Title: NAFTA and migration.
Source: National Forum, Summer 94, Vol. 74 Issue 3, p29, 4p, 2bw
Author(s): Weintraub, Sidney
Abstract: Examines the effects of the North American Free Trade Agreement (NAFTA) on Mexican immigration to the United States. Emigration from Mexico's rural areas; Association of emigration volume to economic conditions; Mexican and American short term actions to address migration issues; Minimal impact of NAFTA on migration.


Many U.S. supporters of the North American Free Trade Agreement (NAFTA) thought that it offered the best hope to reduce the push factors lack jobs and low incomes at home--propelling illegal immigration from Mexico. Many opponents, particularly from California, argued that NAFTA especially its provisions opening Mexico to agricultural imports from the United States--would stimulate undocumented immigration from Mexico. The two contradictory positions are evident from the record of the congressional debate on the agreement.

Both sides overstate the migration effects of NAFTA. They also talk past each other, confusing the long term, on which proponents focus, with the short term, which NAFTA opponents stress. Neither side is prepared to define the time period it has in mind. The debate is extremely emotional because of the high profile that immigration issues are assuming on the U.S. political scene.

This essay dissects the issue of the migration effects of NAFTA to clarify the debate.

Some Salient Background

Approximately 28 percent of the total Mexican population of eighty-five million--or about twenty-four million people--live in rural areas of the country. These twenty-four million account for about 8 percent of Mexico's gross domestic product. In other words, they are contributing substantially less to the economy than their numbers would indicate. They are, consequently, mostly very poor. Around 20 percent of Mexico's population lives in absolute poverty as defined by the World Bank, and most of these people live in rural areas of Mexico. Rural residents have fewer educational opportunities and health facilities than Mexicans who live in urban areas.

What this situation portends is that Mexicans who live in rural areas will emigrate. They will go mostly to urban centers of Mexico, but many also will continue north into the United States. This migration will happen with or without NAFTA because it is the rational thing to do. This pattern has taken place in other countries, including the United States, and is occurring as well throughout the developing world. The issue with respect to migration, therefore, is not whether many millions of Mexicans will leave rural areas, but the speed at which the emigration will take place.

The rural population is not the same as the farm population. The former is defined generally by the size of the villages, towns, or cities in which people live. In 1990, the U.S. rural population--generally defined as people who live in places with less than 5,000 population--was about 27 percent of the total, whereas less than 3 percent of Americans actually lived on farms. This distinction is less precise for Mexico because there are few job opportunities in off-farm rural areas, an important point to which I will return when discussing policy measures possible in Mexico.

The main food staples in Mexico are corn and beans, particularly corn. Between three and four million people grow corn. Much of it is grown on efficient, world-class farms that benefit from mechanization and irrigation, but the bulk of people who grow corn do so on small, rain-fed holdings. Some of these smallholders own their land, and others are daily workers. Many of these holdings fall under the ejido structure of Mexico, which is a form of communal land ownership that has an important place in Mexican history. Precisely this kind of landholding was promoted by Emiliano Zapata during the Mexican Revolution. The recent rebellion in Chiapas was undertaken in the name of Zapata, and inequities in land tenure are an important cause of the discontent in that poor state. Most of the corn grown on these ejidal farms goes for immediate subsistence rather than to market, but even so, it is subsistence at the most basic level.

For many years, Mexico subsidized corn growing and kept domestic prices at double or more the level of world prices. Most of these income transfers went not to the small-holders and certainly not to the workers but to large landholders. These subsidies raised the price of corn products--tortillas, in particular--and to mitigate the effects, these products in turn were subsidized to consumers. Most of this consumer subsidy went to city dwellers, not to rural residents.

It is important to keep these background facts in mind. Thisstructure was supported by a system of dual subsidies, first to growers of corn (mainly for the benefit of large growers), and then subsidies to consumers, mainly for the benefit of city dwellers. These dual subsidies were a large drain on Mexico's budget and reduced the availability of resources for other social activities, such as education, health care, and housing. Most rural residents of Mexico are pitifully poor, and forcing them to stay where they are is not a particularly humane act. Consequently, they are leaving for metropolitan areas where the opportunities are better for them and their children.

It was in the midst of this situation that the NAFTA negotiations took place. In those negotiations, Mexico agreed to eliminate protection against imports of agricultural products gradually over a ten-year period. For the most sensitive products, including corn, the transition to free trade will take place over fifteen years from the onset of NAFTA, that is, until the year 2,009. Removing these protections has aroused the concern of those groups in the United States who opposed NAFTA on immigration grounds.

Simultaneously, the Mexican authorities altered the ejido system to permit landholders greater flexibility in disposing of their land. This change was controversial because of the historical legacy of this structure, but it is impossible to argue that the ejido system successfully dealt with rural poverty. In addition, the authorities terminated the old income-support structure and replaced it with one called Pro-campo designed to benefit growers of grains, beans, and oilseed. The purpose of Procampo is to provide direct support to subsistence farmers who, in the words used by the government in setting up the program, "have not benefitted greatly from Mexico's current system that compensates producers through guaranteed prices for crops that are marketed" (emphasis in original).

The direct payments under Pro-campo will be phased out over fifteen years. The idea is to provide an incentive for impoverished small-holders to remain in place for as long as possible while alternative employment opportunities can be created.

These measures have been years in the making, but their consummation coincided with the completion of NAFTA. Mexican policy makers argue that the changes were necessary regardless of NAFTA. Those who opposed NAFTA because it would stimulate migration out of Mexico's rural areas never stated precisely what they would have preferred. They were against Mexico's liberalization of agricultural imports, which set them against exporters of these products elsewhere in the United States. These opponents presumably were not in favor of forcing millions of rural residents of Mexico and their children to endure poverty indefinitely, but they never articulated how any other outcome was possible if the status quo of Mexican agriculture were maintained.

Policy Options

It is hard, really impossible, to contradict the economic logic that dictates emigration from Mexico's rural areas. Some of this emigration inevitably will spill over into the United States, as it has been doing for more than half a century. The same rural, poverty-dominated Mexican states have provided the bulk of the immigrants coming to the United States throughout this period. This process will not run its course until the economic and social opportunities inside Mexico improve substantially. This is the promise emphasized by NAFTA's proponents in the United States.

The phase-out of Mexican import restrictions under NAFTA defines the short term as ten years for most products and fifteen years for the most sensitive agricultural commodities. Procampo, in essence, defines the short term as fifteen years, the period over which the direct payments to growers will decline to zero. Accepting this as a legitimate definition, what is the probable pattern of illegal immigration from Mexico into the United States within that time frame?

First, let me clarify one point. This article is entitled "NAFTA and Migration," but this title is an oversimplification. The agricultural changes in Mexico were brought on partly by NAFTA--those phasing out import restrictions but most were made necessary by internal conditions in Mexico. The Mexican economy will perform well, middling, or poorly not primarily because of NAFTA, but rather by how effectively Mexico manages its macro- and microeconomic policies. NAFTA can do little to improve the social scene in Mexico, to make income distribution more equitable, or provide widespread educational opportunity. These are Mexican challenges, with or without NAFTA. What NAFTA does is ensure against U.S. protectionism against imports from Mexico. It also gives foreign investors some confidence that there will be continuity of Mexican economic policy. NAFTA thus can contribute to Mexican economic growth, which is necessary if Mexico is to achieve its social objectives, but only as an add-on to internal policy.

Short-Term and Long-Term Immigration

Many studies have examined migration transitions in a variety of countries that have growing economies. The central conclusion of this research is that emigration actually increases in the short term as economic conditions improve. A central conclusion of the 1990 Report of the Commission for the Study of International Migration and Cooperative Economic Development (which was established by the U.S. Congress), entitled Unauthorized Migration: An Economic Development Response, is worth citing:

. . . while job-creating economic growth is the ultimate solution to reducing these migratory pressures, the economic development process itself tends in the short to medium term to stimulate migration by raising expectstions and enhancing people's ability to migrate.

The Commission went on to state, however, in the same paragraph:

Development and the availability of new and better jobs at home, however, is the only way to diminish migratory pressures overtime.

These two quotations summarize the accepted view of immigration scholars. Little evidence exists to show that economic growth reduces emigration pressure in the short term, but it is overwhelming evidence that this is the only long-term deterrent to the push factors stimulating emigration. In the immediate post-World War II period, Italy was an emigration country; Italy's current concern is to keep out unwanted immigration from other places. The same turnaround took place later in Spain. The transition from emigration country to immigration country can happen quickly. Fifteen years can be long term if economic growth is substantial and persistent.

The turnaround does not require that incomes and wages equalize in the emigration and immigration countries. They have not in Spain, in comparison with France or Germany. What is required is that economic growth be sustained so that it can be counted on. Most Mexicans do not want to leave home. They do want some reasonable assurance that they can find good jobs, that their lot in rife and that of their children will improve, that next year will be better than last year into the indefinite future. If NAFTA, when added on to domestic economic and social policy in Mexico, can substantiate this expectation, it can have an emigration-deterring effect in the long term.

Mexican and U.S. Short-Term Actions

If this premise is accepted, the policy question both for Mexico and the United States boils down to what can be done in the short term--for the next fifteen years or thereabouts.

Mexico already has taken one major step, namely, to provide income support directly to agricultural smallholders to slow down the exodus to urban centers. Whether the payments will be enough to accomplish this objective is not clear, nor is it evident that fifteen years will be long enough to provide alternative opportunities. Creating these opportunities requires both steady growth in the Mexican economy and taking actions that will alter the inequalities that exist in Mexican society. Educational and other social expenditures are being increased and now make up more than 50 percent of the Mexican budget, but the deficiencies are immense, and progress will be slow at best.

Most jobs in Mexico, as in the United States, are created in the service sector. These job opportunities exist mainly in large urban centers. The most important of them are Mexico City and the neighboring state of Mexico, Guadalajara, Monterrey, and increasingly in northern cities abutting the United States. Job opportunities are not abundant in the poorer, largely rural states like Oaxaca, Michoacan, Zacatecas, and, as we have learned, Chiapas. Other countries have been successful in decentralizing economic opportunity, including in non-farm rural areas. Mexico must use the short term to provide these opportunities if the people leaving farms are to stay in their own country.

While not a sufficient condition, none of this can be accomplished without substantial and consistent economic growth. About one million jobs must be created each year in Mexico just to absorb new entrants into the labor force. While the rate of Mexico's annual population increase is diminishing, the young people entering the labor force over the next fifteen years already have been bom. As a measure of comparison, the United States in good years creates about two million jobs, but it has three times the population of Mexico. Ontop of this requirement for one million new jobs each year for new entrants into the labor force, Mexico must accommodate many millions who will leave rural areas, not to mention increasing labor force participation by women. Past relationships show that it will take at least 5 percent annual growth in GDP, year in and year out, to reach the required level of job creation.

This, in sum, is Mexico's task for what has been defined here as the short term:

Keep them down on the farm for as long as possible, but certainly not indefinitely;
Use this time to create alternative job opportunities;
Increase expenditures on social concerns;
Further decentralize centers of economic opportunity into rural areas;
And central to all of this, maintain a high level of overall economic growth.

The United States seems to be defining its short-term requirement as getting tough in dealing with illegal immigrants and to some extent with legal immigrants as well. These measures include beefing-up the border patrol, putting up more fences between Mexico and the United States, removing welfare and other benefits from persons illegally in the United States, reducing the level of health care provided to undocumented residents, limiting education provided to children of illegal parents, and even the proposal by Governor Pete Wilson of California to change the Constitution so that children born in the United States of illegal immigrant mothers not be granted U.S. citizenship automatically. The anti-immigrant sentiment in the United States is becoming mean. This sentiment results largely from concern over high domestic unemployment and the economic slowdown in California. It was this combination--high unemployment and uncertain domestic economic prospects--that I believe led to the anti-immigrant opposition to NAFTA.

A self-evident anomaly exists in the U.S. attitude toward Mexico. NAFTA is intended to open contacts among residents of the two countries to increase their commercial and cultural relationships. The anti-immigrant sentiment runs directly counter to this aspiration. The blockade against immigrants crossing the border into El Paso, Texas, is being carried out despite clear evidence that Texas merchants are being hurt from the added inspections and the resulting long delays at the border.

My plea is that the anti-immigrant sentiments of the moment not be allowed to go so far as to destroy the more promising relationship between Mexico and the United States that NAFTA can provide. We can dose the border more effectively, and that may have a temporary effect of denying entry to undocu-mented immigrants, but it also will sour relationships with a country that will be our neighbor forever. The more promising approach is to do what we can to promote development with justice in Mexico--by keeping our market open to Mexican goods and services, just as we wish Mexico to keep its market open to our goods and services--because that is the only sure-fire way to deal with the problem of unwanted immigration over the long term.


By Sidney Weintraub

Sidney Weintraub is director of the U.S-Mexico Policy Studies Program at the Lyndon Johnson School of Public Affairs at the University of Texas-Austin and holds the William Simon chair in political economy at the Center for Strategic and International Studies Washington,DC. He has written extensively on U.S.-Mexican relations, including NAFTA, and on immigration policy.

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Source: National Forum, Summer94, Vol. 74 Issue 3, p29, 4p, 2bw.