Trade deals worsen immigration pressures [Commentary]

Poverty and lack of opportunity drive migration; failed policies like NAFTA make it worse

October 03, 2014|By Robert Blecker

The root cause of undocumented immigration, whether from Mexico or Central America, is the poverty and lack of economic opportunity that have afflicted those nations as a result of failed economic policies — including their trade agreements with the United States.

Those thousands of migrants — including unaccompanied minors — arriving at our border are not criminals trying to break the law. They are a warning sign that the collateral damage of so-called "free trade" agreements cannot always be found in closed factories and shuttered Main Street businesses in the United States.

The Central America Free Trade Agreement (CAFTA) was sold to American voters and Congress 10 years ago as a way to reduce or even eliminate immigration pressures from Central America by creating jobs and raising wages. Similar promises were made for the North American Free Trade Agreement (NAFTA) in the years prior to its creation in 1994.

In fact, as seen with the flow of undocumented Mexican workers in the decades since NAFTA and now again with the economic situation created in Central America, the reality has been just the opposite. These trade agreements failed to achieve the promised increases in employment and wages and actually caused so much economic disruption and hardship in those countries that pressures for workers to emigrate actually increased instead of decreasing.

Soon, Congress is going to be asked to approve a trade bill that, while still being negotiated with the actual text and proposals being kept secret, appears to be little more than an expanded version of NAFTA and CAFTA.

The Trans-Pacific Partnership (TPP) is a massive proposed trade deal that would encompass 12 countries: the United States, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. If done right, a trade bill this large could have huge benefits for American workers and the global economy. But if not, the impact on our economy and the flow of undocumented workers could be even more pronounced.

The TPP could divert significant amounts of trade and jobs away from Mexico and Central America. While NAFTA and CAFTA did at first move many manufacturing jobs across the United States southern border, the job gains in Mexico and Central America were offset by other trade-induced job losses within their economies. In the Mexican case, manufacturing employment grew by about 1 million in the late 1990s but then fell substantially after 2000 as more and more jobs moved to China or other Asian countries. As a result, the net increase in manufacturing jobs from 1993 to 2013 was only about 400,000 — less than half of the annual growth in the Mexican labor force and far less than the post-NAFTA drop in agricultural employment of about 1 million (as cheap imports of U.S. corn helped to displace poor peasant farmers).

Now these economies stand to lose even more if countries like Vietnam and Malaysia get similar tariff preferences to what the members of NAFTA and CAFTA currently enjoy. This is especially true considering that many of the manufacturing jobs that were created are simply the final assembly of parts that are imported from Asia. If companies can enjoy the same, or better, benefits from assembling products in other Asian countries, there is no need to ship the components as far away as Mexico or Central America.

One might think that it makes little difference to American workers if goods are now imported from Malaysia or Vietnam, but there are two reasons why it does matter. First, goods imported from Mexico and Central America are more likely to embody some U.S. content due to CAFTA's rules of origin as well as geographic proximity. Second, if jobs are lost in Mexico or Central America, those workers and their families or children are much more likely to migrate to the United States.

Trade agreements like NAFTA and CAFTA, far from lessening migration pressures, have only increased them, and more trade agreements like TPP will only make matters worse.

Robert Blecker is a professor at American University in Washington, D.C. specializing in international trade and economics. His email is blecker@american.edu.


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