Mexico's economic woes and NAFTA

South of the border
The impact of Mexico's economic woes
- Jeff Faux
Thursday, May 18, 2006

In his speech Monday night, President Bush once again ignored the 800-pound gorilla sitting in the center of the immigration debate -- Mexico, the source of more than three-quarters of illegal immigrants in America.

Like the rest of Washington, Bush talks as if the problem of illegal immigration can be solved within the borders of this country. More border guards might make crossing the frontier more difficult, and amnesty and guest-worker programs might redefine the meaning of "legal," but they will not stop -- and may well accelerate -- the growing tide of people driven north by poverty and the lack of job opportunities at home.

Some 40 percent of the more than 100 million people still living in Mexico say they would come to the United States if they had the opportunity, which can be bought for the roughly $2,500 or so it costs for a "coyote" to smuggle them across the border. Last year, at least 400 died in the attempt.

This was not supposed to happen. Thirteen years ago, when illegal immigration from Mexico across a less-protected border was half of what it is today, we were assured that the North American Free Trade Agreement would transform Mexico into a prosperous middle-class society. "There will be less illegal immigration," promised President Bill Clinton, "because more Mexicans will be able to support their children by staying home." Mexican President Carlos Salinas told Americans it was a choice between getting Mexican tomatoes or tomato pickers.

But NAFTA did not deliver. Mexico has grown too slowly to create enough jobs for its people, and the benefits of trade have largely gone to the wealthy, making it one of the most unequal societies in Latin America. Moreover, the agreement flooded Mexico with highly subsidized U.S. and Canadian grain, driving between 1 million and 2 million Mexican farmers off the land and adding to the supply of desperate Mexicans looking for work.

NAFTA stands in vivid contrast to the experience of the economic integration of Western Europe, which actually provided for free migration among the participating nations. Originally there was great fear that Germany, France and the other rich economies would be flooded with workers from Spain, Ireland, Portugal and Greece. To avoid this, the European community provided funds for economic development programs, which stimulated job growth in the poorer nations and insisted on domestic reforms that assured that the economic growth would be broadly shared. The result was that the people of the poorer nations stayed home and prospered.

It is time for the leaders on this continent to acknowledge that NAFTA has not fulfilled its promises and go back to the drawing board. We need a new deal among the United States, Canada and Mexico. It should include a transfer of funds to Mexico for infrastructure, education and other public investments aimed at creating jobs and raising wages there. In exchange, Mexican leaders would have to agree on enforceable protections for human rights, free collective bargaining, minimum wages and other policies to promote the equitable sharing of wealth.

Such a new deal with Mexico would not be easy. But it would be far better to address the source of the problem directly than continue with the illusion that it can be solved simply by new immigration laws and ever-taller fences. So long as the Mexican economy cannot provide its people with jobs, they will keep coming.

Jeff Faux was founding president of the Economic Policy Institute in Washington, D.C. He is now a distinguished fellow for the institute.

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