparative advantage — 1. That long run gains from all forms of international trade must more than offset losses is a popular polemical untruth and 2.

      comparative advantage can only be an innuendo. For it is dead wrong about the necessary surplus of winnings over losings

      you can read why Dr. Samuelson says this at http://www.nd.edu/~druccio/Samuelson.pdf

      • Hogan says:

        Butbutbut something Paul Krugman said fifteen years ago!

        • Manju says:

          Yes, I forgot. In lefty land what you said 15 years ago doesn’t count, even if you don’t take it back.

          Thats why I used Pat Buchanan earlier instead of youknowho. If the latter burned a cross on LGM’s lawn here, 1/2 the commentators would be running out with a bag of marshmallows.

      • Manju says:

        I’m aware of Samuelson’s dissent. I’m also aware of Barro’s break from the Keynesian consensus.

        But that doesn’t mean there is no consensus.

  6. Yosemite Semite says:

    At the time NAFTA was ratified, about 7 percent of Mexican GDP and 24 percent of Mexican employment was in agriculture. At that time, about 3 percent of US employment was in agriculture, down from about 40 percent at the turn of the 20th century. In other words, Mexican agriculture was a very large share of the Mexican economy. Agricultural workers, many of them subsistence farmers, were seriously under-compensated. The changes in agricultural practices in the US after the turn of the 20th century led to opportunities elsewhere in the US economy. Of course it didn’t lead to those opportunities for the displaced agricultural workers, and it didn’t lead to those opportunities at the instant of displacement. It was, in fact, a brutal change, with injustice aplenty. (Think of the lyrics of Woody Guthrie’s “Do Re Mi”: ‘Now, the police at the port of entry say, “You’re number fourteen thousand for today.”‘ The police were officers of the LAPD, sent out by Chief Davis, on no authority, enforcing no law, just keeping “Okies” and “Arkies” from crossing the California line.) It took a long time to sort out. In another world, it need not have been so brutal. Compared with the migrations of the Thirties in the US, the changes under NAFTA have been relatively mild, although for some any change is too much. See Burfisher, Robinson and Thierfelder (PDF) in the section “Agriculture: Transition Issues and Domestic Policy Reforms.” Is Loomis longing for happy campesinos down on the milpas?

  7. [...] How US policies fueled Mexico’s great migration (via Erik Loomis). [...]

  8. [...] original article: NAFTA on the Ground : Lawyers, Guns & Money Tagged with: mobile • our-mobile • undefined • var-page  If you [...]

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