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January 2003, Volume 10, Number 1

Mexico: Nafta and Migration

The North American Free Trade Agreement has been in effect eight years, but "Nafta at 10" conferences are being held to reflect the Fall 2002 date that North American leaders initialed the draft agreement, which went into effect January 1, 1994. The major message of this first round of discussions is that Nafta, which aimed to free up trade and investment between Canada, Mexico and the US, achieved its trade and investment goals, but did not have many of the hoped-for side effects, such as reducing poverty and inequality in Mexico or stemming Mexico-US migration.

Mexico-US trade increased from $88 billion in 1994 to $350 billion in 2001, but Mexico-US migration- legal and illegal- increased from 300,000 to 500,000 a year. Regional and other inequalities have increased within Mexico- the north and those involved with the export sector have done far better than the south and those involved with the domestic market. On the other hand, Mexico recovered far faster after the 1995 peso devaluation than from the 1982 devaluation.

Mexico-US migration increased in the 1990s, but it is hard to separate the influence of changing demand-pull, supply-push, and network factors, and to assign the appropriate share of each to Nafta. For example, the US unemployment rate, which peaked at just under eight percent in 1992, fell steadily to under four percent in 1999-2000, creating a demand-pull for Mexican workers in the US. The story in Mexico is more complex-uneven job creation (most Nafta-inspired jobs were created in the northern border states), boomlets in areas such as Guadalajara that did not extend to the wider regional economy, a traditional source of US migrants, and Mexican wages that fell in real terms between 1994 and 2000.

Many Mexican leaders say the solution to the malaise in Mexico is to broaden and deepen Nafta so that the trade agreement does not become a scapegoat for unfulfilled expectations. One way to head off calls to re-negotiate Nafta, some argue, is to forge a new migration agreement. Former Mexican president Carlos Salinas de Gortari said: "A migration agreement is indispensable. . . . It is a must for the future [because of Mexican workers' contributions to the] impressive US economic expansion of the last decade."

The most recommended migration change aims to stabilize the stock of Mexican-born US residents, about nine million, and legalize (but not increase) the current flow, about 300,000 to 500,000 a year. One proposal to accomplish this stabilization-legalization goal would have the US grant a combination of more immigrant and guest worker visas to accommodate the current inflow, and allow Mexicans working in the United States to earn immigrant status in the US. For its part, Mexico would police its border to prevent additional illegal emigration.

Mexico lacks formal sector jobs. According to the OECD's Labor Force Statistics Yearbook, Mexico had a labor force of 39 million in 2001, and employment of 38 million, including 6.7 million in agriculture, 9.9 million in industry, and 21.4 million in services. To put Mexican farm employment in perspective, the US with 3.3 million persons employed on farms and Canada with 0.4 million together had only about half as many persons employed in agriculture as Mexico.

Mexico's labor force increased by 5.4 million between 1994 and 2001, from 33.6 million to 39 million. The number of women in the Mexican work force rose by 2.7 million, from 10.6 to 13.3 million, and the number of men rose by 2.5 million, from 23 to 25.5 million. The US labor force was 131 million in 1994, and 142 million in 2001; Canada's labor force was 14.6 million in 1994, and 16.2 million in 2001.

Of Mexico's 31 states, and the leading states of origin for US-bound migrants remain those in the west-central region of the country, such as Guanajuato, Jalisco, Michoacan, Nayarit and Zacatecas. Many of these traditional emigration states have programs to match migrant remittances to promote economic development. For example, Guanajuato matches money remitted by migrant hometown associations that is used to improve infrastructure, and the $9 million sent by hometown associations in 2002 was matched with federal and state funds to provide streets, electricity, water, roads and churches.

The December return of migrants (paisanos) has become a Mexican institution. In 1990, the government launched the Paisano program to welcome migrants home, and beginning in 2000, Mexican President Fox has welcomed returning migrants at the US border, hailing them as heroes for the remittances they bring back to Mexico. Mexican police are sometimes assigned to escort returning migrants from the border to highways that lead to the Mexican interior in an effort to prevent thieves and panhandlers from harassing the returnees. The Salt Lake Tribune noted that the yearly December return of migrants loaded with gifts in makes it very hard to persuade youth to stay at home.

President Bush directed transportation officials to begin processing permit applications to carry freight into the US from 130 Mexico-based trucking firms in December 2002, signaling an end to a 1982 regulation that restricted Mexican trucks to 20 miles inside the U.S. border. Opponents launched a last-ditch effort to block Mexican trucks, arguing that they pollute more than US trucks and should be banned on environmental grounds.

Tim Sullivan, "Lure of the North," Salt Lake Tribune, December 25, 2002. Mary Jordan, "Former Mexican Leader Urges U.S. to Let More Workers Enter," Washington Post, December 9, 2002. Julie Watson, "Mexican Migrants Escorted Home by Police," Associated Press, November 29, 2002.