Race to the Bottom: Maquiladoras, Free Trade, Can of Worms

U.S.-Mexican Relations Lead the Way in the Hemispheric Race to the Bottom: Maquiladoras, Free Trade, and a Can of Worms

In a section of President Obama’s address to Congress that received relatively little attention, he observed that “it’s time to clear the way for a series of trade agreements that would make it easier for American companies to sell their products in Panama, Colombia, and South Korea… If Americans can buy Kias and Hyundais, I want to see folks in South Korea driving Fords and Chevys and Chryslers.” Obama followed his speech with a press conference, which asserted that the free trade agreements (FTAs) should be passed by the end of the year. He did not mention the disturbing thought that FTAs traditionally have prompted U.S. companies to transfer their manufacturing processes to countries with lower wages, rather than noticeably creating jobs in this country. While proponents of free trade often cite the creation of U.S. jobs in export-oriented industries, the U.S. is at least as likely to import products from overseas countries where manufacturing and labor costs tend to be cheaper.

In fact, these imbalances typically have created a large trade deficit under the North American Free Trade Agreement (NAFTA) among the three signatories: the U.S., Mexico, and Canada. NAFTA already has greatly increased the rate at which U.S. corporations have used both factory shutdowns and the threat of closure of additional facilities as anti-union strategies. This process also has prompted the outsourcing of U.S. jobs to Mexico as manufactured goods flowed from south to north. Overall, the Economic Policy Institute has estimated that NAFTA has cost the U.S. some 879,280 production jobs, “contributed to rising income inequality, suppressed real wages for production workers… and reduced fringe benefits,” which, all-told, has proved woefully detrimental to U.S. workers.

This analysis was prepared by COHA Research Associate Courtney Frantz.

To read the full article, click here.

U.S.-Cuba Policy Staggers from the Inept to the Pedestrian: President Obama’s Woeful Performance

Matters could not be more misspent when it comes to U.S.-Latin American relations than they have been when U.S.-Mexico policy has been in focus. This seems to be particularly the case as of now when it was revealed that Texas hunting lands owned by the Perry family included a marker using the “n” word, which should be enough to abruptly settle the presidential campaign of Governor Perry, if good conscience is any guide. After all, a similar act of vulgarity was enough to end the promising campaign of Governor of Mississippi Haley Barbour.

Further hurting matters, Governor Perry’s insignificant knowledge of Mexican taboos as part of his gringo kit of the Tex-Mex lore fell under the weight of his flimsy insights into his neighbor and completely gave way when he advocated that U.S. troops may very well be needed to be dispatched in order to aid Mexico’s war against drugs. Anyone even remotely familiar with that conflict will instantly realize how adamant Mexicans are that nothing be done on the U.S. side of the border to compromise the inviolability of Mexican sovereignty, as judged by the inhabitants of the country.

To read the full statement, click here.

Monday, October 3, 2011 | Research Memorandum 11.3
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The Council on Hemispheric Affairs, founded in 1975, is an independent, non-profit, non-partisan, tax-exempt research and information organization.

ENDS

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