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Most of the benefits of NAFTA have gone to the wealthy, and only deepened the income gap in Mexico, where poverty affects some 45% of the population.
Andrés Manuel López Obrador, Mexico’s incoming “left-wing, anti-American president” (as he was referred to by John McCain), takes office on December 1. But even in the lame-duck period since he was elected July 1, he has taken steps to ensure passage of the renegotiated trade deal once known as NAFTA. His efforts in support of the new U.S.-Mexico-Canada Agreement (USMCA), include encouraging senators from his Morena party to approve it, and taking to Twitter to demand that it be replaced by a more pronounceable acronym than USMCA.
López Obrador will inherit an underdeveloped economy profoundly dependent on the United States—and nowhere is that clearer than in the agricultural sector.
In terms of US-Mexico agricultural trade, USMCA leaves the original NAFTA provisions practically untouched. But while pushing for the continuation of the 24-year-old trade relationship, López Obrador has made a seemingly contradictory pledge to end corn imports in five years, a radical goal for Mexico, which in 2017 imported 16.5 million metric tons of corn, more than any other country in the world. That goal is part of the Plan de Ayala Siglo XXI, a planning document presented to López Obrador by a coalition of campesino groups. The name refers to the original “Plan de Ayala,” a 1911 proclamation by rebel leader Emiliano Zapata in support of the revolutionary government’s promises to peasants and indigenous peoples. The new version includes ambitious goals for increasing national production and reducing imports.
The campesinos offered to carry out an “electoral insurgency” on López Obrador’s behalf in exchange for his support of the plan.
They delivered on that promise. López Obrador garnered 53 percent of the vote, winning thirty-one out of Mexico’s thirty-two states. As one of the president-elect’s aides told The Progressive in June, López Obrador’s past runs have largely depended on support in Mexico City, while in 2018 he has had strong support in every region of the country. He owes that victory in large part to the undivided support of the campesino organizations, who boosted his historic win by 5 million votes, according to Plan de Ayala leader Rocío Miranda. When he takes office, they will be in a position to hold him to his word.
López Obrador will inherit an underdeveloped economy profoundly dependent on the United States—and nowhere is that clearer than in the agricultural sector.
When Mexico, the United States, and Canada signed NAFTA in 1994, U.S. grains began to flow into Mexico at prices below the cost of production, and small Mexican farmers struggled to compete. Around the same time, the Mexican government phased out price supports, surplus buying programs, and other support for agriculture. Those two factors created a massive disruption across rural Mexico, according to Tim Wise, a researcher at the Small Planet Institute.
“There was a huge drop in producer prices, and at the same time, the withdrawal of government support in terms of guaranteed prices and being a buyer,” Wise says in an interview. “It would be hard to design a more radical shock to small-scale farmers than that.”
And the shock was, indeed, “designed.” Even though the cuts on subsidies weren’t mandated in NAFTA, they were consistent with an economic vision focused on international trade and wage labor.
“The Mexican government was, in its words, dedicated to modernizing agriculture, and in farmers’ words, they were dedicated to eradicating campesinos,” Wise says. “The goal was to shrink the rural population, and, in the grand theory of free trade, to send them into the growing manufacturing sector—which did not grow enough to absorb anything like that amount of labor.”
During the past thirty years, millions of people have been driven by poverty from Mexico’s rural areas. Many of them migrated to Mexican cities, working at factories for starvation wages or swelling the ranks of the urban unemployed. Millions of others migrated to the United States.
During the past thirty years, millions of people have been driven by poverty from Mexico’s rural areas.
In the depressed rural areas, drug trafficking organizations filled the employment gaps, offering “jobs” to desperate unemployed young people. And as traditional crops become less sustainable to produce, more farmers turned to opium poppies. In the past six years, the land used for opium poppy cultivation has more than quadrupled, fueling the opiate epidemic in the United States and contributing to the wave of violence that has hit rural Mexico the hardest and has killed over 200,000 people since 2006.
Mexico’s growing dependence on the United States for food has also begun to be seen as a national security concern. In 2017, Mexico imported around 43 percent of the food it consumed, including around a third of its corn, and more than half of basic grains. And while current President Enrique Peña Nieto sees food self-sufficiency as a “myth” and a non-issue, the United Nations Food and Agriculture Organization classifies a country that imports more than 25 percent of what it consumes as “food dependent.”
The strategies laid out in the new government’s plan focus on subsidies for farmers rather than changing existing trade protection measures. But the campesino groups that drafted the updated Plan de Ayala have long demanded the complete removal of existing tariff-free agricultural imports. Many see such a measure as necessary if the president-elect’s goal of food self-sufficiency is to be achieved.
“It is a bit of a contradiction,” says Karen Hansen-Kuhn, director of Trade and Global Governance at the Institute for Agriculture and Trade Policy, in an interview. “Agriculture could be supported a lot through domestic subsidy policies that don't directly interfere with NAFTA, but it would be difficult to meet the goals without some sort of protection.”
But even if USMCA does go into effect in its current form, Wise says that Mexico could take advantage of Trump’s aggressive trade policy.
“If the Trump Administration is continuing to put tariffs on Mexican goods, then Mexico has the right to put retaliatory tariffs on products,” he says. “It could completely protect maize, its priority crop, from U.S. imports.”
Retaliatory tariffs on basic grains could be a powerful bargaining chip for Mexico in trade negotiations, providing badly needed protection to small Mexican maize farmers that could help advance the goal of food self-sufficiency.
Mexico represents the largest export market for U.S. corn producers by far, and losing that market would represent a major shock.
But Mexico represents the largest export market for U.S. corn producers by far, and losing that market would represent a major shock.
“It’s a time when global commodity prices are low already, trade disputes are suppressing markets and reducing prices,” Wise says. “It’s a really vulnerable time for the U.S.”
But Hansen-Kuhn argues that a reduction in demand for U.S. corn exports could be a good thing, pushing U.S. agriculture toward a more sustainable, equitable future.
“U.S. farmers are encouraged to export to make up for low prices, and it hasn’t really worked out so well for them,” she says. “I would say that López Obrador is doing what he needs to do, and at the same time, the United States needs to be solving our problems of overproduction and low prices, which are really hurting farmers across the country.”