Invasion of the Invaded: NAFTA and the Rise of Illegal Immigration

By Joshua R. Keefe
2009, Vol. 1 No. 10 | pg. 1/3 |

On January 1, 1994, the day the North American Free Trade Agreement, the great neoliberal experiment that tested the economic waters of the post-cold war world went into effect, the southern Mexican state of Chiapas was under siege. They came from everywhere and nowhere, wearing ski masks and red, yellow and black bandanas (the colors of the campesinos, or subsistence farmers) and they took the world by surprise. They moved quickly, taking control of six towns, including the traditional capital of Chiapas, San Cristobal de las Casas, using their rag tag array of weapons, an AK-47 there, an old shotgun here, plenty of machetes worn from years of cutting whatever plant life was in the way of the campesinos and their livelihood. Now that same urge to destroy obstacles between the family and his livelihood was turned toward the very government that they lived under. There are women and children among them. They have no military dress, but the clothes they work and sweat in. They called themselves the “Ejército Zapatista de Liberación Nacional” (EZLN). Translated into English, they were the Zapatista Army of National Liberation. The world quickly knew them as the Zapatista’s, a name they took after the Mexican Revolution’s famed freedom fighter, Emiliano Zapata. As they marched through the streets they chanted “NAFTA is death!”1 By the time the government declared a cease fire on January 12, one hundred and forty five people had been killed as the Mexican Army clashed with insurgents.2

Why the revolt? Why did the Zapatista’s declare NAFTA, the controversial and widely publicized free trade agreement between , Mexico and the U.S, a death sentence? The night the Zapatistas took San Cristobal, they burned the financial records and land titles.3 The next morning they read their declaration of war from the balcony of the Palacio Municipal, declaring “Ya Basta!” (“enough is enough!). “We are a product of 500 years of struggle,” they declared. “[…] We have been denied the most elemental preparation so they can use us as cannon fodder and pillage the wealth of our country […] Nor are we able to freely and democratically elect our political representatives, nor is there independence from foreigners, nor is there peace or justice for ourselves or our children. But today we say ENOUGH IS ENOUGH.”4

They didn’t talk about proletariats or the evils of . They put their rebellion squarely within context Mexican political system, citing Article 39 of the Mexican constitution, which states that “the people have, at all times, the inalienable right to alter or modify their form of government.” Calling the Presidency of Carlos Salinas “illegitimate” and called on Mexicans to “restore legitamcy and the stability of the nation by overthrowing the dictator.”

Chiapas had been one of the poorest parts of Mexico for years. Inhabited by a mostly indigenous population, the region had also been flooded by refugees fleeing the in nearby Guatemala in the 1980’s. The population grew in the years leading up to the uprising by six percent, while the land continued to be practically useless for farming.5 Yet, the population preserved, in spite of a huge slump in coffee prices and other free market adjustments that made life harder.6 The EZLN formed in 1983, but it was NAFTA that drove the group public, it was NAFTA that forced the local campesinos to decide between armed insurrection and quiet death. Specifically, it was the Salinas administration’s cancellation of Article 27 of the constitution, which protected communal land holdings from sale or privatization. Article 27 was considered the centerpiece of Zapata’s 1910-1919 r. Now it was considered just another barrier to foreign investment.7 As Andrew Kopkind points out, the campesinos, already struggling to survive, could not compete with high-tech government subsidized corn from “Bob Dole’s Kansas or Tom Harkin’s Iowa.”8 So instead they declared war on the undemocratic one-party government that had remained in power for over seventy years, and had negotiated and implemented NAFTA.

This dissatisfaction with NAFTA did not only manifest itself in the ski-masked rebels in Chiapas. Although the benefits of NAFTA can be shown, as will be done later in this paper, both economically and politically (the reign of the PRI, the one party system that ruled Mexico, ended in 2000 with the election of opposition candidate Vicente Fox to the presidency) the poorest of the poor saw few gains. While a minority took arms, others fled to America, taking advantage of the new open borders that NAFTA produced. The effects of NAFTA on Mexican and US relations are vast and complex, even now, twelve years after the agreement was implemented, no consensus has been reached on whether NAFTA has improved the lives of the citizens of the U.S. and Mexico. But NAFTA has had an effect on Mexican to the U.S. While illegal migration from Mexico has been matter of much public debate starting in the early to mid-eighties (which was legislated first in the 1986 Immigration and Reform and Control Act) it was in the post NAFTA years that immigration exploded. The 2000 census showed that the U.S. had the largest population of non-native born residents in its history (a figure not that shocking given that the whole population is also the highest in the nation’s history). More startling, and more indicative of NAFTA’s influence, was the fact that the 2000 census now counted 31.3 million foreign born people living in the U.S.—compared to only 11.3 million in 1990 (a fifty-seven percent increase). Mexicans were the nationality represented most among that immigrant pool. In 1970, there were 800,000 native Mexicans living within the U.S. In 2000, there were 10 million. That same year 2000 census also found that the Hispanics were now the nation’s largest racial minority.9 While NAFTA might not have been the reason for this in immigration, it is part of a longer process of economic liberalization that encouraged Mexican workers to move to the U.S. and made it financially advantageous for U.S. companies to hire immigrant workers. In many ways NAFTA is the final step in the opening of the Mexican economy to U.S. companies that started when the neoliberal economic policies of U.S. President Ronald Reagan were used to confront the Mexican debt crisis of the early 1980’s.

In 1976 geologists found oil reserves in southern Mexico and the Bay of Campeche. The result was an economic boom that resulted in one million new jobs and an eight percent growth rate in the economy between 1978 and 1981. As Mexico became the world’s fourth largest oil producer, foreign investment flooded into the Mexican economy, increasing 500 percent between 1978 and 1980.10 Unfortunately, with such massive foreign investment also came massive foreign debt. President Lopez Portillo presided over the entirety of the economic boom (1976-1982) and was criticized by many for his reckless spending and projects, which required huge amounts of foreign loans all based on the strength of oil prices. By 1982 Mexico’s foreign debt had tripled since the oil discovery, reaching $87 billion.11 Oil prices declined sharply in 1981, and as a result “commercial banks turned their backs on Mexico.”12 Mexican government officials had predicted oil profits would generate $20 billion in 1982, when the real number turned out to be $15 billion Mexican officials were forced to announce in August of 1982 that the Mexican treasury was suspending its foreign debt payments as it had run out of foreign exchange reserves.13 The Reagan administration, fearful of the consequences of the third largest debtor country in the world no longer able to pay its debts, decided to construct a bailout package organized under the leadership of Treasury Department and Federal Reserve Board Chairman Paul Volker.14 Out of the $2 billion loan that the U.S. treasury granted Mexico, $1 billion was lent against future oil purchases, and U.S. negotiators also succeeded in setting the price of Mexican oil five dollars a barrel below market prices.15 While $9.85 billion was loaned to Mexico from international banking organizations and private banks, the U.S. loan had an implicit interest rate of thirty-eight percent.16 The deal, although saving the Mexican economy, was a victory for the U.S. in securing cheaper oil and actually increasing the amount of debt it could collect on. With the inauguration of economically disciplined President de la Madrid at the end of 1982, the U.S. now had an opportunity to use its collector status to open the closed Mexican economy to U.S. interests. As it became clear that one bailout was not going to save the Mexican economy, the U.S. government and the International Monetary Fund (IMF) continued to support the De La Madrid government on the condition that he embark on an economic recovery program based on a liberalization of the economy.17 Beginning with the Baker Plan (1986) and continuing with the Brady Plan (1990), the U.S. sought to open the previously closed and state structured Mexican economy. The De La Madrid administration followed the U.S. lead in supporting free trade, and implemented many liberal policies, including adopting a more realistic exchange policy, abolishing price controls, selling and closing many state owned enterprises, eliminated quantitative restrictions on imports in favor of a tariff based system, reducing tariffs, and scheduling the phasing out of most remaining non-tariff import barriers.18 In 1986 Mexico joined the General Agreement on Tariffs and Trade (GATT) which was another major step toward free trade. While De La Madrid was receptive to liberal and free trade economic policies advocated by the U.S. treasury and IMF, these policies did not always work in real terms. Jorge Dominguez and Rafael Fernandez de Castro note the costs of the economic restructuring: “the social impact of the austerity was draconian; during President de la Madrid’s term, real wages fell 41.5 percent.”19 De la Madrid’s term lasted from 1982 until 1988, when he was replaced by Carlos Salinas, the former’s Budget Minister and fellow free-trade reformer, in a controversial election that many believed to be rigged, since Salinas, the ruling PRI party’s candidate, won only after a computer crash that delayed vote counting for weeks.

Salinas’ ascension to the Presidency corresponded with George Bush’s inauguration to the north. As the Cold War was suddenly and rapidly ending as a result of the break up of the USSR, President Bush pursued to construct what he called a “new world order” based on free trade and . Jacqueline Mazza writes that when the two newly elected Presidents met in Washington in October of 1989, “it was reported that President Salinas had largely dismissed the idea of a free trade agreement with the United States, saying the unevenness of the two economies made the idea unrealistic.”20 In February, Salinas returned to sign a debt reduction deal based in the Brady Plan which actually reduced Mexico’s $48 billion dollar debt instead of just rolling it over and lowered debt payments in real terms. After a high profile tour through Europe to promote investment failed, Salinas realized he best way to attract foreign capital was to show potential investors that economic policies would continue to be geared toward opening markets and gaining permanent access to the U.S. market. Knowing the only way to gain that kind of investor confidence was through a permanent agreement with the U.S., Salinas met with President Bush on June 10, 1990 and proposed that the two governments begin talks to create a free trade area. Ambassador John Negroponte stated that “Salinas concluded he needed something dramatic. He wanted something to consolidate domestic economic reforms.”21

Another factor for Salinas’s change of heart is the cycle of economic downturn that has occurred at the end of every Mexican presidential term since the Peso was devalued at the end of the Echeverria administration in 1976. Not only that, but Mexico’s pro-democracy forces, no longer easily labeled and discredited as communists, were becoming louder then ever. Looking ahead to 1994, and himself having won by the Presidency by the slightest margin in the PRI’s seventy year history in an election that drew international criticism for its not so subtle subversion of the democratic process, Salinas may have seen the need to do something “big” to secure foreign investment and keep the economy afloat to guarantee victory for his handpicked successor in the next election to keep the PRI dynasty in power. Salinas’s personal ambition may have been a factor as well: it was widely reported that Salinas wanted to use his new reputation as an economic reformer to become the head of the new World Trade Organization22. Either way, Salinas had, in the words of Jorge Castaneda, “bet the store on NAFTA.”

It was the keystone of [the Salinas] administration, the achievement or failure that would determine the fate of his government, and his own. If approved on time by the U.S. Congress, it would allow the Mexican economy to grow again, in time for the 1994 Presidential , which then the PRI could win cleanly; if rejected on Capitol Hill, disaster would follow: capital flight, a devaluation of the currency, disenchantment with the free-market reforms, possible institutional breakdown.23

Although Congress granted Bush fast track negotiating authority (allowing Bush to bring the final NAFTA agreement to the Congress for a simple “yes” or “no” vote) by a vote of 231 to 192 in the house and 59 to 36 in the Senate, the debate over NAFTA heated on many fronts. Mexico’s democratic institutions or lack thereof, was an area of much debate. “We are for the first time being asked to consider a free-trade agreement with a country that is not free,” declared fast-track opponent Sen. Moynihan (D-NY).24 The 1991 Mexican mid-term elections offered a test of Mexican democracy, and the widespread fraud in two of the governor’s elections drew criticism from many U.S. media outlets, which watched Mexico with greater interest due to the NAFTA debate. Salinas, operating in damage control mode for the benefit of NAFTA, forced the resignation of the PRI governor’s elect, but replaced one with another PRI member and the other with a member of the opposition PAN party, but not the one who had lost25 (Vicente Fox, who would end the PRI’s nearly century long control of the Presidency in 2000).

As would be expected with any trade agreement as large in scope and influence as NAFTA, many different interests had stakes in how the agreement was made and implemented. A major source of pressure on the NAFTA negotiations came from traditional pillars of the left: labor and environmental groups. These two groups made up the base of the Democratic Party that saw its candidate elected president in 1992. With the election of Bill Clinton, who declared his support of NAFTA contingent on environmental and labor safeguards during his campaign, these issues came to the forefront of the NAFTA debate. President Clinton followed up on his campaign promise by implementing of the North American Agreements on Environmental and Labor Negotiation (NAALC and NAAEC). However, many commentators have noted that these agreements have very little potential for enforcement. Jorge Dominguez and Rafael Fernandez de Castro observe that “the agreements have some ‘teeth’ but not very sharp or effective ones.”

“There are provisions to impose trade penalties for consistent violations of each of the three nations’ own standards. But the procedures for imposing penalties are so long and cumbersome that it is almost impossible to impose sanctions under either agreement.”26

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