Free trade agreements such as the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA) exist with the purpose of removing trade barriers between nations. A consequence, however, is the harmful way in which they tend to exacerbate poverty and displacement in Latin America. As many U.S. corporations see record profits, the environment, indigenous peoples, workers American and Latin American alike, and the rural poor suffer.
Much of the reason behind this has to do with subsidies and lack of regulation. For example, farm subsidies and lifted tariffs under NAFTA have resulted in the movement of large quantities of corn and other grains from the U.S. to Mexico, known as “dumping1”. While big agribusiness in the U.S. gains profits and a large consumer base, the result for millions of Mexicans has been catastrophic. In anticipation of the 20-year anniversary of NAFTA, the New York Times reported in November 2013 that since NAFTA’s inception in 1994:
Some two million [small farmers have been forced to leave their farms since NAFTA. At the same time, consumer food prices rose, notably the cost of the omnipresent tortilla. As a result, 20 million Mexicans live in “food poverty”. Twenty-five percent of the population does not have access to basic food and one-fifth of Mexican children suffer from malnutrition.2
Deregulation also hurts workers in the U.S. and Latin America. Deregulation policies built into NAFTA, CAFTA, and other trade agreements have allowed U.S. manufacturers to strong-arm employees in the U.S. to accept low wages and little or no benefits under threat of their jobs being moved overseas. Perhaps the most notable example of this is Mexico’s maquiladora3 program, under which some 3,000 factories operate in the Free Trade Zone (FTZ). Maquiladoras, essentially sweatshops, pay below-poverty wages for long hours of demanding physical work, offer no benefits or environmental protections, and provide unsafe working conditions unconscionable to most Americans – the same Americans who buy maquiladora products. Similar operations exist in Nicaragua and other Latin American countries with lax labor law enforcement.
Witness For Peace opposes these effects of free trade agreements and works to bring awareness to the public on the issues. Among other activities, we send delegations of U.S. citizens to the front-lines of U.S. economic policy in Mexico and Nicaragua while supporters lobby Congress to block harmful new free trade agreements and renegotiate existing ones.
1 Dumping, in economics, refers to exporting product at a price much lower the foreign market than the price in the domestic market. This often threatens the viability manufacturers and producers in the importing nation. In Latin America, for example, most locals cannot afford domestically grown corn as the result of U.S. dumping, which makes U.S.-produced corn much cheaper for consumers.
2 Carlsen, Laura. “What We Learned from NAFTA.” The New York Times. 24 Nov 2013.
3 Maquiladoras operate in the Free Trade Zone, just south of the U.S.-Mexico border. Usually owned by U.S. corporations or their subsidiaries, maquiladoras import tariff-free, duty-free raw materials from the U.S. and then assemble, process or manufacture goods that are then put to market.