On February 19th, the presidents of Canada, the United States and Mexico will meet in Toluca, Mexico (Peña Nieto’s heartland) to look back on the twenty years of the North American Free Trade Agreement (NAFTA, or TLCAN in its Spanish acronym). At the time, Mexican President Salinas had promised his citizens that with this agreement Mexico would finally take its place in the “First World.”
The Mexican Treasury (Secretaria de Hacienda) has published an overview of NAFTA, highlighting its positive aspects. According to its information, every minute, $2 million USD is traded between the three member countries of the agreement. But how much of this comprises Mexican products made in Mexico? Enrique Galvan Ochoa, a prominent Mexican commentarist, recently provided an overview on this issue on morning news radio MVS in Mexico. To start with, Galvan Ochoa highlights that Mexico still continues to export petroleum without processing it, and points out that in 20 years of NAFTA, Mexico has not built one refinery on its soil. Any refinery that is built in coming years will likely be done so with ownership by a foreign company, given the recent constitutional reform regarding PEMEX. Petroleum aside, the figures show that Mexico exports $328 billion USD worth of products each year. However it is important to note that of this total, only a third of these products are produced in Mexico, wheareas the rest of the earnings come from products that have been re-assembled using mostly foreign parts, and with some Mexican value-added. This sector, which is mostly made up of the ‘maquiladora’ style factories that populate the Mexico-US border, is the one that has grown the most from the NAFTA agreement. According to the argument of Galvan-Ochoa, in order to remain as a developing country exporting crude oil and assembled factory products it was not necessary for Mexico to enter into NAFTA.
When Mexico signed the NAFTA agreement, it meant opening its borders to imports from Canada and the US. Mexico stands in 3rd place worldwide as an export destination for the US, and 5th for Canada. One of the interesting aspects regards food. Mexico now imports most of its food and sends its best quality corn to the United States, receiving sub-quality corn in return. 20 years ago you would have noticed that all the tacos in Mexico were made with white corn which is high in nutrients. These days you will find Mexicans often eating yellow corn tacos which are much less nutritious. The diets of Mexicans have changed radically with the advent of NAFTA, with processed products, red meat and soft drinks becoming a daily part of the Mexican diet, to the point where Mexico has now overtaken the US as the most obese country in the world. UN Special Rapporteur on the Right to Food, Olivier De Schutter, on a recent visit to Mexico in 2012, described Mexico as having been subjected to a “Coca-cola-nization” in the last 20 years.
For other interesting commentaries on NAFTA, Jeff Faux from the Economic Policy Institute has published this critical article in the Huffington Post relating NAFTA to the escalation of Mexico’s drug war.