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 Editorials | Opinions | January 2008 
NAFTA Needs to be Revised and Improved to Fix Illegal Immigration
 Joe A. Reyna - Salt Lake Tribune
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As of Jan. 1, a new chapter in the North America Free Trade Agreement has opened. Agricultural products such as corn, beans, powder milk and sugar cane are now free to move around the three countries without tariffs.
This means more profits for American and Canadian farmers; however, this will put Mexican farmers at a disadvantage because pricing will be dominated by Americans. Let's not forget that the American economy is 15 times larger than the Mexican economy.
The Mexican farming industry will be tested, and most likely suffer. Products such as corn, beans, and sugar cane are not only the symbols of Mexican gastronomy; in fact, these are the basic food products for millions of poor Mexicans.
The assumption under NAFTA is that the price Mexican families will pay for these products will be cheaper. However, it will be cheaper at the expense of Mexican farmers who will close their farms leaving thousands unemployed.
Plus, Mexico's inflationary pressures will also continue to increase making it more difficult for Mexican families to subsist. What this phenomenon is doing is shifting the industries from Mexico to the United States.
Therefore, we must understand that illegal immigration is a direct consequence of market adjustments and economic competitive advantages and disadvantages under the NAFTA agreement. This problem is not a social problem; it is an economic problem and therefore it can only be fixed with economic solutions.
There is no question that Mexico also benefits from NAFTA, but the economic benefits have gone primarily to large Mexican companies that dominate exports such as Gruma (MASECA), Bimbo, Grupo Modelo, and others. Specialization of industries and labor in Mexico needs to occur to create wealth at all levels of the Mexican society.
Mexican pig farms and the poultry industry for example, suffered under NAFTA in the late 1990s. When you walk into grocery stores in Mexico, including Wal-Mart and Texan HEB, you find poultry and pork products with labels "Made in the U.S.A."
Americans cannot just reap the economic benefits of a free trade agreement with Mexico. We must be willing to accept the economic and social results of the agreement that cause high unemployment in Mexico, and that push the illegal migration of labor to America.
As an economist, I argue that free trade brings wealth to any nation, in this case to Mexico, if its institutional structures are set up properly for market forces to grow.
The United States must pressure the Mexican government to make sure the economic benefits of the NAFTA agreement reach the small and medium-size businesses. Mexico needs to implement a major capital formation mentality where the atmosphere for wealth creation exists.
However, it's been 14 years since NAFTA began. I do not hear any of the presidential candidates addressing this issue. The next U.S. president and the U.S. Congress need to revise and improve the NAFTA agreement with the intent of fixing the illegal immigration problem. The problem can be fixed with an authorized and regulated workers program to allow the free movement of labor among countries and industries.
Under NAFTA, the U.S. Department of Homeland Security can work together with the Commerce Department to help meet the demand for labor of industries where the demand is high. Let's not forget that illegal immigration is an economic phenomenon, and a pure consequence of trade and commerce. The U.S. Constitution calls for Congress, not the states, to regulate trade and commerce.
If we don't address these issues, the flow of illegal immigrants to the United States will explode even more in the next five years. If the Mexican corn, beans and sugar cane industries die under American competition, illegal immigration is not going to be the only problem. A stronger agricultural industry could be taking over Mexican farming: marijuana and cocaine production.
Joe A. Reyna is a Utah banker and businessman, and former chairman of the Utah Hispanic Chamber of Commerce board. |
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