NAFTA MONITOR Vol. 1, No. 1
Monday, December 20, 1993
Headlines:
COMPANIES SHIFT OPERATIONS TO MEXICO
MEXICAN LABOR UNIONS TOO WEAK
MEXICO MAY NOT FOLLOW THROUGH WITH ENVIRONMENT PROMISES
NAFTA WILL HURT MEXICAN INDUSTRIES
U.S. NAFTA PROTESTS CONTINUE
_________________________________________________
COMPANIES SHIFT OPERATIONS TO MEXICO
In the weeks following the ratification of the North American Free Trade
Agreement, many large companies announced plans to increase their
operations in Mexico, often at the expense of U.S. or Canadian-based
manufacturing plants.
Perhaps the quickest to take advantage of NAFTA has been the auto
industry. Ford Motor Company announced it will rehire 300 laid-off
Mexican auto workers and spend $175 million on converting its car plant
in a suburb of Mexico City to meet anticipated demand for automobiles
there. Ford said it could not expand its U.S. plant in Kansas City, Missouri
because of structural problems. NAFTA "solves a dilemma for us" said a
Ford spokesperson. Despite plans to increase operations in Mexico, Ford
said it expects its exports to Mexico from the U.S. and Canada to increase to
25,000 vehicles next year. The automaker shipped 1,500 vehicles to
Mexico this year. General Motors Corp. and Chrysler Corp. are also
expected to expand production in Mexico.
Under NAFTA, automakers will be allowed to send $1 worth of vehicles to
Mexico for every 80 cents worth exported from Mexico. Currently they are
only permitted to send $1 worth of fully assembled cars or trucks to
Mexico for every $1.75 worth of fully built cars in Mexico and exports.
The largest bus and truck manufacturer in Mexico, Consorcio G Grupo Dina
S.A., agreed to purchase U.S.-based Motor Coach Industries International
Inc. under a new merger agreement with a U.S. subsidiary. The merger will
give Dina the right to export trucks to the United States. It is currently
banned from doing so because of a contractual obligation with Chicago-
based Navistar International Corporation. Motor Coach has plants in
Manitoba, North Dakota, and New Mexico.
According to Mexico's EL FINANCIERO newspaper, NAFTA will also make it
easier for European and Asian auto manufacturers to expand truck
production and leasing operations in Mexico. Honda has already announced
it will shift its auto manufacturing facilities from Canada to the western
coast of Mexico. "The pieces are in place to give U.S. multinationals a run
for their money, right in the territory that most assumed was annexed
under NAFTA," writes EL FINANCIERO. NAFTA negotiators hammered out
the details of an auto deal that would set local integration limits
specifically targeted at Asian and European exports of passenger cars. But
limits are apparently still low enough to make it economically efficient for
Nissan, Saab and Mercedes-Benz to produce pickup trucks and lease bus
fleets in Mexico.
Sources: "Trucks Make Comeback," EL FINANCIERO INTERNATIONAL,
December 6-12, 1993; Kathryn Jones, "Mexican Company Agrees to Acquire
U.S. Bus Maker," NEW YORK TIMES, December 1, 1993; "Grupo Dina to Buy
U.S. Bus Maker," EL FINANCIERO INTERNATIONAL, December 6-12, 1993;
Robert L. Simison, "Ford Plans Sharp Boost in Shipments Between Mexico,
the U.S. and Canada," WALL STREET JOURNAL, December 17, 1993; Alan L.
Alder, "Autos After NAFTA," AP, December 16, 1993; "Ford Will Build More
in Mexico and Increase Its Shipments South," INVESTOR'S BUSINESS DAILY,
December 17, 1993; Alva Senzek, "Trucks Make Comeback," EL
FINANCIERO INTERNATIONAL, December 6-12, 1993.
_________________________________________________
MEXICAN LABOR UNIONS TOO WEAK
As Mexican businesses suffer from increased competition under NAFTA,
they will likely get tougher on workers to improve productivity. But an
article in the NEW YORK TIMES says that under President Carlos Salinas de
Gortari Mexican labor unions are weaker than they have been for 50 years
and in a poor position to deal with NAFTA's consequences. In testimony
before the U.S. Congress this year, Pharis Harvey, executive director of the
International Labor Rights Education and Research Fund, described
organized labor in Mexico as "sterile unions without power to represent
workers." Harvey said health and safety standards have deteriorated
under the government controlled unions. Mexico now has the third highest
rate of industrial accidents in the world.
Following the recent deaths of two young workers who had inhaled toxic
fumes at the Calinor rubber plant, two Tijuana-based organizations
launched an educational campaign among maquiladora workers. Casa de
la Mujer and the Centro de Informacion y Formacion de Trabajadores have
printed posters and organized educational sessions to advise maquiladora
workers on the dangers of working with toxic chemicals. Employees of the
plant are not provided with masks or safety equipment of any kind to
protect them against the toxic fumes.
The number of maquiladoras operating in Mexico is now 2,178, an increase
of 4.9 percent during the first eight months of 1993, according to a study
by the National Statistics Institute. The report said the number of
maquiladora employees rose 7.3 percent this year to 544,476.
Source: Anthony DePalma, "Mexico's Unions, Frail Now, Face Trade Pact
Blows," NEW YORK TIMES, December 14, 1993; "Health and Safety
Campaign Begins," WORKER RIGHTS NEWS, Fall 1993; "Number of
Maquiladoras Grows by 4.9 Percent," EL FINANCIERO, December 6-12,
1993.
_________________________________________________
MEXICO MAY NOT FOLLOW THROUGH WITH ENVIRONMENT PROMISES
The Texas Center for Policy Studies says Mexico may not follow
through with promises to clean up the environment. "When we were
debating NAFTA, they had to come to the table and talk. We made
some real progress," said Researcher Domingo Gonzalez. "Now the
incentive to listen to those voices is gone." President Carlos Salinas
de Gortari and U.S. President Bill Clinton agreed to spend more than
$8 billion over the next eight years on infrastructure and
environmental cleanup projects.
Gonzalez speculates the Mexican government may be more interested
in funding profitable industrial development projects than much
needed waste water treatment facilities. "The border has been
ignored for generations," said Gonzalez. "Who's to say that won't
continue?"
Source: Leon Lazaroff, "The Polluted Border," EL FINANCIERO
INTERNATIONAL, November 29-December 5, 1993.
_________________________________________________
NAFTA WILL HURT MEXICAN INDUSTRIES
Arturo Nava Bolanos, president of the Social Union of Mexican
Businesses, said Mexico's textile, electronics and agriculture industries
will be hardest hit under NAFTA. The electronics industry, for
example, reportedly lacks updated equipment, which will make it
difficult for them to compete with U.S. and Canadian companies
operating in Mexico.
Mexico's farming industry is also expected to suffer in competition
with the U.S. and Canada for powdered milk, chicken, meat and eggs
commodities. The National Rural Credit Bank announced last month
that it would provide loans to Mexican farmers in an attempt to help
them adjust to economic integration.
Source: "NAFTA, Crisis for Textile, Electronics, and Agriculture
Industries," EQUIPO PUEBLO/RMALC, December 1, 1993.
_________________________________________________
U.S. NAFTA PROTESTS CONTINUE
A confederation of U.S. labor unions blocked traffic last week on a major
highway connecting Tennessee and Arkansas to protest President Bill
Clinton's support of NAFTA. Sixty-one members of the Amalgamated
Clothing and Textile Workers Union, the Teamsters and the AFL-CIO were
arrested after taking control of the Hernando DeSoto bridge for about one
hour.
Sources: "Labor Protest," AP, December 12, 1993.
_________________________________________________
Editors: Gigi DiGiacomo and Kai Mander
The Institute for Agriculture and Trade Policy (IATP)
1313 Fifth Street SE, Suite #303, Minneapolis, MN 55414-1546 USA
Telephone:(612)379-5980 Fax:(612)379-5982
E-Mail:
[email protected]
_________________________________________________
