US Imperialism - "Free" Trade

The last post dealt with how the United States used its military to influence policies that benefitted its own political and economic interests. This post will look at how we used "Free" Trade to benefit US shareholders at the expense of our poorer partner countries and how the deleterious effects of the agreement were almost immediate, long lasting and devastating.

NAFTA – 1994

The North America Free Trade Agreement between Mexico, the United States and Canada was passed in 1994. It promised to reduce immigration from Mexico to the United States because wages would increase as tariffs between the countries would be reduced or eliminated.

For Mexico to be a party to the trade agreement they had to change part of their Constitution. After the Mexican Revolution, plots of land were given to farmers. The land could not be confiscated or sold to pay off debt. Mexico was made to change that provision. Going forward land would be able to be bought and sold, parceled together in large plots and be made available to purchase by large corporations.

NAFTA cut tariffs on Mexican corn, but the US maintained their subsidies on US grown corn which led to Mexican corn prices falling by 66%. This devastated small farmers. From 1993-2005, 1.1 million small farmers went out of business and 1.4 million jobs that depended on the small farm sector also went out of business. That’s 2.5 million jobs lost in one sector. Farm wages are a third of what they were pre-NAFTA. To add insult to injury, the cost of food increased. In the first 10 years of NAFTA the price of tortillas rose 279%. According the World Bank the number of Mexicans who could not afford a basic diet grew by 50% in the first 4 years of NAFTA.

Small farms folded and people moved to urban areas to fight for low paying jobs in manufacturing. Those jobs were short lived because those manufacturing jobs that paid around $5/hour moved to China after it entered the WTO (World Trade Agreement) in 2001 where hourly wages were $1/hour.

In the first 7 years of NAFTA migration to the United States increased 108%. In 1995 there were 2.9 million undocumented migrants in the United States. At the peak in 2007 there were 6.9 million undocumented people. It leveled off after the Great Recession.

CAFTA – 2006

Despite seeing how negatively NAFTA affected Mexico and ignoring the warnings and protestations of Central American advocacy groups and the prediction by Oxfam that 1.5 million livelihoods related to rice production would be lost, the US pushed forward to create another trade agreement. CAFTA was passed in Congress in the Spring 2006 by one vote.

Recently the CAFTA-DR, a free trade agreement between the US, Dominican Republic and 6 central American countries has worked to significantly deteriorate working conditions and wage stability for workers in central America.

Ben Beachy, Public Citizen’s Global Trade Watch said, “Under CAFTA, family farmers in El Salvador, Guatemala and Honduras have not fared well, the economies have become dependent on short-lived apparel assembly jobs–many of which have vanished, and economic growth has actually slowed.”

Agricultural imports to El Salvador, Guatemala and Honduras has increased 78% since CAFTA was enacted. Is it a coincidence that those three countries that are experiencing economic upheaval and instability are also suffering through great violence and migration?

Summation of Actions and Ensuing Health Inequities

The United States has a long history of intervening in the affairs of other countries. The official message is that we are the world police, looking to restore order to these destitute places and preventing corrupt governments from swindling their people. In reality we are looking out for our own best interest. Maybe our best interest is in controlling the Panama Canal, taking care of obstacles for large corporations like United Fruit Company which benefits a few very powerful Americans. We fight for policies that lower the price of the consumer goods we purchase, that give our exports the best rates. We also cause our manufacturing jobs to migrate south in a race to the bottom – who is willing to work for the least amount of money and give the least amount of resistance? As manufacturing costs go down, profits for shareholders increases.

While we do have a great many benefits from NAFTA and CAFTA, we inflict great harm on Mexico and Central America and we also hurt ourselves by allowing manufacturing jobs to go off-shore.

Because of our many interventions and free trade agreements people are coming to our southern border who are fleeing violence and destitution that, while not 100% the fault of the US, we bear a great responsibility for the instability of our neighbors to the south.

For over one hundred years the US has been actively meddling in the politics of Latin American countries after they gained their independence from their colonizers. Instead of assisting the people in rebuilding their countries, we assist in the destabilization of their countries through our fear of the spread of communism, through our belief in Manifest Destiny, through our belief that we are better.