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:kmander@igc.apc.org _________________________________________________