VIKING Published by the Penguin Group Penguin Putnam Inc., 375 Hudson Street, NewYork,NewYork 10014, U.S.A. HARVEST Penguin Books Ltd,27 Wrights Lane, London W8 5TZ,England Penguin Books Australia Ltd, Ringwood, OF Victoria,Australia EMPIRE Penguin Books Canada Ltd, 10 Alcorn Avenue, Toronto, Ontario, Canada M4V 3B2 Penguin Books (N.Z.) Ltd, 182-190 Wairau Road, Auckland 10, New Zealand
Penguin Books Ltd,Registered Offices: A History of Latinos Harmondsworth, Middlesex, England First published in 2000 by Viking Penguin, in America a member of Penguin Putnam Inc.
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Library of Congress Cataloging-in-Publication Data
Gonzalez,Ju an. Harvest of empire : a history of Latinos in America I Juan Gonzalez. JUAN GONZALEZ p. em . Includes bibliographical references ISBN 0-670-86720-9 1. Hispanic Americans-History. 2. Immigrants-United States History. 3. United States-Emigration and immigration-History. 4. Latin America-Emigration and immigration-History. 5. United States-Relations-Latin America. 6. Latin America-Relations United States. 7. United States-Territorial expansion-History. 8. United States-Ethnic relations. I. Title. E184.S75G655 2000 973'.0468-dc21 99-33526
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Free Trade: The Final Conquest of Latin America
After two centuries, England has found it convenient to adopt free trade because it thinks that protection can no longer offer it anything ...my knowledge of our country leads me to be lieve that within two hundred years, when America has gotten out of protection all that it can offer, it too will adopt free trade . -Ulysses S. Grant
Latin America was where neoliberal globalization assumed its most pernicious form ...with an unprecedented concentration of wealth and power into the hands of a small minority. -Ximena de Ia Barra, "Latin America after the Neoliberal Debacle"
uring the second half of the twentieth century a momentous shift Doccurred in American economic life. U.S. transnational firms searching for cheap labor and maximum profit shifted much of their manufacturing to Third World countries, especially to Latin Amer ica. As part of the shift, the U.S. government led a worldwide campaign for "free trade." It pressed developing nations to lower tariffs on im ported goods and to create new export-oriented manufacturing zones, largely to serve the needs of those foreign firms. But free trade, as we shall see in this chapter, deeply distorted many Latin American economies. It became a key pillar during the 1980s and 1990s for a new "neoliberal" economic strategy. Sometimes dubbed the "Washington Consensus," that strategy also included the mass sell-off of public assets, the privatization of basic government services, and the sub mission of national governments to the financial and trade dictates of agencies like the International Monetary Fund, the World Bank, and the World Trade Organization.1 While foreign investors and a domestic elite prospered from the boom in expanded trade, the Latin American nations that rushed to adopt the
i49 �50 HARVEST OF EMPIRE HARVEST (LA COSECHA) neoliberalmodel soon discovered it did not produce the miracle progress Sixty years of U.S. free trade policies, however, have left a lasting imprint for ordinary people its proponents had promised. By the late 1990s, not only on Latin America, but also on Latino migration to this country. wealth disparity had grown so rapidly that the region was reporting the The modern Latino presence in the United States, in fact, cannot be un biggest income gaps in the world between rich and poor. Ironically, Latin derstood without first grasping the origins and development of our gov America, which historically had been a major destination for millions of ernment's free trade policies in Latin America. immigrants from around the world, was transformed into a giant ex porter of its own people-and the bulk of those migrants headed for the THE RISE OF FREE TRADE ZONES United States. Perhaps nowhere was the free trade model more enthusiastically em North Americans at first ventured into Mexico, the Caribbean, and Cen braced than in neighboring Mexico, which formally entered a permanent tral America during the nineteenth century to buy up land and build economic union with the United States and Canada through the North massive transportation projects: Vanderbilt's Nicaraguan Tr ansit Com American Free Trade Agreement (NAFfA) in 1994. NAFfA set off a pany, Minor Keith's Central American Railroad, Aspinwall's Panama stampede by U.S. and other foreign investors to gobble up key portions Railroad, for ex ample. By the early twentieth century, the main methods of Mexico's manufacturing, agricultural, and banking industries. The sud of exploitation had shifted to ex tracting raw materials-bananas, sugar, den infusion of foreign capital, however, drove so many small Mexican coffee, oil-and to financing the operations of Latin American govern manufacturers and farmers out of business that millions of people were ments. The region grew to be so important that by 1914, U.S. companies dislocated and unemployment mushroomed. Thus, instead of reducing had $416 million in direct investments in Mexico alone, the highest of the pressure on Mexicans to migrate, NAFfA increased it. any country in the world, and Latin America overall accounted fo r The deepening crisis of poverty throughout Latin America ignited a nearly half of all U. S. foreign investment in the world.2 firestormof popular discontent by the late 1990s.One after another, local The period after World War II brought a third shift, as U.S. apparel, governments that had espoused neoliberalism were toppled from power then electronics, plastics, and chemical companies, started closing down by massive protest movements, or they were routed in national elections. factories at home and reopening them abroad. That of fshore production The new leaders who took office invariably sought a more socially is at the heart of the free trade model the United States has promoted conscious road to economic growth, one more independent of U.S. con and perfected in Latin America. It is a model that has so far developed trol. Their governments swept to power thanks to complex alliances be in four main stages: tween traditional left-wing politicians and labor leaders and newer civil society organizations. Many of those civic groups were based in sectors 1. Panama and Puerto Rico (1947) long ig nored by the established political parties and economic elite of 2. Mexico's border industrialization program (1965) Latin America: indigenous peoples, poor farmers, urban slum dwellers, 3. The Caribbean Basin Initiative (1985) racial minorities, and lower-level civil servants. 4. NAFfA (1994) With the elections of Hugo Chavez in Ve nezuela in 1998, Brazil's Luis Im1cio "Lula" da Silva in 2002, Argentina's Nestor Kirchner in 2003, and As quickly as industrial plants were shuttered in the Northeast and Evo Morales as Bolivia's first indigenous president in 2005, Latin Amer Midwest, scores of shiny new industri al parks and factory towns, usually ican leaders began to chart foreign and domestic policies that could no called free trade zones (FfZs) or export processing zones (EPZs), sprang longer be dictated by the Un ited States. Over the next decade, the region up south of the border. By 1992, there were more than 200 of these zones turned into a worldwide center for mass participation in democracy, for in Mexico and the Caribbean Basin. They housed more than 3,000 assem new economic alliances between neighboring nations, and for new social bly plants, employed 735,000workers, and produced $14 billion in annual initiatives by governments at home. Having rejected the Washington ex ports to the United States.3 Consensus, several countries in the region promptly showed remarkable These free trade zones were allowed to operate as virtual sovereign progress in reducing their domestic income gap and reducing poverty. enclaves within the host countries, routinely ignoring the few local labor 151 HARVEST OF EMPIRE HARVEST (LA COSECHA) 153 and environmental laws that ex isted. Inside the zones, child labor was pro sperity? Unfortunately, the history of most major industrialized na reborn and the most basic rights of workers trampled. As agricultural tions is just the opposite. None of them practiced free trade during their production in many Latin American countries fell under the sway of for early period of economic growth. Instead, they used high tariffs to pro eign agribusiness, millions of Latin America's young people abandoned tect their domestic industries from foreign competition, often engaging the countryside to find work in or near the zones. But the cities to which in tariff wars against rivals. the migrants flowed lacked sufficient infrastructure of roads, sewage "In the early days, when British industry was still at a disadvantage, an systems, housing, and schools to sustain the sudden surge in population. Englishman caught ex porting raw wool was sentenced to lose his right Giant shantytowns sprang up almost overnight. The makeshift slums hand, and if he repeated the sin he was hanged," Uruguayan journalist and the new factories around which they developed led to a public Eduardo Galeano reminds us. 5 health nightmare of industrial pollution, untreated human waste, and Only when England gained a decided advantage over all other coun disease. tries in world commerce did its government begin advocating free trade Thusfree trade zones, which were meant to stabilize the economies of in the nineteenth century. During the early days of Latin American in the countries that established them, only led to more drastic and unex dependence, England used the slogan to justify bullying the new criollo pected problems. While the new factories they spawned did provide a governments. In the 1850s, for instance, British and French warships certain number of low-wage jobs for the host nations, they also fueled sailed up the Ri o Parana to force the protectionist government of Ar even more massive Latin American emigration to the United States. gentine leader Juan Manuel de Rosas to open his country's prospering Typically, the young Latin American worker from the countryside ar market to British bankers and traders.6 Eventually, the British concen rives in the local city and finds work in a free trade zone in factories now trated on controlling the South American market, ceding control over commonly known as maquiladoras or maquilas. There, the worker is most of the Caribbean region to the United States. trained in rudimentary industrial skills-the rigors of assembly produc In our own country, Congress pursued protectionist policies through tion, the discipl ine of time, the necessity for obedience to instructions. At out the post-Civil War period, an era of ex traordinary industrial growth night, the worker be gins studying English in the scores of private lan for the nation. "In every year from 1862 to 1911, the average [U.S.] duty guage schools that abound in the new urban environment. He or she on all imports ex ceeded 20 percent ... [and] in forty-six of those fifty becomes immersed in American shows on the newly bought television. In years ... [it] ex ceeded 40 percent," notes economist Alfred Eckes, who 1993, maquila workers in Honduras were more likely to own a television served on the International Tr ade Commission under President Reagan.7 (67 percent) than non-maquila workers (60 percent); in fact, they were Germany pursued a similar protectionist policy during its nine teenth more likely to own a television than a stove (49 percent) or a refrigerator century industrial ex pansion. Not surprisingly, both the German and the (24 percent).4 Each day, the worker devours the Spanish-language maga U.S. economies ex perienced higher gro wth rates during that century than zines and newspapers that are easily available in th� cities and which glo did England, the era's main proponent of free trade. rify life in the United States. The worker quickly learns she can earn ten Despite the historical record, most neoliberal economists in the ad times the salary she gets in the maquila doing the same job in a factory vanced industrial nations continue to praise the fall of tariffs and the across the border. Eventually, filled with her new consciousness and dis growth of free trade during the past few decades. They contrast the new gusted with her dead-end shantytown ex istence, the worker saves up the open global marketplace to the "bad old days" of the 1970s, when Third money to pay a coyote and risks the trip to El Norte. World governments resorted to high tariffs to protect their own fledgling industries, a strategy called import substitution. But does ex panded world commerce automatically spur an increase in DO AS I SAY, NOT AS I DO wealth, as the free traders say? And just who are the main beneficiaries The term "free trade" seems innocuous at first glance. Who could be of today's surge in international trading? against the idea that nations should seek the max imum freedom to trade Free trade proponents would have us believe this unfettered com with each other? Or that increased trade will bring with it increased merce is occurring between millions of businessmen in scores of countries 154 HARVEST OF EMP IRE HARVEST (LA COSECHA) 155 and that the money changing hands is creating more and better-paid THE FIRST EXPERIMENTS-PUERTO RICO workers, who then have more money to consume, which in turn means AND PANAMA that markets ex pand. But the reality is quite different.Two- thirds of all the trade in the world today is between multinational corporations, and The first attempts by American corporations to operate offshore facto one- third of it represents multinational corporations trading with their ries on any grand scale started in the late 1940s in the Panama Canal own foreign subsidiaries! A General Motors plant in Matamoros, for ex Zone and Puerto Rico, where pliant local governments cooperated in ample, moves parts and finished cars between itself and the parent com setting up corporate oases that included: no tariffs or local taxes; super pany in the United States; or Zenith ships machinery to ex pand one of its low wages; minimal enforcement of environmental and labor laws; fi twelve assembly plants operating in Reynosa. Between 1982 and 1995, nancial incentives from Washington for companies to relocate there; and ex ports of U.S. multinational corporations more than doubled, but the federal tax ex emption for the repatriated income of the company. By the portion of those ex ports that represented intracompany trading more 1980s, six hundred firms had factories operating in the Colon Free Zone than tripled. As a result of this enormous ex pansion of mu ltinationals, on the Atlantic Coast, where they could take advantage of Panama's the largest private traders and employers in Mexico today are not Mexi seventy-five-cent- an-hour wages.11 can firmsbut U.S. corporations.8 Puerto Rico's ex periment was even more ex tensive. The whole island Furthermore, if free trade leads to greater prosperity, why has eco was turned into a virtual free trade zone, thanks to a little-known loop nomic inequality soared and poverty deepened in virtually every Third hole in the Internal Revenue Service Code-c alled Section 936 in its last World country that adopted neoliberal free trade policies? According to incarnation-which ex empted from federal tax es the income of U.S. sub the United Nations, the 225 richest people in the world had a net worth sidiaries. in 1997 equal to the income of 2.5 billion people, 47 percent of the world's First to arrive was Tex tron, which relocated to the island in 1947 after population.9 shutting six of its U.S. mills and laying off 3,500 workers. By the early 1950s, more than one new factory a week was being inaugurated. But the boom proved ephemeral. As more U.S. companies opened up, Puerto Before the 1980s, Latin Americans generally protected their domestic in Rican-owned factories, unable to compete, were driven out of business. dustries through heavy government ownership, high tariffs, and import During the first ten years of t� e program, new U.S. factories created substitution. Mexico pursued that policy from 1940 to 1980, and during 37,300 island jobs, but the job losses among Puerto Rican manufacturers that time it averaged annual growth rates of more than 6 percent, with totaled 16,600.12 both manufacturing output and real wages for industrial workers grow Thenew jobs the factories created were not sufficient to dent the soar ing consistently. But then came the debt crisis of the 1980s. Along with ing unemployment in the countryside caused by the rapid mechanization other Latin American countries, Mexico was gradually pressured by of agriculture and the flight of people to the cities. As a result, both the U.S.-controlled international financial institutions to adopt neoliberal U.S. and Puerto Rican governments actively encouraged migration to free trade policies. Those policies included selling public assets and in the mainland as a safety valve to prevent social unrest. They offered creasing ex ports to pay down its debt. Between 1982 and 1992, the Mex cheap air fares and facilitated large-scale labor contracting by American ican government sold offeleven hundred of fifteenhundred state-owned companies through a network of officesof the Commonwealth of Puerto companies and privatized more than eighteen banks. This fire sale, in Rico, which were established in several U.S. cities.13 The result was that stead of bringing prosperity, only deepened the chasm between rich and at the height of the new U.S. investment, the greatest number of Puerto poor, as a new crop of Mexican billionaires emerged, real wages plum Ricans in history migrated to the United States. meted, and 200,000 Mexicanslost their jobs.10 Puerto Rico set the mold for a trend that then repeated itself through Mexico, however, was not the birthplace of Latin America's free trade out the Caribbean region for two generations: American corporations model; it started instead in two territories the United States directly con move in and set up low-wage factories, the factories draw laborers to the trolled. cities from the impoverished countryside, the migrants come in greater 156 HARVEST OF EMP IRE HARVEST (LA COSECHA) 15 7 numbers than the jobs available, and the surplus workers begin leaving moros near the Tex as Gulf, the maquiladora zone emerged as a giant in for the United States, either as contract laborers or as illegal immigrants. dustrial strip all along that border. Puerto Rico had one wrinkle that set it apart, however-it was still a Too often, the twin plant on this side of the border became nothing U.S. territory. That meant fe deral labor and environmental laws pro more than a warehouse, providing jobs to only a few people.15 General tected factory workers' health and safety and their right to unionize. By Electric Corporation, which opened its first maquiladora in 1971, had the 1960s, as the island's labor movement became increasingly militant, eight Mexican pl ants within a decade, where 8,500 workers made circuit workers demanded wages and working conditions closer to U.S. levels, breakers, motors, coils, and pumps.16 In one year alone, the General Mo prompting many U.S. firms to sour on the "Puerto Rican miracle." The tors Corporation opened twelve new maquilas while closing eleven facto firms started moving to other Caribbean countries willing to offer lower ries in the United States and laying off 29,000people. By the early 1990s, labor costs and laxer environmental and safety laws. The shift away from GM was the biggest private employer in Mex ico, with fifty maquila plants Puerto Rico production, however, failed initially to address one impor and 50,000 workers.17 On the eve of Congress's approving the North tant cost area-tariffs.Once they left U.S. territory, manufacturers could American Free Tr ade Agreement in late 1993, more than 2,000 factories not count on duty-free entry to the American market. To replicate their were employing 550,000 Mexicans.18 Thus, in little more than two de Puerto Rican oasis, therefore, American industrialists needed steep tar cades, the industrial heartland of North America was unceremoniously iff reductions wherever they were going next. uprooted from America's Midwest to Mex ico's northern border. Unlike the old U.S. factories that largely employed men, the maquilas took to recruiting young Mexican women, who traditionally had not been THE RISE OF THE MAQUILAS part of Mexico's labor force. Their U.S. managers considered Mexican Beginning in 1965, the manufacturing scene shifted to Mexico. That men more difficult to control and hired as few as possible.19 Thus, Mex country's new border industrialization program (BIP) spawned the ico's unemployment problem, which had always been more severe for its "miracle" of the maquiladoras, a swath of industrial parks just across the men, was barely dented by the maquila program. Drawing so many U.S. border. young women from the countryside to the border factories disrupted so In colonial Mexico, maquiladora denoted the share of grain a miller cial organization in rural villages, where women historically provided would charge a farmer for processing his harvest. Over time, the word critical unpaid labor. Even though the young men had no job prospects, came to represent a step in a larger operation that occurred elsewhere.14 they ended up following the women to the cities, and once they arrived As envisioned in the original BIP legislation, the firstmaquilas were sup at the border towns, many of them decided to cross into the United posed to be "twin plants," each with a partner factory on the U.S. side. States. As economist Saskia Sassen notes: "People first uprooted from The Mexican plant would assemble a product from components im traditional ways of life, then left unemployed and unemployable as ex ported from its twin plant in the United States, then ship the finished port firms hire younger workers or move production to other countries, product back across the border for sale in the American market, and may see few options but emigration-especially if export-led strategies when the product crossed the border only the value added by the Mexi have weakened the country's domestic economy."20 can labor would be subject to a tariff. Those who managed to findjobs in the maquilas soon found that their Since this was a very specific and limited form of tariffred uction, the meager wages bought less and less each day. Real wages in the industry Mexican government initially permitted it only in areas near the border. plummeted when measured against the U.S. dollar. Theydropped 68 per That way, supporters argued, jobs would be created on both sides of the cent between 1980 and 1992 even though maquila productivity increased border, and the maquilas would reduce immigration because Mexicans 41 percent. Most of the drop resulted from two separate devaluations would choose to stay and work in their own country with the new North of the Mexican peso in the 1980s-and all that was before the huge American subsidiaries. December 1994 devaluation, where the peso lost an additional 50 per But the BIP turned instead into a way for the corporations to evade cent value. U.S. labor and environmental laws while manufacturing hundreds of Contrary to the glowing predictions of our government and business yards from our own country. From Tijuana on the PacificCoast to Mata- leaders, the explosion of maquiladorashas done nothing to slow Mexican 25 8 HARVEST OF EMP IRE HARVEST (LA COSECHA) 259 emigration. Instead, emigration has escalated side by side with maquila President Carlos Salinas released Gonzalez only after he agreed to turn growth-ex actly as happened with Puerto Rico (see table 11). over day-to- day operations of the union to his son. When I interviewed Agapito Gonzalez, Jr., in June 1993, at the union headquarters in Mata moros, the son spoke with obvious caution about the need for "coopera
TABLE 11 tion" with the maquila owners and the government. LEGAL MEXICAN IMMIGRATION TO THE UNITED STATES NIGHTMARE ON THE BORDER (BY FISCAL YEAR}11 The other side of Mex ico's industrial transformation is the social and en 1960--1969 441,824 vironmental disaster created by unrestrained growth. 1970--1979 621,218 Sleepy border towns have been catapulted helter-skelter into the in 1980--1989 1,009,586 dustrial age. Just across the Rio Grande from El Paso, for instance, is 1990--1999 2,757,418 Jua rez, whose population, just 250,000 in 1960, jumped fivefold in thirty 2000--2008 1,698,091 years. 25 Reynosa, across the river from McAllen, Tex as, zoomed from 4,800 inhabitants in 1930 to 280,000 in 1990. And that's according to the official government count. Estimates by the McAllen Economic Devel The miracle prosperity that lower trade barriers were supposed to opment Corporation put the population closer to 600,000! So frenetic bring never reached the majority of Mexicans outside the maquilas ei has been the pace of growth that 60 percent of Reynosa's maquila work ther. Per capita domestic product for the whole country dropped from ers have lived in the city less than five years, and 20 percent less than a $2,421 annually in 1980 to $2,284 in 1994.22While in the Far East factory year.26 wages rose throughout the 1980s, Mexican wages plummeted, making The same population ex plosion has been replicated in the border the country and the whole Caribbean region the most desirable place in cities of Tij uana, Mexicali, Nogales, Nuevo Laredo, and Matamoros. As the world for U.s: direct investment.2 3 thousands have flockedto the farrago of maquiladoras in search of work, Meanwhile, Mex ico's government, thanks to its tight control over na the border towns have simply been overwhelmed by the lack of roads, tional unions, assured foreign investors that no one would challenge the housing, electrical power, schools, even clean drinking water for the new super-low-wage structures of the maquilas. In most free trade zones migrants. Theresult has been urban anarchy on a scale almost unimagin along the border, only government unions are allowed to operate. In able to Americans. In Reynosa, one researcher counted two hundred those rare cases where independent unions gain a foothold, such as the separate shantytowns in 1992, most without cement roads. More than a northeastern state of Tamaulipas, the workers see immediate benefit. third of the city's population had no indoor plumbing and 15 percent no Maquila workers there earn 30 percent more than their counterparts in electricity.27 As late as 1998, no major city along the border had a fully other Mexican states for a forty-hour week, while workers in other states operational sewage treatment plant, including Jua rez, with its 1.5 million are required to work forty- eight hours. residents. But even in Tamaulipas, union leaders know their limits. In 1993, Added to the human waste and garbage created by the population Agapito Gonzalez, the seventy-six-year-old leader of the Union of Day surge has been the pollution released from the unprecedented concen Laborers and Industrial Workers of Matamoros, found out what happens tration of factories. The most cursory summary of the worst contamina when you ex ceed them. That January, he pulled his thirty-five thousand tion would fillscores of pages. Among them are: the repeated escapes of members out in an unprecedented strike against the maquila owners' at deadly tox ic gas clouds from Dupont's Quimica Flor plant in a densely tempt to reinstitute the forty-eight-hour week.24 The strike was so suc populated neighborhood of Matamoros; the 80,000 tons of lead sulfate cessful the owners relented within a few days. Soon afterward, the federal found illegally dumped in 1992 outside Tijuana by Los Angeles-based government arrested the popular labor leader, flew him to Mexico City, Alco Pacific, which ran a lead-processing pl ant there for more than a and imprisoned him without bail for six months on tax evasion charges. decade; the discharges of xylene-a highly tox ic industrial solvent-by 160 HARVEST OF EMPIRE HARVEST (LA COSECHA) 161
General Motors' Rimir plant into the sewers of Matamoros, where a • Mexico's industrial accident and illness rate is among the highest in Boston-based environmental gr oup found xylene at 6,300 times the level the world, 23 cases per 100,000 workers annually between 1987 and permitted by U. S. drinking water standards.28 1991, according to the International Labor Organization, and the rate Thehuman impact of so much toxic pollution is inescapable: has been rising.35 Moreover , under Mexican law, for eign companies are absolved fr om court suits for work-related injuries. With workers • In the mid-1980s, Mexican health pr ofessionals in Matamoros discov only allowed to collect legally capped disability payments fr om the ered that deformities in many of the citfs children might be tr aced to· government, American companies thus have little fear of liability one of the first maquiladoras, Mallory Mexicana S. A. , an Indiana suits.36 based plant that had pr oduced capacitors for televisions during its early years and in the pr ocess exposed employees to various toxic chemi THE CARIBBEAN BACKYARD cals, including PCBs. At least 70 severely disabled Mallory children had been identified By the mid-1980s, American industrialists persuaded our feder al govern in 1992 when I visited Matamoros. Since then, the number has climbed ment to replicate the Puerto Rico and Mexico experiments throughout to 120. All the children were born between 1970 and 1977 to mothers the rest of the Caribbean and Centr al America. TheReagan administra who had worked on the assembly line while pr egnant. Those children tion called this next stage the Car ibbean Basin Initiative (CBI). Under are all adults now, but many still wear diapers; others mov e and talk the pr ogram, Congress provided direct feder al aid to countries in the normally but possess the minds of seven-year-olds. Their facial fea Caribbean that established fr ee tr ade zones and eliminated tariffs for tures ar e flat and listless and some communicate in bone-chilling manufactured goods entering the United States fr om those zones. Pas shr ieks, their spindly ar ms and legs constantly convulsing. sage of the bill fueled an immediate expansion of offshore pr oduction. By the time the mothers realized the source of their pr oblem, the Many of .the new manufacturers wer e direct subsidiaries of U. S. firms or plant had closed and the company had been sold in a str ing of deals Kor ean and Taiwanese middlemen supplying the U. S. market. to sev eral U. S. firms.29 On August 27, 1995, mor e than a half-dozen But CBI went much fur ther than the Mexico pr ogr am. U. S. officials ac maquiladora firms agreed to pay $17 million to settle a lawsuit by tually enticed U. S. companies to close down their U. S. factories and elim twenty-seven of the families, though the companies insisted no proof inate American jobs. The policy became public late in 1992, when a had been established of an env ir onmental link.30 co alition of labor unions pulled off the first labor sting in American his • In 1993, American Rivers, a national conservation group, concluded tor y. The sting, or ganized by the National Labor Committee, involved that the Rio Gr ande "poses a gr eater threat to human health tha n the cr eation of a fictitious firm, New AgeTe xtiles. The"execu tives" of the any other river system in North America." There port blamed indus fake firm attended textile industry tr ade shows, wher e they secretly tr ial wa ste fr om maquiladoras for much of the pr oblemY filmed officials of the U. S. Agency for International Development and • From 1991 to 1993, childhood cancers in the Brownsville public schools the U. S. Commerce Department ur ging their firm tolocate production in increased 230 percent.32 the Caribbean region. The feder al officials offered to arrange financing, • Gallbladder pr oblems, liver cancer, and hepatitis rates ar e higher feasibility studies, and site selection tr ips to th e Caribbean fr ee tr ade along the thirty-three Texas counties near the Rio Grande than in the zones, and they even boasted how union activists were blacklisted and rest of the state and the nation.33 unions kept out of the zones. • Abnormal clusters of anencephalic births have been identified in When the sting was finally revealed on a network television news Cameron County on the U. S. side of the border and in the adjacent pr ogram, it turned out that the federal government had spent nearly state ofTaumalipas on the Mexican side. Thougha few studies by U.S. $700 million since 1980 on projects aimed at pr omoting Caribbean medical experts have so far found no link to pollution, many resi maquiladoras.31 There velations, coming in the midst of a recession and dents and env ironmental activ ists remain convinced the birth defects just befor e the 1992 pr esidential elections, thr ew Washington into an ar e related to the toxins produced by the maquilas. 34 uproar and conv inced Congress to enact new restrictions on economic 262 HARVEST OF EMPIRE HARVEST (LA COSECHA) 263 aid under CBI. A decade after the pr ogr am had been established, mor e ers in the Dominican Republic, Honduras, Haiti, and Costa Rica. Today, than five hundred companies had utilized CBI incentives to set up their 58 percent of Kenwood's workfor ce is offshore, where its workers earn first pr oduction facilities in the region's FfZ s, and another thr ee hun only a few dollars a day.42 dred had expanded operations.3 8 The frenetic pace of factor y expansion in the region is astounding. A By the time of my first tr ip to the Dominican Republic in 1992, that 1993 U.S. AID study of the fr ee tr ade zones in Honduras reported that country already boasted twenty-three free tr ade zones, which employed the number of Honduran maquila worker s had skyrocketed by 43 per 170,000 people. Few of those jobs had existed a decade earlier. The cent in just one year, to more than 22,000, and was expected to tr iple by largest FfZ was in the southeasterncity of San Pedro de Macorfs. It con 1996. Tho se Honduran workers were overwhelmingly women (71 per tained ninety plants and was brimming with 40,000 workers, most of cent) and under twenty-five year s of age (83 percent), with nearly half of them teenagers and young women who worked ten- and twelve-hour them teenagers.43 shifts for as little as four dollars a day. Claudia Leticia Molina was one of those teenagers. She was a rail -thin Once again, however, the staggering gr owth in jobs did nothing to sixteen-year-old who weighed ninety-three pounds when she began stem emigration. The same decade that saw the most maquila jobs cr e working at a Honduran factor y called Orion Apparel in one of the zones ated in the Dominican Republic also saw the gr eatest Dominican exodus outside San Pedro Sula. Her supervisors sometimes for ced Claudia to to the United States; fr om 1981 to 1990, 252,000emig rated legally to this clock into work at 7:00A.M. on a Fr iday, and she would not leave the fac country and an unknown number illegally-more than in the previous tory until 4:00A.M. the next morning. Her only rest was catching a few two decades combined. hours' sleep on the floor by her machine. A week of such work earned With maquila pr ofi ts booming, you might expect some meager pr os her for ty-three dollars..In neighboring El Salvador, Judith Yanira Viera, perity to find its way to the av er age Dominican. Just the op posite oc eighteen, would work as many as seventy hours at Mandarin Interna curred. Dominican gr oss national pr oduct declined almost every year tional, a Taiwanese-owned plant that produced shirts for such well between 1982 and 1992, and per capita consumption dr opped 22 percent known American retailers as Eddie Bauer, the Gap, and JCPenney. Her during that time.39 average pay was 56 cents an hour.44 Central Americans have not far ed much better. At first, the civil war s Physical and sexual abuse against women in the zones is commonplace. in the region dampened for eign investment inter est, but since the end of In some factories, women are fired when they become pregnant, and the fighting, Central America has joined the maquila bandwagon, with ther e have been documented instances of factory owners requir ing em fr ee tr ade zones sprouting in several countries. ployees to take birth control pills each morning as they report to work. By 1998, the Caribbean Basin had become the world's largest supplier In San Salvador , th e Human Rights Office of the Catholic Ar chdio of clothing to the U.S. market.40 Name an American retailer whose soar cese denounced an incident in which numerous female employees at ing pr ofi ts had made it a darling of Wall Street and in all likelihood its Mandarin International were beaten with pistol butts on June 29, 1995, garments were being pr oduced by teenagers in Central America. Av er by a factor y manager and a Salvadoran ar my colonel who was a partner age hourly wages in those zones began a spir aling race to the bottom. In in the firm.At the time, the women wer e pr otesting the firing of 350 of 1992, they were 45 cents for El Salvador ; 39 cents for Honduras; 26 cents their coworkers for tr ying to or ganize a union.45 The outcry by church for Costa Rica; and 62 cents for Guatemala. 41 and labor gr oups in El Salvador and the United States led to a boycott Among the U.S. firms that closed domestic plants and flocked to the against the Gap, one of Mandarin's principal customers. As the boycott region were Farah, Haggar, GT E, Kellwood, Levi Strauss, Leslie Fay, appeared to gather steam, image-conscious Gap officials offer ed to set Sara Lee, Oxford, and Arrow. In 1981, for instance, Kellwood Industries, tle the dispute and get the workers rehired. The Gap also agreed to a a St. Louis-based manufacturer of apparel and home furnishings, em pioneering set of employee rights, which the firm pledged all its futur e ployed 16,000 people in sixty-two U.S. plants and it had no ov er seas pr o contractors would honor. duction. Eleven years later, Kellwood had closed fifty of those plants and Thegr owth of factories in the fr ee tr ade zones has been so gr eat that eliminated 9,500domestic jobs and replaced them with 8,900new work- one federal study warned of a looming shortage of female workers. The 164 HARVEST OF EMP IRE HARVEST {LA COSECHA) 165 report, compiled for the U.S. Agency for International Development by NAFTA: WHERE DiD ALL THE PROMISES GO? Pr ice Waterhouse, pr edicted that in Honduras, where 50 percent of young females in the Sula Valley ar e already working in the factories, "it None of the pr ior phases of this fr ee tr ade juggernaut compares in scope is likely that the female participation rate will level off between 65 per to what has happened since the U.S. Congress approved NAFTA. The cent and 70 percent, so future labor for ce growth will depend on vegeta tr eaty, which took effect on January 1, 1994, cr eated a new common mar tive population increase plus immigration."46 ket whose aim was to remove all tariff barr iers between Mexico, Canada, Unfortunately, the phenomenal pr ofi ts being made by the multina and the United States by 2010.49 tional corporations and their middlemen pr oducers have not tr ickled During the bitter fight in Congress over the tr eaty, NAFTA's advo down to the average Central American worker. While for eign invest cates pr omised a new er a of prosperity for what they billed as the world's ment in the fr ee tr ade zones has boomed, over all annual exports fr om biggest economic bloc. President Clinton predicted 170,000 new jobs the region to the United States dr opped by more than $1 billion fr om would be cr eated for Americans fr om increased exports to Mexico just 1984 to 1991 and per capita income in the Caribbean Basin fell at a rate in NAFTA' s firstyear.50 During the initial ten years, some experts claimed, tw o and a half times faster than the rest of Latin America. TheUnited Mexico would gain more than 1 million new industrial jobs. Clinton and Nations estimates that 60 percent of the people of Central Amer ica and Vice President Al Gore lobbied fiercely for the tr eaty and they were the Caribbean live below the poverty line.47 joined by several for mer Republican and Democratic pr esidents. They Just as in Puerto Rico, Mexico,and the Dominican Republic, maquiladora all assured the public, just as pr evious leaders had with the border indus gr ow th in Central America did not slow immigration. During the decade tr ialization pr ogr am, that the economic boom fr om NAFTA would ben of the 1980s-at the height of the region's civil wars-468,000 Central efi t Americans and that it would slow the tide of illegal immigration, Amer icans came to the United States legally and many more illegally. because Mexicans who earned mor e at home would not come here look After the fightingstopped, however, the exodus continued. Between 1991 ing for jobs. and 1996, another 344,000 arr ived legally. Theconclusion is inescapable. The same day NAFTA took effect, Mayan peasants in Chiapas Theneoliberal industrialization str ategy has done little to improve basic launched the Zapatista insurrection. One of the demands of the rebels conditions in the region. If anything, it has only accelerated migration was for pr otection against NAFTA' s expected impact on agr iculture. The and rootlessness among the region's workers, who, once they have fled tr eaty's provisions, the Zapatistas and some American cr itics insisted, their villages for the maquilas, find it even easier to flee the maquilas for had the potential to devastate close to 2 million Mexican peasants who El Norte. pr oduced corn, the country's food staple, on small individual plots. By re Nonetheless, leaders of both the Democratic and Republican parties ducing agricultural tariffs, NAFTA would dr ive the farmers out of bus i have pressed forward with an expansion of tr ade liberalization through ness, since they would not be able to compete with the expected surge of out the region. In the early morning hours of July 27,2005, the House of American cor n and wheat, cr ops whose harvests, here, ar e highly mech Representatives approved a new Central American Free Trade Agree anized. 51 ment by the slimmest of margins, 217 to 215. Themeasu re, which eventu The guerrilla uprising jolted world financia l experts who had long ally included the Dominican Republic as well as the United States and trumpeted Mexico as an economic miracle and a model for Latin Amer five Central American nations, pr evailed only after an extraor dinary ica. 52 What those experts refused to acknowledge was that Mexico re fight on the House floor, during which Republican leaders kept the vote mains a nation divided by immense disparities of wealth. In 1992 , for open for more than an hour as they br azenly strong-armed reluctant instance, the top 10 percent of Mexicans took in 38 percent of total in members and even offered pork barrel inducements to several of them come, while the bottom half received only 18 percent. 53 in or der to eke out a victory.48 The Mexican leader most in tune with corporate America's desire for NAFTA, and the man who shepherded the tr eaty thr ough the Mexican legislature, was for mer pr esident Carlos Salinas. Throughout his presidency, Salinas fueled the Mexican miracle with risky gambits, high-interest, 266 HARVEST OF EMPIRE HARVEST (LA COSECHA) 267
short-term bonds sold to foreign in vestors an d denominated in U.S. dol has had a similar effect-both positive an d small-on the Canadian an d lars. By 1995, Mexico owed $29 billion in those bonds. It needed an other Mexican economies."54 $9 billion a year just to service the in terest on its regular long-term debt, Others paint a far more troublin g picture. In Canada, which had already on e of the biggest in the world. The combined debt, together launched a bilateral predecessor agreement to NAFTA with the Un ited with a ballooning trade deficit, drove the country to the brink of in sol States in 1989, unemployment rose to an average of 9.6 percent through vency by late 1993 an d early 1994. out the 1990s-the highest levels in that country since the Great De Both the Clin ton an d Salinas administrations, however, ignored the pression; meanwhile, in come in equality in creased. An d even though growin g crisis. Theywere determined first to win passage for NAFTA in over 870,000 new Canadian jobs were created between 1989 and 1997 the American Congress, then to salvage an other victory for Salinas's by the surge in exports, an estimated 1,147,000 were lost from an even chosen successor for president, Ernesto Zedillo, in the August 1994 elec higher growth in imports.55 tion-so they dared not risk an y belt-tightenin g fin an cial reforms that Here in the Un ited States, the Department of Labor estimated that would an ger the Mexican electorate. Salinas's failure to act left Mexico's 214,000 factory layoffs between 1994 and 1998 were due to jobs trans econ omy in such shambles that his successor was forced to order an ferred south of the border. Union leaders, however, in sisted the govern open -ended devaluation of the peso on ly mon ths after assumin g the ment's measuring standards were too narrow an d that job losses were presidency. Zedillo's decision stunned world markets an d propelled the actually twice, that figure.They claimed as well that in dustrial wages at country in to economic free fall. home were kept artificially low because a growing number of U.S. man President Clin ton hastily engineered a $50 billion in tern ational ufacturin g firms had responded to their workers' demands for more pay bailout, $20 billion of which he offered from the U. S. Tr easury, so that by threatenin g to move production to low-wage Mexico. Mexico could pay off its foreign creditors. The bailout was con ditioned The U.S. trade deficitwith its NAFTApartn ers, meanwhile, grew at an on the Zedillo government's rammin g a severe austerity program on to astonishing clip. In 1993, for example, the country had enjoyed a $1.7 bil its people. By midyear 1995, the Mexican peso had plummeted 50 per- · lion trade surplus with Mexico, but that surplus quickly evaporated an d cen t against the dollar, 1 million Mexicans had lost their jobs, an d inter turn ed in to a whopping $74.7 billion deficit by 2007.56 est rates had skyrocketed to the point that Mexican consumers were As a result of spiraling trade deficits with Mexico an d Canada, the paying as much as 100 percent in terest for credit card loans. All predic Un ited States en dured a net loss off 1,015,290 trade-related jobs between tions of immediate post-NAFTA prosperity vanished in the meltdown. NAFTA's inception an d 2004, according to a report by the Econ omic Pol Four years later, the average Mexican had still not regained his precrisis icy In stitute, with Mexico accounting for about 560,000 of that net loss, standard of living. an d Canada for about 455,000.57 Many economists in this country tried to separate the NAFfAaccords Thoselost jobs, moreover, had paid on average $800 per week, con sid from the Mexican fin ancial meltdown . By doing so they overlooked erably more than the manufacturing jobs that remained in the United the fun damental weakness of the common market the treaty created States, the report concluded, adding: when it married Mexico, a developing country still torn by severe poverty an d class con flict,to two of the richest econ omies in the world. The average job in the rest of the economy paid on ly $683 per wee k, 16% to 19% less than trade -relat ed jobs. Growing trade deficits wit h Mexico an d Canada have pushe d more than 1 million wor kers out of NAFTAtS IMPACT ON THE UNITED STATES higher-wage jobs an d in to lower-wage position s in non-trade related AND CANADA in dust rie s. Thus,the displacement of 1 mill ion jobs from traded to By the fifteen th anniversary of the new economic union in 2009, many of non-traded goods industries reduced wage payments to US. workers the original promises had dissipated. Even some of the strongest backers by $7.6 billion in 2004 alone (my empha sis) .58 of the treaty had long since conceded that, while trade has in creased sharply between the Un ited States, Canada, an d Mexico, "the NAFTA Overall, the U.S. economy lost nearly 3.8 million man ufacturing sector deal has expanded U.S. gross domestic product ( GDP) 'very slightly,' and jobs between 2001 and 2008, a 22 percent decline in less than a decade. 268 HARVEST OF EMPIRE HARVEST (LA COSECHA) 26 9
A Con gressional Budget Offi ce report pointed to cheaply produced for 1 million new jobs each year just to keep pace with the number of people eign imports as a major contributor. "Although man y factors other than who enter its workforce. 61 trade affect man ufacturing employmen t," the report noted, "in recent The labor picture became even more dismal on ce you factored in years, the pattern of decline in employmen t across in dustries has been NAFTA's impact on the Mexican countryside. With government subsidies correlated with the rate of in crease of import penetration ."59 for sowing com eliminated, small farmers simply could not compete with On ly the strong growth of the U.S. economy during the 1990s an d the the mechanized output of U.S. agribusiness. Mexico's grain imports from early years of the new century obscured the seriousness of NAFTA's fail the United States tr ipled from 1994 levels an d now represent 40 percent ure at home. Nothin g, however, could hide what was happenin g in Mexico. of that country's food needs. Agricultural employment plummeted by nearly 30 percent between 1993 an d 2008---from 8.1 million to 5.8 million. The 2.3 million peasants an d farm workers thrown off the land thus NAFTA AND THE REORDERING dwarfed the half-million net job gain in Mexican manufacturing. Many of OF MEXICAN SOCIETY those un employed peasants were forced to either join the ranks of the It is difficult for Americans to grasp the immen se dislocation an d fracturing country's huge in formal econ omy or migrate to the Un ited States.62 of Mexican society that has resulted from NAFfA-harder still to imagine So instead of slowing down the exodus to the Un ited States, NAFfA, that our governmen t's trade policies have actually accelerated the exodus with its extraordinary impact on Mexican agriculture, has speeded it up. of Mexican workers to our own coun try. Supporters of the trade accord, TheMexi can -born population of the Un ited States went from 4.5 million aft er all, promised it would bring gen eral prosperity to the three pa rtner na in 1990 to 9 million in 2000, an d then to 12.7 million in 2008, with more tion s an d would reduce the flow of immigrants from below the Rio Gran de. than half of that population being un documented. Rural dwellers repre At first, Mexico did attract a breathtaking amount of new foreign in sen ted 44 percent of those migrants even though on ly one-quarter of vestment an d jobs, but the employment growth proved to be temporary. Mexico's people reside in the countryside.63 Furthermore, it obscured profound transformations that were occurring As a study by the CarnegieFound ation noted, "one of the paradoxes of simultan eously in Mexico's banking system, an d most of all, in its agri NAFTA, which leaders promised would help Mexico 'export goods, not culture, where the social cost was greater than even the Zapatistas an d people,' is that Mexico now 'exports' more people than ever an d more of other NAFTA critics had warned. them reside permanently in the Un ited States without documents."64 Thenu mber of jobs in foreign-owned Mexican maquiladorqs nearly Those Mexicans who have remained in their country have been forced tripled between 1993 an d 2000, fromabout 546,000 to more than 1.3 mil to contend with a relentless downward pressure on wages an d on the lion . This was due in part to the peso devaluation of 1995, which so low quality of life. A little-noticed consequence of the flood of processed im ered the cost of Mexican labor that foreign companies rushed to set up ported U.S. foods, for in stance, has been an epidemic of obesity. new.factories. Maquila employment peaked in 2000, however, an d it has According to one report, "almost 33 percent of Mexican adults are now remained stagn an t ever since, registering around 1.2 million by 2008. obese an d an other 40 percent overweight."65 Thus, fifteen years of NAFTA produced a job gain of only 660,000 in On ly 10 percent of Mexican households, on the other hand, have seen foreign-owned man ufacturin g plants.60 their in comes in crease sin ce 1994, while 90 percent have seen stagnation Mexico's own local in dustry, meanwh ile, was languishing, largely be or a decline in in comes. Despite a small rise in average pay for the cause the new foreign-owned companies tended to utilize few domestic maquiladora in dustry, the gap between U.S. an d Mexican factory work components for their export-oriented factories. By 2008, employment in ers' wages keeps widenin g. Theaverage U.S. man ufacturing wage in 1993 _ the country' s non-maquila industry had declined to 1.24 million- was 5.6 times higher than in Mexico; by 2007 it was 5.8 times higher. 159,000 fewer jobs than when NAFTA took effect. Not only do foreign Moreover, half the new jobs created in Mexico do not offer basic bene firms now produce as many jobs in Mexican manufacturing as the coun fits that are mandated by that country' s laws, such as social security an d try's own domestic plants, but the industry's net gain in both foreign paid vacation time.66 controlled an d domestic man ufacturing workers was just 500,000for the Since NAFTA' s in ception , the real value of Mexico's min imum wage has en tire period. To put that number in perspective, Mexico must produce dropped by 25 percent. Fifty-five percen t of the country's rural population 170 HARVEST OF EMPIRE HARVEST (LA COSECHA) 17 1 was living in poverty in 2006, with states like Chiapas, birthplace of the A public uproar ensued when the foreign banks started charging Mex Zapatista movement, registering an astounding 75 percent poverty rate. ican businesses and consumers service fees up to three times higher than And though the nation's overall poverty rate dropped from 53 percent to they charged clients in other countries and when they made access to 43 percent since 1992, that was due largely to targeted antipoverty pro credit far more difficultfor ordinary Mexicans than had been the custom grams that the Mexican government was forced to develop to handle the previously. In 2004, for instance, private sector lending by the country's lack of labor income. More than 18 percent of Mexican households were banks affected only 15 percent of the economy, compared to 70 percent receiving government transfers by 2006 through its two main poverty in the United States. So pervasive did the exorbitant fees and lending re programs, Procampo and Oportunidades (formerly called Progresa).67 strictions become that President Vicente Fox and the Mexican legisla Another factor contributing mightily to poverty reduction is the con ture publicly rebuked the foreign banks and demanded a change in their tinued exodus of unemployed laborers to the United States. By 2007, policies. Nonetheless, the damage was done. Within ten years of NAFfA, remittances those migrants sent back to Mexico had jumped to $24 bil most of the banking deposits of the Mexican people were under the con lion, more than six times higher than pre-NAFfA levels, with 7 percent of trol of American and European bankers. Imagine for a moment the out all households receiving those remittances.68 cry that would have occurred in the United States if a handful of foreign Meanwhile, the biggest beneficiaries of free trade with Mexico have financial firms had suddenly established control over 80 percent of our been foreign multinational corporations, especially those from the United domestic banking industry. 71 States. Between 1994 and 2004,American companies produced 67 percent of all new foreign direct investment in the country, making Mexico more NAFTA AND THE WAR ON DRUGS dependent than ever on the ups and downs of the U.S. economy. While in 1970, 70 percent of Mexican exports went to the United States, by 2008that Mexico has been beset for years by escalating violence connected to il figlire had climbed to 85 percent. Not surprisingly, when the Great Reces licit drug trafficking and to efforts by Mexican and U.S. law enforcement sion caused a rapid contraction of the U.S. economy that year, Mexican to eradicate it. But while that violence has attracted growing attention workers were especially hard hit. Exports to the United States in 2009 from the U.S. news media and prompted huge increases in aid from plummeted by more than 15 percent, from $215 billion to $176 billion.69 Washington for heightened interdiction, few reports have analyzed the connection between NAFTA and the mushrooming narcotics trade. The cross-border flow ofmoney and guns into northern Mexico, and Mexico's banking system has been even more affected by NAFTA than of marijuana, opium, and methamphetamines into the United States, its industry. The trade agreement combined with the country's financial gradually emerged into a lethal industry now estimated to generate crisis of 1994-1995 to open the floodgates for foreign banking opera $15 billion to $30 billion annually. The major cartels that control that tions. Citibank, for instance, had been the only non-Mexican company trade have turned so brazen that they have periodically assassinated authorized to operate independently in Mexico, with all other outsiders police and government officials, gunned down civilians in broad day limited to owning no more than a 30 percent share of major domestic light, and even launched attacks against law enforcement outposts. In banks. But between 1994 and 2004, a tsunami of foreign financial invest 2009, more than 5,800 people died in drug-related violence in Mexico, ment struck that was "unprecedented for an economy the size of Mex nearly three times the number killed in 2006. Most of the killings ico," according to one economist. U.S., Canadian, and European banks occurred in Juarez and other cities along the border. Nearly 36,000people poured in more than $30 billion and ended up seizing near total control were jailed by Mexican law enforcement on drug charges in 2009-a of the country's financial sector. Foreign firmshad controlled just 16 per fourfold increase over the number arrested in 2001.72 cent of banking assets in 1997, yet they amassed an astonishing 82 per Under the Merida Initiative (also known as Plan Mexico), the U.S. cent by 2004.By then, eight of the country's ten largest banks were in the government supplied more than $700 million in aid to Mexico between hands of outsiders. Just two of those banks, BBVA Bancomer (owned by 2007 and 2009 for military equipment, training, and surveillance technol Spain's Grupo BBVA) and Banamex (owned by Citigroup), controlled ogy to ramp up the efforts of Mexican president Felipe Calderon against 48 percent of all banking assets.70 the drug trafficking organizations.73 272 HARVEST OF EMPIRE HARVEST (LA COSECHA) 273
Yet the drug trade continues to flourish. 2001 and 2004,but in two-thirds of food poisoning incidents, health offi The U.S. State Department's annual survey of worldwide narcotics cials failed even to diagnose the outbreak or pinpoint the source.76 trafficking estimated that thirty-seven thousand acres of land in Mexico was cultivated with opium in 2009. That was more than double the LATIN AMERICA'S REVOLT AGAINST FREE TRADE amount from the previous year, and the "highest level of [opium] pro duction ever estimated in all of Mexico and Latin America combined," In the years after the creation of NAFfA, U.S. officials aggressively the report concluded. Meanwhile, land use for marijuana cultivation was sought similar treaties with governments throughout Latin America, in higher than at any time since 2002. In addition, Mexico produces 80 per cluding the regional Caribbean Free Tr ade Agreement, the hemisphere cent of the methamphetamines sold in this country and is the transit wide Free 'Ifade Area of the Americas, and individual pacts with key place for 90 percent of the U.S. cocaine supply.74 nations like Chile and Colombia. But those effortsmet increasing resis Some Mexican officials see a direct link between drug trafficking, tance from a wave of new populist governments that began to reject the NAFfA,and the crisis in Mexican agriculture. They note that hundreds Washington Consensus. Media reports in the United States tended to fo of thousands of the country's peasants can no longer make a living from cus attention on the most confrontational of those leaders, Venezuela's growing beans and corn because of the competition from cheap U.S. Hugo Chavez and Bolivia's Eva Morales, but the reality was, the entire grain imports that began with NAFfA. Drug traffickers are increasingly region was undergoing a transformation. luring many of those farmers to cultivate illicit crops instead. As much as The reason for the new resistance was simple: two decades of neolib 30 percent of Mexico's farmland may currently be planted in part with eralism had failed. Economic policies promoted by the United States marijuana and opium poppies, according to an estimate by Ricardo Gar had produced not prosperity but deeper economic misery throughout da Villalobos, head of one of the country's federal courts that handles Latin America. Between 1990 and 2004,the officialunemployment in the agrarian issues. And with more than 2 million farm laborers out of work region rose from 6.9 percent to 10 percent. Seven out of every ten new since NAFfA began, the northern cities of Mexico are teeming with an jobs created during the period were in the informal sector, where work army of desperate, unemployed men. Many of those unemployed be ers enjoyed little security, few fringe benefits, and virtually no health and come easy to recruit for the operations of the drug gangs. Finally, the safety protection. By 2006, the International Labor Organization re massive volume of truck trafficcrossing the U.S.-Mexico border each day ported that 23 million Latin Americans were unemployed and another to transport NAFfA-generated imports and exports makes it even more 103 million were "precariously" employed-more than half of the re difficult for U.S. border agents to find and isolate drug contraband with gion's active workforce.77 out at the same time interrupting the legal trade.75 In response to the crisis, new social movements arose that were unlike NAFfA's impact on food quality in the United States rarely gets men any others in the modern history of Latin America. Their leadership did tioned by proponents of export-based free trade. By 2000,nearly 96 per not come from traditional opposition groups, the old social democratic cent of all strawberries and 52 percent of all other fruits and vegetables and Communist parties or the petrified trade union hierarchy, nor was it consumed in the country were coming from Mexico. At the same time, inspired by the remnants of Marxist guerrilla bands, such as Peru's Shin the rates of food inspections on both sides of the border declined pre ing Path or Colombia's FARC. Instead, the new movements emerged cipitously. In 1997, 270 people in five states were sickened by a strain of from the most impoverished sectors of their societies, long-ignored potentially fatal hepatitis A from frozen Mexican strawberries. The U.S. indigenous and black populations: the peasant cocalero movements in Food and Drug Administration (FDA) estimated in 2007 that it would Bolivia and Peru; the Zapatista rebels in Chiapas, Mexico; the factory conduct border inspections that year on less than 1 percent of the food takeover movement in Argentina; the Landless People's Movement of that it regulates, largely vegetables, fruit, seafood, grains, dairy, and ani Brazil. These uprisings did not merely oppose their own governments mal feed. That was down froman already low 8 percent prior to NAFfA. and domestic elites, they increasingly directed their ire at the neoliberal According to an investigation by Scripps News Service, more than fifty agenda of international bodies like the International Monetary Fund, thousand Americans got sick or died from something they ate between the World Bank, and the World Tr ade Organization. !174 HARVEST OF EMPIRE HARVEST (LA COSECHA) !175
In January 2003, on the tenth anniversary of NAFTA, a movement (2003)and Carlos Mesa (2005);in Ecuador,Abdahi Bucaram (1997),Jamil called El Campo No Aguanta Mas (the Rural Sector Can't Take It Any Mahuad (2000), and Lucio Gutierrez (2005); in Paraguay, Raul Cubas more) blocked the border bridge connecting Juarez and El Paso, while Grau (1999); and in Peru, Alberto Fujimori (2000).80 more than 100,000 Mexican campesinos marched in Mexico City to con The extraordinary political and economic changes in Latin America demn the dumping of low-cost U.S. corn and the massive displacement of during the past decade are beyond the scope of this book to chronicle. It Mexico's small farmers.78 is no understatement to say, however, that most countries in the region Numerous protests erupted, as well, against the continued sell-off of have begun to chart policies for the first time in their history that are in government assets and services in the region: dependent of Washington and Wall Street, in both their domestic and in ternational affairs. Unfortunately, U.S. media accounts of the region have • In Puerto Rico, more than half a million people joined a two-day gen sought to perpetrate the stereotypical image of El Jefe , repeatedly spot eral strike in 1998, shutting down hospitals, government offices, and lighting Hugo Chavez of Venezuela and Evo Morales of Bolivia, the commercial malls and barricading all roads to the San Juan interna most confrontational opponents of the old Washington Consensus, as a tional airport. Their aim was to prevent the government's sale of the new Latin American "threat." But Chavez and Morales are only two of Puerto Rico Telephone Company to U.S.-based GTE. Even though more than a dozen presidents in the region who have challenged U.S. polls showed 65 percent opposition to the sale among Puerto Ricans, imposed solutions. Thelist of left-wing Latin American populist leaders the island's governor, Pedro Rossell6, proceeded with the deal. In democratically elected to office in recent years is truly unprecedented. 2010, university students paralyzed eleven campuses of the Univer sity of Puerto Rico for more than a month to protest government pri vatizationand increased tuition. TABLE 12 • In Bolivia, tens of thousands of urban poor filled the streets of PRESIDENTS ELECTED IN LATIN AMERICA WITH Cochabamba in 2000 in a successful rebellion against water privati LEFT-WING CO AL ITIONS, 1998-2009 zation. Organized by the Coordinating Committee in Defense of Wa Hugo Chavez Ve nezuela December 1998* ter and Life, the protesters were furious about huge price hikes Luis Inacio "Lula" da Silva Brazil October 2002 instituted after the government sold the city's water supply to a sub Nestor Kirchner Argentina May 2003 sidiary of the U.S. multinational giant Bechtel. Ta bare Vazquez Uruguay October 2004 • In Costa Rica, thousands took to the streets in 2002 against the pri Evo Morales Bolivia December 2005 vatization of the nation's electricity. Michele Bachelet Chile December 2005 • In El Salvador, doctors and public health workers went on strike for Daniel Ortega Nicaragua November 2006 nine months in 2002 and 2003 and successfully stopped the privatiza Rafael Correa Ecuador December 2006 tion of that nation's health system. Alvaro Colom Guatemala September 2007 • In Panama, two general strikes in late 2003 paralyzed the country. Mauricio Funes El Salvador March 2009 Both were aimed at preventing President Mireya Moscoso from pri
vatizing that country's social security system. The unrest led to *Chavez was reelected in 2000 and 2006. Cristina Fe rnandez de Kirchner was Moscoso's defeat in new elections the following year, though her suc elected to succeed her husband as Argentine president in October 2007. cessor, Martin Torrijos, then severely repressed the movement and proceeded with the social security reform.79
Thenew social movements soon began sweeping aside regimes whose Only Mexico and Colombia managed to elect conservative presidents leaders refused to heed their concerns. Since 1997, seven presidents in allied to the United States. In the case of Mexico, however, the narrow four Latin American countries have been forced from office by their: victory of businessman Felipe Calder6n in 2006 was marred by persis people before finishingtheir terms: in Bolivia, Gonzalo Sanchez de Lozada tent accusations of voter fraud and by months of massive postelection 17 6 HARVEST OF EMPIRE HARVEST (LA COSECHA} 17 7 protests from supporters of his opponent, left-wing populist Andres the events in Seattle had largely featured opposition by a few thousand Manuel Lopez Obrador. The only other center-right candidate to radical protesters, the rejection of the FTA A was a signal that an entire emerge victorious in a presidential election in Latin America during the region of the world had turned against free trade agreements dictated by decade was Sebastian Pifiera, who Chilean voters chose in January 2010 the rich countries. The new wave of Latin American leaders had effec to succeed Michelle Bachelet. tively proclaimed their region's independence, or at least its autonomy, The region's new populist leaders, despite big differences in approach from the United States.82 and style, have reached considerable unity on a number of policies. All Such independent policies have already begun to show concrete ben have sought to end imperial domination of their countries by Europe efits forordinary Latin Americans. Between 2002 and 2008, there was a and the United States through exercising greater control over the nat dramatic decline in the region's overall poverty rate, from 44 percent to ural resources and renegotiating unequal arrangements with foreign 33 percent. Some of the biggest improvements occurred in those nations multinational companies; using the power of their governments to re that most rejected neoliberal policies: Venezuela (48.6 percent to 27.6 duce income inequality at home; building stronger economic integration percent); Argentina (45.4 percent to 21.0 percent), Ecuador (49 percent within the region; and insisting on fair trade pacts with the major indus to 38.8 percent), Bolivia (62.4 percent to 54.0 percent), and Brazil (37.5 trialized countries. percent to 30.0 percent). The U.S. poverty rate, by contrast, increased In their attempts to overcome Latin America's long history of Balka from 12.4 percent in 2002 to 13.2 percent in 2008.83 nization, the new leaders have largely fallen into two camps, the moder Despite Latin America's improving situation, more than 180 million of ate "neodevelopmentalist" trend headed by Brazil and Argentina, and the region's people remain mired in poverty. In the barrios, shantytowns, the more radical "Bolivarian" trend headed by Venezuela and Bolivia. In and villages where those poor reside, sixty years of neoliberal free trade July 2004, for instance, Mercosur, the trade bloc founded in 1991 by policies have brought little o.f the prosperity proponents promised. In Brazil, Argentina, Uruguay, and Paraguay, expanded its formal member stead, it produced a desperate exodus by millions to El Norte in search of ship from four to ten nations, including Venezuela and Colombia. Then work. Those Latin American migrants, as previously noted, have assumed in December 2004, at the Third South American Summit in Cuzco, Peru, a pivotal role today in sustaining their countrymen through the remit twelve nations led by Brazil and Venezuela agreed to create the South tances they send back home each month (see chapter 11). In 2009, for in American Community of Nations, a trading bloc of 361 million people.81 stance, migrants from Latin America and the Caribbean sent $64 billion Meanwhile, Ve nezuela's Chavez has used his country's immense oil to their families back home.84Ironically, the massive movement of labor wealth to negotiate more than a dozen bilateral trade agreements with across national borders may have accomplished more to aid Latin Amer neighboring countries for cheap oil, and as a result, his influence in the ica than all the free trade policies espoused by the hemisphere's financial region has skyrocketed. More importantly, Chavez and Morales have elites. both nurtured and encouraged nongovernment social movements in the region. Groups like the Continental Social Alliance and the World Social Forum have mobilized tens of thousands of people throughout Latin America to oppose U.S. initiatives like the Free Tr ade Area of the Amer icas (FTAA). Originally envisioned as a further expansion of NAFTA, the FTA A was an attempt by the Bush administration to consolidate the hegemony of U.S. multinationals over the hemisphere by creating a single free trade bloc of thirty-four countries. The plan collapsed in November 2005 at the Summit of the Americas, when Brazil, Argentina, Cuba, Venezuela, and a half-dozen other nations refused to join. The defeat followed by only a few years the 1999 street protests in Seattle that had derailed Wa shing ton's efforts to strengthen the World Tr ade Organization. But whereas 344 NOTES NOTES 345
15. Author's interview with Othal Brand, mayor of McAllen, Te xas, and president of Griffin and Brand, June 1993. 16. Dwyer, On the Line, 8. 17. Ibid., 42. 18. NA FTA's Broken Promises: Th e Border Betrayed (Washington, D.C.: Public Citizen Publications, 19%), 5-6; also La Industria Maquiladora en Reynosa y Matamoros, Centro de Estudios Fronterizos y de Promoci6n de los Derechos Humanos (Tamaulipas, Mexico: 1992), 5. 19. La Industria Maquiladora, 10; also Mexico, No Guarantees: Sex Discrimination in Mexico 'sMaquiladora Sector (New Yo rk: Human Rights Wa tch, August 1996). 20. Saskia Sassen, "Why Migration?" in Free Trade and Economic Restructuring in Latin America, 277-78. 21. U.S. Department of Homeland Security, Ye arbook of Immigration Statistics: 2008. 22. Inter-American Development Bank, Annual Report (Washington, D.C.: 1994), CHAPTER 13: FREE TRADE 103. 1.For a discussion of the key pillars of neoliberalism, see John Williamson, Did 23. In 1981, the average hourly factory wage in Mexico and Hong Kong was the the Washington Consensus Fa il? (Washington, D.C.: Peterson Institute for In same, $1.80. But, by 1987, the Hong Kong wage had risen to $2.11, while Mex ternational Economics, 2002); also Ximena de la Barra and Richard A. Dello ico's had dropped to $.71. See La Industria Maquiladora, 3. Buono, Latin America after the Neoliberal Debacle (Lanham, Md.: Rowman & 24.Juan Gonzalez, New Yo rk Daily News, June 11, 1993. Littlefield, 2009). 25. Dwyer, On the Line, 17. 2. Mira Wilkins, The Emergence of Multinational Enterprise:Amer ican Business 26. La Industria Maquiladora, 34. Abroad from the Colonial Era to 1914 (Cambridge, Mass.: Harvard University 27. Ibid., 36. Press, 1970), 110. 28. Sanford J. Lewis, Border Tr ouble: Rivers in Peril: A Report on Wa ter Po llution 3. National Labor Committee Education Fund, "Paying to Lose Our Jobs" Due to Industrial Development in Northern Mexico (Boston: National Toxic (September 1992), 7. Campaign Fund, 1991), 4-8. 4. Price Waterhouse, Up date of Baseline Study of Honduran Exp ort Processing 29. Michael Beebe, "Mallory Plant Is Long Gone: Some Say It Left Grim Legacy," Zones, Report to United States Agency for International Development Buffalo News, March 11, 1987; also Juan Gonzalez, "The High Costs of 'Free' (Washington, D.C.: 1993), 63. Tr ade," New Yo rk Daily News, January 22, 1992; also Dwyer, On the Line, 5. Galeano, Op en Ve ins of Latin America, 198. 66-68. 6. Ibid., 203-6. 30. NA FTA's Broken Promises, 25. 7. Alfred E. Eckes, Jr., Opening America's Market: U.S. Fo reign Tr ade Policy 31. Endangered Rivers of America: Th e Nation 's Te n Most Endangered Rivers and Since 1776 (Chapel Hill: University of North Carolina Press, 1995), 47, 52. Fifteen Most Th reatened Rivers fo r 1993, American Rivers (Washington: April 8. United Nations Conference on Tr ade and Development, Investment-Related 20, 1993), 1. Tr ade Measures (New York: 1999), 7; also Kim Moody, Wo rkers in a Lean Wo rld: 32. Author's interview with Domingo Gonzales, Coalition for Justice for the Maqui Un ions in the International Economy (New York: Ve rso, 1997), 48-49.Also Ray ladora Workers, Brownsville, Te xas, June 1993; also Sanford J. Lewis, Border mond J. Mataloni, Jr., "U.S. Multinational Companies: Operations in 1995," in Tr ouble, 8. Survey of Current Business, October 1997, 50; also Doug Henwood, "Clinton's 33. NA FTA's Broken Promises, 29-34. Tr ade Policy," in Free Trade and Economic Restructuring in Latin America, ed. 34. Ibid., 20-25; also Te xas Department of Health, An Investigation of a Cluster of Fred Rosen and Deidre McFadyen (New York: Monthly Review, 1995), 32. Neural Tu be Defe cts in Cameron County, Texas, July 1, 1992; also Linda Diebel, 9. United Nations Development Programme, Human Development Report 1998 "Mexico's Futuristic Nightmare," To ronto Star, March 13, 1993. (New York: Oxford University Press, 1998), 30. 35. Dwyer, On the Line, 67. 10. Moody, Wo rkers in a Lean Wo rld, 130-32. 36. Ibid., 5. 11. Barry and Preusch, The Central America Fa ct Book, 309. 37. National Labor Committee, "Paying to Lose Our Jobs," 17-22. 12. Dietz, Economic History of Puerto Rico, 210-12. 38. Ibid., 23. 13. Ibid., 226-28. 39. Ramona Hernandez, Francisco Rivera-Batiz, and Roberto Agodini, "Domini 14. Augusta Dwyer, On the Line: Life on the U.S.-Mexican Border (London: Latin can New Yorkers: A Socioeconomic Profile," Dominican Research Mono American Bureau, 1994), 6. graphs (New York: CUNY Dominican Studies Institute, 1995), 14. 346 NOTES NOTES 347
40. Apparel exports to the United States from the region increased 688 percent be 59. David Brauer, "Factors Underlying the Decline in Manufacturing Employment tween 1980 and 1991. See National Labor Committee, "Paying to Lose Our Since 2000," U.S. Congressional Budget Office report, December 23, 2008, Jobs," 23-24. 2, 4 (accessed May 2010 at http:// www.cbo.gov/ftpdocs/97xx/doc9749/12-23- 41. National Labor Committee, "Paying to Lose Our Jobs," 39-41. Manufacturing.pdf). P. 42. National Labor Committee Education Fund, "Free Tr ade's Hidden Secrets: 60. Eduardo Zepeda, Timothy A. Wise, and Kevin Gallagher, "Rethinking Tr ade Why We Are Losing Our Shirts" (November 1993), 9. Policy for Development: Lessons from Mexico under NAFTA," Carnegie En 43. Price Waterhouse, Up date of Baseline Study, 11-12. dowment for International Peace, December 2009, 10 (accessed April 2010 at 44.Juan Gonzalez, "Exploitation's Always in Fashion," New Yo rk Daily News, July http://www.carnegieendowment.org/files/nafta_trade_development.pdf); also P. 25, 1995. Kevin Gallagher and Ly uba Zarsky, "Sustainable Industrial Development? The 45. "Casos Especiales Durante el Periodo del 23/06/95 al 29/06/95," Oficina de Performance of Mexico's FDI-Led Integration Strategy," Global Develop Thtela Legaldel Arzobispado, Comisi6n Arquidiocesana de Justicia y Paz, San ment and Environment Institute, Fletcher School of Law and Diplomacy, Thfts Salvador, El Salvador, C.A. University, February 2004, 44-45. 46. Price Wa terhouse, Up date ofBaseline Study, 50. 61. Zepeda, Wise, and Gallagher, "Rethinking Tr ade Policy," 10, 13. 47. National Labor Committee, "Paying to Lose Our Jobs," 24-25. 62. Anne Vigna, "NAFTA Hurts Mexico, To o," Agence Global, June 1, 2008; also 48. Edmund L. Andrews, "How Cafta Passed House by 2 Vo tes," New Yo rk Times, Zepeda, Wise, and Gallagher, "Rethinking Tr ade Policy," 12-13. July 29, 2005. 63. Elisabeth Malkin, "NAFTA's Promise Unfulfilled," New Yo rk Times, April 13, 49. Estimates are that Mexico spent some $30 million lobbying for the passage of 2009, Bl. 64. NAFTA, more than twice the previous record of foreign lobbying, which was Zepeda, Wise, and Gallagher, "Rethinking Tr ade Policy," 13. Kuwait's spending of $10 to $12 million before and during the Persian Gulf 65. Vigna, "NAFTA Hurts Mexico, To o." War. See "Trading Game," by the Center for Public Integrity, May 27, 1993, and 66. Ibid.; also Zepeda, Wise, and Gallagher, "Rethinking Tr ade Policy," 14. "Mexico Buys Free Tr ade," by Don Hazen, in Fa cts and Fictions About "Free 67. Gerardo Esquivel,"The Dynamics of Income Inequality in Mexico since NAFTA," amm Latin Tr ade" (New York: Institute for Alternative Journalism, 1993), 89-92. United Nations Development Progr e, Regional Bureau for America and the 50. "NAFTA Tr ade-off: Some Jobs Lost, Others Gained," New Yo rk Times, Octo Caribbean,February 2009, 14-15 (accessed May 2010 at http://economiccluster ber 9, 1995. lac.org/images/pdf/desarrollos-Incluyentes/02_RPPLAC_ID.pdf). 51. Author's interview with Othal Brand, mayor of McAllen, Te xas. 68. Zepeda, Wise, and Gallagher, "Rethinking Tr ade Policy," 10, 14-15; Esquivel, 52. Nancy J. Perry's "What's Powering Mexico's Success," Fo rtune, February 10, "The Dynamics of Income Inequality," 15. 1992, 109-15. 69. United Nations Statistics Division, United Nations Commodity Tr ade Statistics 53. Jorge G. Castaneda, The Mexican Shock: Its Meaning fo r the US. (New York: Database, 2008 (accessed May 2010 at http://unstats.un.org/unsd/comtrade). TheNew Press, 1995,), 36. 70. Heiner Schulz, "Foreign Banks in Mexico: New Conquistadors or Agents of 54. See Lee Hudson Te slik, "NAFTA's Economic Impact," Council on Foreign Re Change?" Wharton Financial Institutions Center Working Paper No. 06-1 1, lations Backgrounder, July 7, 2009 (accessed May 2010 at http:// www.cfr.org/ April 22, 2006, 3, 8-10; also Luis Pefia,"Chase Is On for the Whole Enchilada, " publication/15790/); also "The Effects of NAFTA on U.S.-Mexico Tr ade and The Banker, June 2, 2004 (accessed April 2010 at http://www.thebanker.com/ GDP," U.S. Congressional Budget Office report, May 2003. news/fullstor y. php/ aid/1587/Chase_is_ o n_for_the_whole_ enchilada.h tml). 55. Bruce Campbell, "False Promise: Canada in the Free Trade Era," Economic 71. John Lyons, "Mexican Officials Prod Banks to Boost Lending," Wa ll Street Policy Institute Briefing Paper, April 2001 (accessed May 2010 at http://www Jo urnal, March 22, 2004, A17; also Pefia,"Chase Is On." .epi.org/pageslbriefingpapers_nafta01_cal). 72. "2010 International Narcotics Control Strategy Report (INCSR)," U.S. State 56. The deficit in goods was slightly offset by a growing U.S. surplus in services Department, Bureau of International Narcotics and Law Enforcement Affairs, sold to Mexico ($8.7 billion in 2007), but it still remained at historically high March 1, 2010 (accessed May 2010 at http://www.state.gov/p/inl/rls/nrcrpt/2010/ levels. See Office of the United States Trade Secretary, "U.S.-Mexico Tr ade voll/137197.htm); also Hector To bar and Cecilia Sanchez, "Mexico's Drug War Facts," July 23, 2009 (accessed May 2010 at http://www.ustr.gov/countries To ps 2,000," Los Angeles Times, November 14, 2006. regions/americas/mexico ); also "Trade in Goods (Imports, Exports and Tr ade 73. Roberta S. Jacobson, "U.S.-Mexico Security Agreement: Next Steps for the Balance) with Mexico," U.S. Census Bureau, Foreign Tr ade Statistics (accessed Merida Initiative," deputy assistant secretary of state testimony to U.S. House May 2010 at http://www.census.gov/foreign-tradelbalance/c2010.html#2010). of Representatives Committee on Foreign Affairs, May 27, 2010 (accessed 57. Robert E. Scott, Carlos Salas, and Bruce Campbell, "Revisiting NAFTA: Still May 2010 at http://www.state.gov/p/wha/rls/rm/2010/142297.htm). Not Working for North America's Workers," Economic Policy Institute Briefing 74. "2010 International Narcotics Control Strategy Report (INCSR)." Paper No. 173, September 28, 2006, 9 (accessed May 2010 at http://www.epi.org/ 75. Tr acy Wilkinson, "Mexico Agricultural Subsidies Are Going Astray: A Fund to publications/entry/bp173/). Help Poor Farmers Compete with U.S. Imports Is Instead Benefiting Drug 58. Ibid., 3. Lords' Kin and Officials," Los Angeles Times, March 7, 2010. 348 NOTES NOTES 3 49
76. Mary Botari, "Trade Deficit in Food Safety: Proposed NAFTA Expansions 6. Hector Cordero Guzman, "Lessons from Operation Bootstrap," in Rosen, Replicate Limits on U.S. Fo od Safety Policy That Are Contributing to Unsafe Free Tr ade and Economic Restructuring in Latin America, 79; also James Dietz Fo od Imports," Public Citizen, July 2007, 4 (accessed May 2010 at http://www and Emilio Pantojas-Garcfa, "Puerto Rico's New Role in the Caribbean: The .citizen.org/documents/FoodSafety ReportFINAL.pdf); also Thomas Hargrove, High-Finance/Maquiladora Strategy," in Colonial Dilemma: Critical Pe rspec "A Russian Roulette of Food Poisoning in the American States," Scripps News, tives on ContemporaryPuerto Rico, ed. Edwin Melendez and Edgardo Melen November 11,2006 (accessed at http://www.scrippsnews.com/fatalfood). dez (Boston: South End Press, 1993,) 108. 77. De la Barra and Delio Buono, Latin America, 28. 7. According to a 1964 report to Congress by the Commonwealth of Puerto Rico, 78. Isidro Morales-Moreno, "Mexico's Agricultural Tr ade Policies: International over 40 percent of companies that started with local tax exemptions closed Commitments and Domestic Pressure," World Tr ade Organization, Case their doors when those exemptions expired. See Fernandez, Th e Disenchanted Study 28 (accessed November 2010 at www.wto.org/english/res_elbooksp_e/ Island: Puerto Rico and the United States in the Tw entieth Century (New York: casestudies_e/case28_e.htm). Praeger, 1992), 208. 79. For an excellent summary of these new social movements, see De la Barra and 8. U.S. General Accounting Office, Ta x Policy: Puerto Rico and the Section 936 Dello Buono, Latin America, 51-77. Ta x Credit, June 1993, 3. 80. De la Barra and Dello Buono, Latin America, 77, n. 8. 9. Ibid., 9; also Congressional Budget Office, "Potential Economic Impacts of 81 . Raul Zibechi, "Regional Integration after the Collapse of the FTAA," Inter Changes in Puerto Rico's Status Under S. 712," April 1990, 7; also Emilio national Relations Center, Silver City, N.M., November 21, 2005, 2-4. Pantojas-Garcfa, Development Strategies as Ideology: Puerto Rico's Export-Led 82. Ibid., 1-2. Industrialization Experience (London: Lynne Rienner Publishers, 1990),117 -18. 83. For Ve nezuela, Bolivia, Ecuador, and Brazil, the span of years was 2002 to 2007; 10. Those 110 firms had three hundred factories operating then. See Pantojas for Argentina, it was 2002 to 2006. See "Social Panorama of Latin America, Garcfa, Development Strategies, 114. 2009," United Nations Commission for Latin America and the Caribbean, 9-11. 11. Ibid., 115-16. 84. Manuel Orozco, "Migration and Remittances in Times of Recession: Effects 12. Ibid., 153. According to Pantojas-Garcfa, Abbott Laboratories listed 71 per on Latin American Economies," Sistema Econ6mico Latinoamerican y cent of worldwide profits from Puerto Rico; Digital Equipment, 57 percent; del Caribe, May 2009 (accessed May 2010 at http://www.thedialogue.org/ Union Carbide, 25 percent; Pepsi-Cola, 21 percent; and Motorola, 23 percent. PublicationFiles/Migration%20and%20remittances%20in%20times%20of% 13. The twenty-two drug company subsidiaries in Puerto Rico averaged 77.5 per 20recession %20Effects %20on %20Latin %20American %20economies.pdf). cent returnon operating income in 1983, compared to the mainland average of 18.7 percent for pharmaceuticals. See GAO, Ta x Policy, 52-53. CHAPTER 14: PUERTO RICO, U.S.A. 14. Kelly Richmond, "Drug Companies Fear Loss of Tax Exemption," New Je rsey 1.For poverty levels, see Alemayehu Bishaw and Tr udi Renwick, "Poverty: 2007 Record, November 8, 1993. and 2008," American Community Surveys, U.S. Census Bureau, September 2009 15. Thiscompared to $5.1.billion in Canada and $4.6 billion in Germany. While the (accessed May 2010 at http://www.census.gov/prod/2009pubs/acsbr08-l.pdf). For size of U.S. investment in Canada was twice that of Puerto Rico's, the island's comparative median household incomes, see U.S. General Accounting Office, rate of return on investment is more than twice Canada's-a phenomenal 23.7 "Puerto Rican Fiscal and Economic Tr ends," 2006, 11 (accessed May 2010 at percent. See Pantojas-Garcfa, Development Strategies, 167; for lost federal rev http://www.gao.gov/new.items/d06541.pdf). For federal transfers, see "Transfers enues, see U.S.General Accounting Office, "Pharmaceutical IndustryTax Ben between Puerto Rico and the Federal Government, State Governments and efits of Operating in Puerto Rico," May 1992, 14. Other Nonresidents in Puerto Rico," Puerto Rico Planning Board, Program of 16. Puerto Rico Planning Board, Statistical Appendix, April 12, 2010, Ta ble 25, Economic and Social Planning, Subprogram of Economic Analysis, Statistical Ap "Trade Balance: Fiscal Years" (accessedApril 2010 at http:// www.jp.gobierno.pr/) . pendix, Table 21, May 17,2010 (accessed June 2010 at http://www.jp.gobierno.pr/). 17. Puerto Rico Planning Board, Economic Report to the Governor 1995, March 2. Perez, "From Assimilation to Annihilation," 8-27. 1996, chap. 5, 11. 3. Lewis portrayed the Rios family, an intergenerational dysfunctional group with 18. "Democrats Attack Permanent Tax Exemption for Profitable Te rritorial Sub a history of prostitution and other social problems. He popularized the term sidiaries Bill," Puerto Rico Herald, October 18, 2002 (accessed May 2010 at "culture of poverty" to describe individuals who became accustomed to living at http://www.puertorico-herald.org/issues/2002/vol6n42/WashUpdate0642-en.html); the margins of society. See Oscar Lewis, La Vida: A Puerto Rican Fa mily in the U.S. GAO, "Puerto Rican Hscal .and Economic Tr ends," 81. Manufacturing jobs Culture of Poverty, San Juan and New Yo rk (New Yo rk: Random House, 1966). dropped from158, 000in 2000to 112,000in 2009-seePuerto Rico Planning Board, 4. Chavez, Out of the Barrio, 140. Statistical Appendix,Ta ble 33 (accessed June 2010 at http://www.jp.gobierno.pr/). 5. During a May 6, 1999, U.S. Senate hearing on Puerto Rico's status, for instance, 19. U.S. GAO, "Puerto Rican Fiscal and Economic Tr ends," 15, 6. Senator Mary Landrieu (D=LA) said Puerto Ricans would rather have a "free 20. Larry Luxner,"Puerto Rico: Life after Section 936," Global Finance, October 1, lunch" than join the union and pay taxes. See Kenneth R. Bazinet, "Senate 2000 (accessed May 2010 at http://www.allbusiness.com/accounting-reporting/ Furor on Puerto Rico," New Yo rk Daily News, May 7, 1999. corporate-taxes/1151063-l.html).