Saturday, July 08, 2006

Maize Malaise and the Mexican Election

Greg Grandin's op-ed in the NY Times today is apposite to any understanding of the Mexico election debacle and why the resultant fiasco was entirely expected. At the heart of the opposing political forces in Mexico, as they're represented by Lopez Obrador and Felipe Calderón, are equally opposing views of NAFTA and the effects that the agreement has had upon Mexico's economy, especially the rural, agricultural economy. And it is from this perspective that we can understand the strength of Obrador's support among the rural population of Mexico and the tenacious desire on the part of the ruling class, on both sides of the border, to maintain the status quo. And that tenacity would not exclude subverting the democratic will of the majority of Mexico's voting population.

As with most "free trade agreements" poorer countries and/or regions enter into with the United States, the agreements often spell out anything but free trade. In fact, they almost always detail a one-way path for US dumping of commodity over-production. And while such agreements usually specify liberalization of capital flows, this rarely affects a rural population, or at best has only a minimal impact on their lives. What the rural populations usually suffer are huge amounts of highly subsidized US agricultural products pouring over the border, decimating local agricultural industries and farms. Such countries needn't sign any free-trade agreements for the ravages of such policies to be felt, however. IMF strictures generally provide for the same tariff-free, or close to tariff-free, dumping as do many putative free-trade agreements.(1) Jamaica's local dairy industry was wiped out in exactly this way.

For Mexico, the relevant agricultural product that has been most affected by NAFTA has been corn and it is the economic decimation this crop has suffered -- and with that the farming population of Mexico -- that has Mexico's farming communities anxious to see the agreement repealed. Obrador was firmly on the side of NAFTA renegotiation. Calderón supported the status quo, despite the heavy price paid by Mexico's farmers.

The United States is largest producer of corn and with a new fervour for the ethanol boondoggle, corn is heavily subsidized by the federal government with most of the $22.7 billion last year in subsidies supporting corn production. Between 1995 and 2004, US subsidies of corn alone totalled $42 billion. Overproduction is rampant and leads to enormous volumes of the crop with nowhere to go but elsewhere. And with NAFTA greasing the way, some of that elsewhere is Mexico, which now absorbs more than double the amount of federally subsidized US corn than it did in 1994. (2) This has devasted local farmers in Mexico, who cannot compete with the US product and now the country routinely watches 3 million tons of its own corn rot in fields, too expensive to sell against the US import.

In 2008, provisions within NAFTA specify that meager subsidies Mexican farmers now receive would expire, as would any remaining tariffs on corn imports, while American subsidies will not only remain unaffected but can be expected to even increase. Meanwhile, the USDA has indicated that they have no interest in renegotiating any of NAFTA's asymmetric and contentious provisions. Washington and its Mexican allies, such as Calderón, insist on continuing to foist this demonstrably unfair imbalance upon the Mexican economy and Mexico's rural population have now grown entirely disenchanted with this "free trade" arrangement. It was this situation that Obrador promised to amend and Calderón promised not to. The election was the battle ground for these competing positions and the business and political elite were very much behind ensuring a win for Calderón.

When it first came to light that the Bush-friendly corporation, ChoicePoint, was involved with the Mexican elections, it was obvious that the Bush administration was doing what it could, albeit always at arm's length, to help Calderón claim Mexico's presidency. Indeed, many of the shenanigans that came to light before, during and after the election -- with more expected -- bore a striking resemblance to deeds seen here in the US during the 2004 elections.

Though no actual recount was done for the Mexican elections -- only a check of the precinct tabulation sheets occurred -- Grandin suggests that the Bush administration should insist on a full recount in order to establish legitimacy of the result. While Grandin's suggestion is borne of a high-minded desire to do the right thing, he cannot be this naive. Despite the latest prognostication that a full recount might actually hand the election to Obrador, the Bush administration got exactly the result they wanted. Why would they mess that up?
1. Globalisation and Its Discontents, J. Stiglitz, 2002. throughout.
2. Free Trade, Corn, and the Environment: Environmental Impacts of US – Mexico Corn Trade Under NAFTA, Ackerman et al., GLOBAL DEVELOPMENT AND ENVIRONMENT INSTITUTE, June 2003.


Blogger Musclemouth said...

Great post my friend. And documented, even. I am officially less dumb.

I have about a million questions for you, but I'll just pick one.

How bad is it in Mexico as a result of NAFTA? Obviously the corn farmers are screwed. But is that the only industry being affected?

5:16 AM  
Blogger theBhc said...

That is the one I looked at just because that is the one Grandin focused on. It is likely, however, that there are others. Mostly, the industries that suffer under these free trade agreementst are the agricultural ones: beef, dairy, crops, fruit. Industrialized American food production is well subsidized and often protected by heavy tariffs, usually inviolation of the agreements. But we still see examples of manufacturing goods here protected by tariffs whenever overseas producers are cheaper; recall Bush's steel tariffs and those imposed on Chinese textiles. These were both in violation of WTO strictures and Bush eventually backed off the steel tariff -- after the election -- bu it was mostly done to save his ass in the mid-west.

Corn is crucial in Mexico and is a rudimentary food staple. Nafta has put 30%, some 3 million, farmers out of work from US corn dumping alone. Renogotiation of NAFTA was one of Obrador's key issues.

5:19 PM  
Blogger Musclemouth said...

That makes sense. It's alwasy the workers who get screwed, isn't it? The multi-nationals themselves - that is, those who stand to benefit from worker exploitation - are anti-American and anti-Human. You raise the point of the steel industry. No matter what happens, the workers suffer. The American steel industry has been in decline for years now, and steel workers are losing everything. They are the ones who are demanding steep tariffs. From what I can recall, I believe it is Asia who benefits from steel dumping into America. The situation parallels the agriculture imbalance between Mexica and America, it seems. And thanks for the observation about Bush and his broken promise to steel workers in America. I didn't know he had done that. Another brick in the wall, I suppose. When I was working in D.C., the steel lobby had a major presense. They often held demonstrations on Capitol Hill. I remember interviewing them, actually.

It's all about the denigration of the worker.

6:12 PM  

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