Mexico and NAFTA

By: John Milstead

Because the (round) world continues to turn even with Donald Trump soaking up all of the media attention, John Milstead is offering Americans an opportunity to go beyond the bumper stickers. This is an engaging look at how Mexico got where it is today. It will touch on NAFTA and the drug war from the Mexican perspective, and asks an important question for the North American Continent: Will there be a return to evolution in Mexico?

Mexico City journalist Il Madesimo condemned a group of US citizens who he insisted had no respect for Mexican sovereignty. The author reported in his 1895 column that an unnamed proprietor ejected several “well-dressed” African American tourists from the US out of his cantina after a group of “americanos blancos [white Americans] opposed” their presence. The group urged the owner to “expel the blacks” and refused to patronize his bar if he did not segregate patrons according to race. Such an affront to Mexico’s laws angered Madesimo who asked “are we in Mexico or the United States?” He insisted that “they should know when they arrive in another country” Jim Crow laws remained at the border. For Madesimo such a “public affront” to Mexican sovereignty revealed a growing problem that many people faced in their daily lives. Beginning in the 1870s, politicians had enticed investors from the United States and Europe to Mexico by granting them a number of concessions they rarely extended to Mexican citizens. By 1910, this became such a problem that popular revolutionaries overthrew the government and demanded a return to México para los mexicanos, or Mexico for Mexicans.

This example has important parallels to the current lack of popular support for Mexico’s leaders during the North American Free Trade Agreement (NAFTA) negotiations. Carrying a historically low approval rating, President Enrique Peña Nieto has encountered problems generating support for his plan of action against the new national villain Donald Trump. Peña Nieto’s problems come from his inability to overcome a number of political scandals, humanitarian crises, and policy initiatives that have led many people to question his ability to represent the will of the Mexican people. In fact, they have expressed little confidence in all politicians outside of 2018 Morena Party presidential nominee Andrés Manuel López Obrador.

This extends to the business community as well. Critics complain that entrepreneurs placed national sovereignty at risk by advocating NAFTA in the first place. Prominent economists and intellectuals argue that diversifying the economy is the best hope for the future. National sovereignty seems to be the thing that resonates when politicians like López Obrador pledge to defend Mexico from Trump. The effectiveness of such language also suggests that the popular tenets of the 1910 Mexican Revolution have returned to national politics. Peña Nieto’s unpopularity, on the other hand, illustrate how far his party, the Institutionalized Revolutionary Party (PRI), has drifted from reforms enshrined in the 1917 Constitution.

Politicians in the late nineteenth century had good reasons to offer concessions to investors. After all, they tried to rebuild what had been Spain’s most profitable colony after nearly a half-century of instability. Following independence in 1821, politicians mobilized large groups of people in previously unprecedented levels of political participation. In 1829, the country’s first Afro-Mexican president, Vicente Guerrero, channeled popular support and decreed an end to slavery. This sparked a revolt in Texas less than a decade later in 1836, and leaders there secured independence when they captured President Antonio López de Santa Anna at San Jacinto later that same year. Almost a decade later, US President James K. Polk sought to balance slave and free territories when he annexed Texas and instigated a war with Mexico whose politicians still claimed the fledgling republic as a state. Polk’s war was a disaster. The US Army suffered substantial setbacks but overwhelmed Mexico’s defenders. In the end, they ceded approximately half of the national territory to the United States.

The defeat discredited Santa Anna as a politician and eventually led to important reforms. However, elites and church leaders resisted and forced the country’s first indigenous president Benito Juárez to defend the country once again from a foreign invasion. They invited Napoleon III to re-colonize Mexico in 1862 and establish a monarch with European ties. After the stunning defeat of French forces at the Battle of Puebla on May 5, 1862, Napoleon III’s army forced Juárez and his allies to retreat from Mexico City. The French monarch installed Maximilian von Habsburg as the second Mexican Emperor. The short-lived experiment fell apart in less than a decade. Juárez maintained a shadow government while moving across northern Mexico, and his supporters fought to overthrow the emperor. Juárez regained control of Mexico City in 1867 and ordered Maximilian’s execution as a warning of what would happen to would-be colonial powers interested in expanding their empires in Mexico.

Juárez died in 1872, but another hero from the French Intervention assumed the presidency less than four years later. Porfirio Díaz ushered in a new era of stability by forming a rural police force to restore order, reaching out to former political opponents, and promoting industrialization. To modernize the economy he turned to foreign investors from Europe and the United States to construct railways, expand agricultural exports, extract mineral resources, and modernize the manufacturing sector. He stressed Mexico’s relatively new stability to attract these entrepreneurs, and his slogan “Order and Progress” summed up the last quarter of the nineteenth century. Díaz oversaw a dramatic transformation across Mexico, but as the opening example suggests, he often did this at the expense of the Mexican people. Foreign investors seemingly had more rights than ordinary Mexicans. On the other hand, Díaz subjected the popular classes to draconian law enforcement practices, virtually inescapable debt peonage, and land expropriation schemes. Díaz’s long period as Mexico’s dictator from 1876 to 1911 ended with a violent explosion in the twentieth century’s first great social and political revolution.

Revolutionary leaders insisted on a number of reforms beginning with limiting church power, redistributing communal lands, and guaranteeing workers’ rights. They codified these reforms in the 1917 Constitution, and President Lázaro Cárdenas finally delivered on these promises during the 1930s. Cárdenas redistributed millions of acres of communal lands to small villages, consolidated the government into a one-party system, and expropriated foreign oil company possessions. This last point was incredibly popular because Mexico’s rich oil reserves offered national economic stability and a supposed end to foreign debt. Thousands of people lined up to support Cárdenas and donate money to purchase American, Canadian, and European oil companies. The expropriation was an overwhelming success and fueled economic prosperity during the 1940s and 1950s. Things changed in 1968 when government forces opened fire on student demonstrations in the main square of Tlatelolco, a Mexico City neighborhood. The remnants of the revolutionary façade eventually gave way in 1982 when oil futures collapsed and sent the economy in a downward spiral. President Miguel de la Madrid partnered with Ronald Reagan to avoid disaster and moved the two economies closer together. The thawed relations led to even cozier economic relationships among elites. After nearly a decade of negotiations, Mexican politicians proudly joined NAFTA as a seemingly equal partner.

Many people objected immediately to what they argued represented an end to Mexico’s sovereignty. In particular, a group of armed indigenous people in the state of Chiapas took inspiration from popular revolutionary hero Emiliano Zapata and revolted against the government on January 1, 1994, the day NAFTA became law. Officials eventually put down the rebellion, but they never managed to silence Zapatista leaders. In fact, they will nominate a female indigenous candidate to run in the 2018 presidential election. Their participation in upcoming election could take votes from López Obrador, the left’s leading candidate. Zapatista leaders insist on national economic sovereignty and legal recognition of indigenous rights in the form of a new constitution. This could resonate with voters during a Trump presidency.

Officials estimate that the number of people killed and disappeared in drug war violence since 2000 has surpassed 208,000.

Peña Nieto’s actions as president lend credibility to such reform efforts. During his time in office, he has attacked a number of the revolution’s basic principles. One of his first actions was to privatize Pemex, the state-owned oil company Cárdenas formed in the 1930s. He also has worked to transform the education system to require teacher evaluations, but educators have protested that this is merely a means to privatize the public-school system. Last year, federal and state officials in Oaxaca confronted angry protestors in a rural Mixtec town. Someone fired live rounds into the demonstrators and killed nine people. In terms of violence, Peña Nieto’s campaign vow to end drug cartel and gang violence has tragically backfired. Recent statistics demonstrate that violence has continued and, in some cases, increased during his administration. Recent reports published in Proceso, a popular Mexico City newspaper, estimate that the number of people killed and disappeared in drug war violence since 2000 has surpassed 208,000.

Intellectuals and journalists have argued that corruption represented the greatest threat to Mexico before Trump’s arrival. Peña Nieto also has a terrible record in this arena. He has close political ties with people believed to have been involved with the disappearance and presumed murder of 43 education students in Iguala, Guerrero in 2014. In the aftermath, critics charged that Peña Nieto has worked to obstruct the international investigation. These future teachers attended a rural pedagogical academy located in Ayotzinapa that specializes in training teachers to work in majority-indigenous locations. Their disappearance after attending a political protest in Iguala has forced many people to reassess Peña Nieto’s presidency.

At the height of the Ayotzinapa crisis, journalist Carmen Aristegui broke news in 2014 that a man who recently secured a government contract purchased a multi-million-dollar condominium in Miami for Peña Nieto’s wife Angélica Rivera. The radio station that broadcast her popular show repaid Aristegui by firing her not long after the bombshell report. In another instance, Peña Nieto associate, and former Institutionalized Revolutionary Party (PRI) governor of the state of Veracruz, Javier Duarte de Ochoa took flight in late 2016. A report surfaced last year, after several years of speculation, that Duarte used his position as governor to embezzle taxpayer funds and intimidate political opponents. Peña Nieto’s political problems became acute when he refused to confront Trump about the wall during the candidate’s campaign trip to Mexico City in 2016. Peña Nieto’s approval rating reflects the public’s lack of confidence in his failing government. One recent report published in Regeneración estimated that a stunning 94% of Mexican people disapprove of his presidency.

Corruption perhaps did represent the greatest threat to Mexico before Trump’s ascendance to the presidency, but his words and behavior threaten economic and political stability in Mexico. The Peso has plummeted to record lows over the course of the past year largely due to Trump’s repeated threats to withdraw from NAFTA and start a trade war. Trump has also helped to undermine the Mexican political system with his visit and wall rhetoric. In fact, the popular outrage toward Trump is unprecedented. Journalists, intellectuals, and politicians have publicly debated if Trump represents the biggest threat to Mexico since 1846, the year of the US invasion. One group of scholars from Latin America, the United States, and Europe only narrowly agreed in an online vote that the 1846 action represented a larger threat than Trump does today.

Oddly, public support for Peña Nieto in the ongoing NAFTA negotiations remains small. Several journalists noted a lack of participation during a nationwide anti-Trump march on Sunday, February 12. Small crowds gathered in Mexico City for what organizers named the #Vibra march to show solidarity with Peña Nieto. Journalists reported that many protestors used the occasion to compare their president to Trump and condemn both men. This is stunning when one considers that an overwhelming majority of people express fear about Trump’s potential economic war, but the general refusal to attend the marches more than likely demonstrates a lack of faith in Peña Nieto. When given the opportunity to mobilize against him, millions of people attended demonstrations in January to protest his administration’s decision to raise gas prices.

Most people in Mexico understand the potential consequences of a trade war. Contrary to Trump’s rhetoric, the NAFTA trade gap he often cites narrowly focuses on one aspect of international commerce. As Gavin O’Toole points out in his recent article, Mexico does enjoy an advantage if one only accounts for manufactured goods. However, this overlooks the devastating effects US government-subsidized agribusinesses have had on local agriculture. These businesses have stifled local production by importing inexpensive staple crops like corn to Mexico. In addition, US-based manufacturers have purposely kept wages low in their factories in Mexico. Thus, the advantages for the United States far outweigh Mexico.

An abrupt end to the system, however, would likely do more harm to the Mexican economy. This is because Mexico sells nearly 80% of the country’s exports to the United States. This seems to be the primary reason so many people are angry. A majority of people in Mexico have not enjoyed NAFTA’s economic benefits. Critics argue that elites have tied the Mexican economy too closely with the United States, and in so doing, they have ignored potential opportunities to diversify the economy by expanding trade partnerships with China and other Latin American nations. For elites, such decisions were dangerous when they could more easily do business with partners in the US. Trump’s threats have exposed the flaw of this approach, and elites are scrambling to salvage the system. Perhaps this is why people failed to march in solidarity against Trump on February 12. People complained on social media that elites organized the march in the first place. Critics charged that these same elites deserve the blame, not support, for the looming economic disaster.

The current situation has obvious parallels to the 1895 incident in Mexico City. Foreign entrepreneurs, and Trump himself, have forced a large number of Mexican people to feel like second-class citizens in their own country. If popular outcry across social media is any indication, many people feel that political and economic elites care little for anything other than preserving their own narrow economic interests. Interestingly, Trump may end up being the catalyst to greater economic independence and a move away from US-led neoliberalism. Peña Nieto even suggested this as he laid out Mexico’s long-term economic plan. He noted that officials will pursue trade agreements in Southeast Asia, China, and Latin America to diversify the economy. It seems as though the lame duck president has reframed Il Madesimo’s question and asks if his administration is on the side of “Mexico or the United States.”

John Milstead is a Ph.D. candidate in the history department at Michigan State University. His research analyzes race, citizenship, and state formation in nineteenth century Mexico. In 2012, John published his M.A. thesis, “Party of the Century: Juárez, Díaz, and the End of the ‘Unifying Liberal Myth’ in 1906 Oaxaca,” at East Tennessee State University. When he isn’t brewing beer or writing, you can find him in Mexico where he has spent several years researching in Oaxaca, Veracruz, Puebla, and Mexico City.

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