NAFTA and Maquiladoras

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The North American Free Trade Agreement (NAFTA), which became effective on January 1, 1994, is a comprehensive, rules-based agreement designed to promote “free-trade” among the United States, Mexico and Canada (NAFTA Forum,1998). Although the agreement was made between three countries, it was largely the inclusion of Mexico around which most of the oppositional debate was centered (Mayer, 1998).  Canada is a modern, developed nation very similar in culture and economy to the United States.  Mexico, however, is considered a developing nation with an economy much weaker than the United States.  Still, a prior trade agreement did exist between the United States and Mexico.  Therefore, in order to properly evaluate NAFTA, we must also take into account that prior trade agreement, the Border Industrialization Program (BIP) of 1965.  The increase in maquiladoras on the U.S.-Mexico border, and its inherent problems, is a direct result of the BIP (Blank & Haar, 1998).  The overall impact of the BIP on the U.S.-Mexico border and the maquiladora industry has been manifold, resulting in increases in maquiladoras, border population, environmental pollution and human social and health concerns.  It is also important to recognize that prior to ratification of NAFTA, the Clinton Administration demanded, under pressure by environmental and labor groups, the attachment of two side agreements concerning labor and the environment.  Although still too early to tell, NAFTA appears to be amending some of the inherent problems which exist along the U.S.-Mexico border.

Opposition to NAFTA must be placed in some historical context.  During the 1980’s many American manufacturing jobs were being exported to Mexican maquiladoras.  American labor groups originally protested only on the grounds of job loss, but eventually shifted their focus on the plight of the Mexican worker and the environmental degradation around maquiladora’s (Mayer, 1998).  In 1989, the AFL-CIO  produced a film about toxic dumping at a Mexican maquiladora, and even worked with ABC’s “20/20” program and NBC’s “Dateline” on stories about toxic hazards in Mexican maquiladoras.  In 1989, the AFL-CIO joined environmental and citizen rights groups such as The Border Ecology Project and the Quaker American Friends Service Committee in forming the Coalition for Justice in the Maquiladoras.  Environmental and human rights abuses were a means for the American public to focus on the loss of American jobs.  As one AFL-CIO official stated, regarding the American public, “Nobody cared about a worker losing his job in Illinois.  They were much more sensitive to toxic dumping in Mexico” (Mayer, 1998).  Environmental opponents saw the Maquiladora Program as being extremely harmful to the environment, and publicized instances of American companies attempting to take advantage of Mexico’s poor environmental record.  Once NAFTA became an important political objective, labor and environmental groups found an opportunity to promote their own particular objectives.  As a result, NAFTA would not be passed unless the labor and environmental opponents were appeased, and it is from there that the two side agreements were born.

NAFTA should not be evaluated separately from previous trade agreements between the United States and Mexico.  The Border Industrialization Program, instituted by Mexico in 1965, is far more responsible for the expansion of maquiladoras along the border than NAFTA (Blank & Haar, 1998).  An offshoot of the BIP was the Maquiladora Program, which attracted U.S. companies to assembly operations along the northern Mexican border by allowing duty-free imports of raw materials and reexportation of finished products back into the U.S., with taxes applied only on the value added.  The primary attraction for American companies was to utilize inexpensive Mexican labor.  Maquiladoras grew relatively slowly ( there were only 12 in 1966 ) until an economic crisis in Mexico in 1982 caused a devaluation in the peso.  From that point, maquiladoras grew to over 1500 by 1989, employing nearly 400,000 workers.  In 1993, one year before NAFTA came into effect, there were 1,850 maquiladoras on the Mexican border. On January 1, 1994, the day NAFTA went into effect, employment in maquiladora’s at the U.S.-Mexican border was nearly 550,000 (Public Citizen,1999).  Evaluating the increase in maquiladora’s since their inception, we can see a relatively steady growth  both prior and subsequent to the implementation of  NAFTA.
The border regions where the vast majority of maquiladoras exist today lack an adequate infrastructure to offer clean water or handle the waste created by the increase of population and industry.  The result has caused a detrimental impact on human health, and funding for the development of water and waste treatment facilities has only recently begun to address some of the problems. Over 70 percent of maquiladora’s are located in border areas, half of which reside in the two largest Mexican border cities of Tijuana and Ciudad Juarez (Border Issues, 1997). The city of Tijuana had a population of 430,000 in 1980.  Today, it exceeds one million.  Similarly, Tijuana’s “sister city” of San Diego, California, has increased its population from 200,000 in 1940, to 1.1 million in 1990.  Ciudad Juarez has increased from 500,000 in 1980 to over 1 million in 1990.  The “sister city” of El Paso, just over the Rio Grande, increased it’s population five-fold over the same time period.  This increase in population is a result of many factors; devaluation of the Mexican peso, tourism, as well as the increase in maquiladoras (Border Health, 1997). By April of 1998, maquila employment had increased to over 980,000.  This rapid population growth has significantly outpaced the development of infrastructure.  Ciudad Juarez has no wastewater treatment plant, and dumps 22 million gallons of raw sewage into the Rio Grande each day (Davidson,1998).  An estimated 40 percent of residents on the Mexican side of the border lack water, sewers, or both.  People who live in the make-shift communities on the hillside of Nogales, Sonora, Mexico, receive water from trucks which they store in contaminated barrels they’ve retrieved from dumps or nearby factories ( as for maquiladoras, most have private wells and do not feel a need to contribute to the cost of updating water systems (Davidson, 1998)).  Again, the wastewater system is either dilapidated or non-existant.  Effluent runs down the hillsides into Nogales, Arizona, where it eventually inundates the binational treatment plant.  As a result, morbidity rates of Hepatitis A and tuberculosis at the border are far greater than the interior rates of either country (Border Issues, 1997).  A lack of infrastructure development for increases in population in the U.S. has resulted in communities emerging outside of city limits, called “colonias,” that are not subject to zoning regulations.  They generally consist of sub-standard housing, inadequate clean water and sewage disposal systems.  Residents of these “colonias” are exposed to toxic substances and water-borne bacteria and suffer from higher than normal rates of cholera, typhus and hepatitis.

The North American Agreement on Environmental Cooperation, contained within NAFTA, established the Commission for Environmental Cooperation (CEC).  The CEC was created to alleviate environmental conflicts and concerns as well as promote effective enforcement of existing environmental laws (NAFTA Forum, 1998).  However, the CEC was not intended to create environmental laws but only assure that each country adhere to its existing laws.  Mexico had already developed an environmental policy structure largely based on the U.S. Environmental Protection Agency, providing for inspection and enforcement of environmental regulations (Heritage,).  Still, it was not until 1994, around the time NAFTA was passed, that Mexico reorganized its disparate environmental agencies into one cabinet level agency, with the appointment of a secretariat (Environment, 1998).  Environmental enforcement has increased in recent years, but was reduced during the peso crisis of 1995.  In 1996, over 3,000 inspections of industrial plants brought 18 total closures, 59 partial closures and fines for two-thirds of all plants inspected.  This does signify a clear effort on Mexico’s behalf to address it’s environmental problems.  Still, Mexico generates over 80,000 metric tons of municipal waste every day and only 70 percent is collected, and of this, only a small fraction ends up in a sanitary landfill.  Mexico also generates nearly 8 million metric tons of hazardous waste each year, and only 11 percent is properly disposed.  The remaining ends up illegally dumped in municipal sewer systems, on land and in bodies of water.  The maquiladora industry is the largest generator of hazardous waste in the U.S.-Mexico border region, and under current Mexican law, the waste must be transported to the country of origin (Environment,1998).  Until this law expires in 2001, little incentive exists for the construction of adequate hazardous waste treatment facilities in Mexicos border region.  In 1997, the Commission for Environmental Cooperation, a product of the environmental side agreement, began negotiations between the U.S. and Mexico on implementing an environmental impact assesment agreement (CEC,1999).  The North American Development Bank, another product of NAFTA, has recently begun financing water treatment and pollution control projects along the border (LatinoLink, 1997). Although only $15 million in loans, of a promised $2 billion, have been allocated so far, it seems fair that the environmental side agreement is at least adressing these problems.

 Mexico’s Federal Labor Act of 1990 affirms an employers responsibilty in providing a safe and hygenic work environment and founded advisory commissions to reduce work risks (McGuiness, 1998).  The Labor Act of 1990 is wide-ranging and progressive in it’s intent.  In 1996, the federal government conducted over 47,000 labor inspections in Mexico.  Unfortunately, it was found that about one third of all employers  attempted to impede or complicate labor inspections.  An important feature of the labor inspection, the employee interview, is also complicated by a lack of forthrightness.  Among inspectors, it is common that employees will only speak positively in regard to working conditions, as “their comments appear next to their names in the Inspection Report and that private employers tend to punish complaining workers.”  These limitations seem to allow for many deleterious working conditions to remain uncorrected.  A second side agreement to NAFTA is the North American Agreement on Labor Cooperation (NAALC).  Again, this agreement offers no provision to change current labor laws but affords that each country adhere to it’s existing laws.  However, the National Administrative Office, organized by the NAALC, has recently reviewed allegations of mistreatment of female employees in regards to pregnancy bias, and has engaged the Mexican government in amending the practices (Sweatshop Watch, 1998).  As for the American corporations utilizing these maquiladoras, their response has generally been that they were following “common practice” among maquildora employers (Sweatshop Watch, 1998).  It is worth mentioning that these allegations may not even have been addressed by the two governments had NAFTA not been in place.

Maquiladoras had been steadily increasing before NAFTA came into effect.  Although the governments of the United States and Mexico share similar labor and environmental policies, inefficiencies still exist on behalf of Mexico in enforcing those policies.  Although American multi-national corporations have largely not taken the responsibility for amending labor and environmental problems, the North American Free Trade Agreement should not be seen as a promotional vehicle for the increase in maquiladoras and further environmental degradation along the U.S.-Mexico border.  Although it is still too early to measure, perhaps it is possible to view NAFTA in completely opposite terms.  Bringing Mexico into a trade agreement with the United States and Canada may very well be beneficial to maquiladora workers and the environment in the long run.  Inherent within the agreement is the enforcement of existing labor and environmental laws.  Mexican laws are no less stringent than the United States, and although enforcement of those laws has been lacking it is not fair to place the blame on NAFTA.  In fact, because it is in Mexico’s best interest to remain in NAFTA, then perhaps it is also fair to assume that Mexico will continue to adhere to its principals.

2.Mayer, Frederick W. 1998. Interpreting NAFTA: The Science of Art and Political Analysis. Columbia University Press. New York.

3.Blank, Stephen and Haar, Jerry. 1998. Making NAFTA Work: U.S. Firms and the New North American Business Environment. North-South Center Press. University of Miami. Florida.

4.Bruhn, John G. and Brandon, Jeffrey E. (eds.). 1997. Border Health: Challenges for the United States and Mexico. Garland Publishing. New York & London.

5. Davidson, Miriam. 1998. Bridging Troubled Waters in Ambos Nogales. APF Reporter, Vol. 19, #1

6. Border Issues. 1997. United States-Mexico Chamber of Commerce.
http://www.usmcoc.org/border1.html Viewed on 2/27/99.

7.Smith, Wesley R. 1993. The NAFTA Debate, Part 1: A Primer on Labor, Environmental, and Legal Issues. Available at: http://www.heritage.org/library/categories/trade/bg936.html  Viewed on 3/19/99.

8. Environment. 1998. United States-Mexico Chamber of Commerce. http://www.usmcoc.org/environment.html  Viewed on 2/27/99.

9. NAFTA Partners Approaching Agreement on Transboundary Environmental Impact Assesment. 1999. Commission for Environmental Cooperation. Available at: http://www.cec.org/new/Data.cfm

10. McGuiness, Michael J. 1998. The Landscape of Labor Law Enforcement in North America: An Examination of Mexico’s Labor Regulatory Policy and Practice. Law and Policy in International Business.

11. Sweatshop Watch. 1998. U.S. Labor Department Review Finds Sex Bias at Border Plants in Mexico. Available at: http://www.sweatshopwatch.org/swatch/headlines/1998/sexbias_jan98.html Viewed on 3/27/99.