México: The NAFTA, crude oil and something else

PROGRESO WEEKLY
January 17-23, 2008

México: The NAFTA, crude oil and something else

“Without corn there is no homeland, neither without bean.” And without petroleum?

By Eduardo Dimas

Ordinarily, little is said in the international media about the North American Free Trade Agreement (NAFTA) between the United States, Canada and Mexico, which became effective Jan. 1, 1994.

Recently, more has been printed about the ASPNA (Alliance for the Security and Prosperity of North America), a monstrosity intended to strengthen the neoliberal model and U.S. domination over the other two partners.

The enactment of the NAFTA coincided with the uprising of the Zapatistas in Chiapas and a major crisis in the Mexican economy, which provoked an urgent intervention by the government of William Clinton, which provided a loan of more than $14 billion so Mexico could get out of its mess.

The consequences of that economic disaster ("the tequila effect") lasted for a long time. Today, 14 years and a few days later, very few people remember those events. The Zapatistas make the headlines once in a while.

Now, the NAFTA has again attracted the attention of the media, as one of the clauses of the treaty takes effect in Mexico. That clause frees from import tariffs several agricultural products from the United States and Mexico, among them corn and beans, two of the main products of Mexican agriculture.

The media attention is directed not so much at the activation of that clause but at the protests it has raised among peasant organizations and agrarian labor unions, which see competition from U.S. and Canadian products as a serious threat to their economies.

To them, it is impossible to compete, because of the differences in technical development and because U.S. agricultural products are subsidized.

In 2006 alone, the U.S. government distributed $18 billion among U.S. farmers.

According to leaders of peasant organizations, since the NAFTA was signed, two million jobs have been lost in Mexican farms, the prices of farm products fell between 40 percent and 70 percent, and Mexico's alimentary dependence on the United States rose by 40 percent in 2006.

So far, the mobilization of farmers throughout Mexico to demand a renegotiation of the NAFTA, including a demonstration in the capital and a human wall in the city of Juárez, on the border with the U.S., have been unsuccessful.

Through its Secretary of Agriculture, the Mexican government has said that the NAFTA has brought more benefits than ills, and that Mexican production and the agricultural industry are doing well. Many analysts and observers counter that that assertion is either wrong or does not match reality.

According to some critics of the Mexican governments (from Salinas de Gortari to this date), it was no coincidence that the signing of the NAFTA was preceded by an amendment to Article 27 of the Constitution, which forbade the sale of the "ejidos," or communal lands.

Those critics say that the objective of Salinas de Gortari, Zedillo, Fox and now Felipe Calderón was -- and is -- to remove the largest possible number of people from the countryside, thus permitting the food transnational corporations to assume control of the Mexican agricultural industry.

Whether that's true or not, I don't know, but if we analyze how the big U.S. food producers and marketers today control the distribution of food in Mexico, it might be true. Only one of those companies is Mexican-owned.

In an article published in the daily La Jornada, titled "Agriculture and free trade: a fallacy," journalist Luis Hernández Serrano points out that "According to information from the U.S. Department of Agriculture, the agricultural food trade balance between Mexico and the United States clearly represents a deficit for our country. It has been so ever since the start of the NAFTA. Until October 2007, Mexican imports totaled more than $10.487 billion, while exports barely added up to $8.479 billion.

"The same has happened since 1994. National purchases of food products to our neighbor totaled about $10.881 billion in 2006 and sales rose to $9.39 billion. In 2005, we imported $9.429 billion and exported $8.33 billion."

Hernández Serrano adds that what somewhat saves Mexico's food trade balance with the United States is the sale of beer, which in 2006 amounted to $1.3 billion. One might inquire if beer production remains in Mexican hands or if it went to foreign hands, like almost all other industries.

Even before the clause on the most sensitive farm products went into effect, the NAFTA had caused the ruination of 40 percent of Mexican farmers, several million people and a massive exodus from the countryside to the cities. Not to mention an increase in the number of people who want to enter the U.S. illegally.

According to some Mexican media, beginning in 1994, the Mexican authorities permitted the importation of corn and beans from the United States and Canada without charging tariffs, thus violating the rules established in the NAFTA itself. The same happened with rice, cotton and milk, products that Mexico used to export.

So, it is difficult to think that the current Mexican government will renegotiate the NAFTA with the United States and Canada. Rather, it may do everything possible to comply with the accord, no matter what the consequences.

The small and midsize farmer (with less than 100 hectares of land) is sentenced to ruination, because he cannot compete with U.S. farmers, particularly with the big producers and marketers of food, who are investing large sums of money in the Mexican agriculture.

Another issue at hand is the complaint by Mexican farmers about the use of genetically modified seeds, to the detriment of the homegrown seeds, which are beginning to disappear. To utilize those seeds means to depend, from now on, on companies like Monsanto, Cargill, Bayer or BASF, because the resulting product is a hybrid seed, that is, it cannot be planted again.

If you think of a policy designed so that the big transnational corporations may control Mexican agriculture, in collusion with the Mexican oligarchy, you will not be far from the truth. The NAFTA is the best expression of neoliberalism; the ASPNA is its purest application.

"The fields can take no more," says one of the slogans of the peasant protests. The next most used is "without corn, there is no country; without beans, the same." The slogans are accurate. But, what about without crude oil?

For years now, Mexican personalities from all political parties have been denouncing the systematic policy of the government to privatize Petróleos Mexicanos (PEMEX), an endeavor prohibited by the Constitution and something that no government has convinced the Congress to amend.

Nevertheless, the different governments have created the conditions for such a privatization in a not-too-distant future. For example, little by little, they have postponed the necessary repairs and expansions of the industries that carry out the extraction, transportation and refinement of crude oil and natural gas.

They have also plunged PEMEX into debt, with the objective of eventually provoking the "necessary" intervetion of private enterprises. Last year, PEMEX's debt amounted to $107 billion. A paradoxical fact about that policy of privatization is that PEMEX contributes more than 50 percent of the state budget.

On Jan. 9, the Coordinating Commission for the Defense of Petroleum (CCDP) called for a national movement to denounce the delivery of Mexican crude to the foreign transnational corporations, even when the Constitution forbids it.

The reason for the call was the enactment of a contract given to Energy Maintenance to provide security to more than half of PEMEX's oil pipeline. According to the CCDP, the transaction initiated the transfer of PEMEX's strategic zones to private companies -- a concession that violates the Mexican Constitution.

The CCDP also pointed out that, for the past 25 years, the neoliberal governments have been looking for a pretext to privatize crude oil and electricity and that now they are drafting laws to permit a greater private participation in that industry.

The most significant aspect of the complaint is that PEMEX's leadership has kept secret its links to five foreign oil companies. PEMEX directors even made a commitment to those foreign firms not to report those links to the Federal Institute of Access to Information.

According to the CCDP, PEMEX signed the accords and agreed to pay a fine if it broke its pact of silence with Royal Dutch Shell (Anglo-Dutch), Chevron (U.S.), Nexen (Canada) and Statoil (Norway).

I think you will agree with me that PEMEX"s privatization is closer at hand than most people think, unless the Mexican people and progressive organizations form a common front to prevent that event.

The tendency of some sectors of the oligarchy and bourgeoisie to sell their country away is surprising. But let's not forget what happened in Argentina during the military dictatorship and later, during the 10 years of Carlos Menem's administration. They simply sold everything to foreign companies.

Sometimes we forget that neoliberalism is not only an economic model. It is also an ideology that places the free market, business, above any other consideration, be it nationalist or patriotic.

If the alimentary transnationals manage to control the Mexican agriculture and oil is privatized, how much economic and political independence would Mexico retain? It would become practically annexed to the United States, but with a dividing wall that would prevent Mexicans from crossing the border.

The people of Juárez do not deserve that fate.