Open Trade, Closed Borders
The Effect of NAFTA on Immigration and Borders in Mexico
On January 1st, 1994, Mexico entered into a monumental new trade deal with the United States and Canada that drastically changed the movement of money, goods, and people across borders. The deal, known as the North American Free Trade Agreement (NAFTA), aimed to gradually reduce the majority of tariffs between countries in order to increase the volume of trade and boost each country’s economy. The countries’ leaders believed that this trade increase would lead to more development and prosperity for people in all three countries. However, while it certainly increased the exchange of goods across borders, it did not produce the promised increase in wages and development and has led to an unpredicted increase in northward migration.
With the elimination of many tariffs and agricultural subsidies, NAFTA had a particularly unsettling effect on rural farmers in Mexico. Open trade meant that these farmers were now competing with farmers and large agri-businesses in the United States that were able to sell more goods on the international market at significantly lower prices.
The deal had a particularly devastating effect on Mexican corn farmers. Native to Mexico, corn has been a staple of the country’s agriculture, economy, and culture throughout its history. “Sin maíz, no hay país” (“Without corn, there is no country”) remains a common phrase—a testament to corn’s importance in the country’s identity.
With the elimination of many tariffs and agricultural subsidies, NAFTA had a particularly unsettling effect on rural farmers in Mexico.
Prior to NAFTA’s institution, Mexico subsidized corn production specifically in order to ensure that farmers were able to grow the traditional crop and sell it at sufficient prices. Under NAFTA, the Mexican government removed these subsidies, which dropped the price of Mexican corn and made it more susceptible to US competition. When US corn flooded into the Mexican market due to its even lower prices, Mexican corn growers were no longer able to sell enough corn domestically to sustain themselves, which left many facing poverty.
A study by the Center for Economic and Policy Research estimates that the effect of NAFTA on the Mexican corn industry displaced as many as 2 million farmers. Many who were unable to continue by farming other crops were forced to sell their land. In order to make a living, they moved to nearby urban areas or to the increasingly industrialized northern states where they sought to take advantage of new jobs. Incentivized by higher wages, those unable to find work in new places or who already had ties to the United States attempted to journey north across the border in order to find work instead.
NAFTA also paved the way for more US companies to build production plants and retail stores in Mexico. While these large corporations brought some jobs and services to the country, their ability to sell foreign-made goods for cheap prices put them in direct competition with Mexican small businesses. This competition may have caused as many as 28,000 small businesses in Mexico to close, which has further contributed to both internal and cross-border migration.
While the overall effects of NAFTA are highly disputed both between and within countries, increased competition in certain industries like agriculture and manufacturing inevitably led to an increase in migration out of the country. Some estimates suggest that Mexican immigration to the United States increased as much as 79% between 1994 and 2000, which the US was not prepared to accommodate.
As NAFTA prompted an increase in migration, the journey north became more difficult and dangerous for Mexicans and Central Americans hoping to cross over into the United States because of increased border security and more restrictive immigration policies. Between 1993 and 2016, the US Border Patrol increased its budget from $362 million to $3.6 billion as it hired more border patrol agents, built physical border separations, and invested in surveillance technology. Increasing economic interdependence also led to more security cooperation between the US and Mexico, through which the US provided funding that expanded Mexico’s immigration enforcement and border security on its own southern border.
As NAFTA prompted an increase in migration, the journey north became more difficult and dangerous for Mexicans and Central Americans hoping to cross over into the United States.
The economic displacement caused by NAFTA points to the importance of creating policies that benefit rural farmers and unskilled workers instead of just economic and political elites. While free trade can be an effective method of economic growth, it is also important to protect traditional forms of generating income and provide viable work alternatives for negatively affected industries. Ensuring stable employment opportunities amidst changing trade agreements allows individuals and families to remain in their country of origin and contribute to their local economies, therefore reducing migration flows.
In the past few years, the three North American countries entered into talks aimed at re-negotiating the terms of the NAFTA agreement. The result of these talks was the United States Mexico Canada Agreement (USMCA), which aims to remedy some of each country’s major criticisms of the original deal. While not drastically different from NAFTA, the new deal includes some new provisions including environmental protections, increasing dairy trade, intellectual property guidelines and protections, and a stronger emphasis on fair labor laws. Officially instituted on July 20th, 2020, it remains to be seen whether the limited changes in the new agreement will have a significant effect on labor conditions, rural farmers, or immigration in Mexico.
