FREE TRADE ZONES
T HIS "differential" has naturally
led to movement between the two zones. The first major wave was so-called braceros, going to work in Texas or California, principally in agriculture. This movement was at its height in the 1940s, because of the labour shortage brought about by the Unitentry into the Second World War. It continued until the end of the 1960s, during the period of the so-called "Mexican miracle". This wave was comanaged by the governments of the United States and of Mexico, through the "Braestablishing
A US law of 1952 had regulated the flow of immigration, in a suitably hypocritical manner — the favouring of such immigration was considered a crime, whilst the employment of a foreigner in an irregular situation was not! The Simpson-Rodino law, which came into force on November 6, 1986, apparently changed this state of affairs. But it did not succeed in noticeably reducing the number of clandestines, and its principal effect has been ever growing insecurity for the indocumentados (those without papers). Its real function moreover is to serve as a means of pressure on the Mexican government so as to obtain more enthusiastic participation in the struggle against the drug traffic. Half illegals of Mexican origin
Although estimates fluctuate widely, it is believed that around 20 million Hispanics live in the United States, of whom 8-9 million are citizens of Mexican origin. As for illegals, estimates vary between 3 and 6 million, of whom half world be of Mexican origin.
Starting from 1965, the US put an end to the Bracero plan, and the Mexican government launched the PIF (Programa de Industrializacion Fronterizo). The maquiladora industry benefitted from a specific regime defined thus by the International Trade Commission: "The maquiladora is an enterprise which imports goods temporarily with a view to developing exports. These goods must be judged necessary to the operation and, finally, they must be reexported as a component of the finished product after a specific period of time".
It added up then initially to a relatively well controlled shock to Mexican commercial legislation, which remained in other respects very protectionist. But this sector of the economy was to develop very 24 rapidly, accelerating further after the 'financial crisis of 1982. In 1966, 57 facto-
IN Spanish, the word maquila denotes the act of carrying grain to the mill to be ground. By extension, this term is employed to refer to the factories where the gringo capitalists bring primary materials and semi-finished products to be assembled into finished products. Such free trade zones do not exist only in
Mexico, but the immense frontier (nearly 3,000 kilometers) that this country shares with the
United States represents a phenomenon almost without comparison. There are certainly few frontiers where the gulf separating the standard of living on either side is so wide.
### MAXIME DURAND ries, all situated on the frontier, employed 4,257 workers. In 1975, there were 454 establishments employing 67,000 people'. Since the end of the oil boom, maquiladora industry has experienced an extremely rapid evolution - the number of establishments involved has more than doubled, going from 600 to 1,400.
Majority of industry in twin cities
The majority of maquiladora industry is concentrated on the frontier, in what are known as the twin cities, which in fact form a single agglomeration on both sides of the frontier. The most active are El Paso to the north and Ciudad Juarez, San Diego-San Isidro and Tijuana, Brownsville and Matamaros, Calexico and Mexicali, and so on. But the past decade has seen a tendency to increasing implantations inside the country, beyond the frontier zone - from 72 such establishments in 1981, the figure had reached 256 in 1988.
The growth of the numbers employed in the maquiladora sector has been equally spectacular, going from 131,000 to
370,000 between 1981 to 1988, and this in a context of stagnating employment at the national level; over the same period jobs in the "formal" sector increased only from 21.6 to 22.1 millions. In other words, one job out of every two created during this period was in the maquilas. Here again, the dynamism was more pronounced in the interior of the country where jobs increased fivefold, to reach 70,000 in 1988 — today, maquiladora industry in the interior represents about 25% of that in the frontier zone. Of course, on the national scale, there has been a massive increase in "jobs" in the informal sector, where employment went from 400,000 to 4 million, according to the estimates of the Wharton Institute, which moreover constitute nothing more than an indication of the tendency.
Massive increase in total value added
The total value added of maquiladora industry has gone from 24 billion pesos in 1981 to 5,264 billion in 1988. Taking account of inflation, this represents a progression of the order of 17% a year. The sectoral implantation is essentially in industry, and more particularly in two subsets, automobiles and equipment industry, notably the assembly of electronics components.
The weight of value added from maquiladora industry has regularly grown, whether in relation to GNP (which was virtually at the same level as 1981 in 1988) or in relation to exports. In 1989, net exports from the maquila (after "transformation services" are subtracted from the balance of payments) represented a little more than $3 billion, or around 12% of Mexican exports of goods and services apart from crude oil. It is then a considerable source of foreign currency, even if it is obviously not enough to cover interest on the foreign debt which represented $9.4 billion.
The essential secret of the success of maquiladora industry resides in low wages: "the economic crisis in Mexico has lowered wages in the frontier zone to the equivalent of less than a dollar an hour, well below the rate of the worker in Korea, Taiwan or Brazil... Inasmuch as these low wages attract employers towards maquila production, the low wages must be kept low to conserve jobs"2. Such is the infer1. INEGI (Institut National de Statistique), Estadistica de la Industria Maquiladora de exportacion, Mexico, 1986 and 1989.
December 10, 1990 • #196 International Viewpoint nal logic of this mode of industrialization — it rests on the incredible wage disparities between the two sides of the border which separates Mexico from the United States. Moreover the proximity of the United States, which reduces the costs of transport, is an additional incentive (see table opposite, which shows the relationship between wage rates in the United States and those in the maquilas).
These wage disparities have fluctuated strongly over time. From 1965 to 1975, wages increased significantly — the minimum wage in Ciudad Juarez went from $2.14 per hour to $5.68. The 1976 devaluation reversed the process, then the oil boom allowed a new improvement of the minimum, which reached $6.97 a day in 1980. The financial crisis of 1982, devaluation of the peso, and then a brutal austerity policy made the minimum drop to $4.9 in 1985, and to $2.86 in the month of July 1987. Since then, the minimum wage has gone back up and today represents the equivalent of $3.2 per day.
Growing fracturing of Mexican economy
Compared to interior Mexican salaries, the average wage paid in the maquilas represents around three times the minimum, but is still inferior by nearly 40% to the average industrial wage. The wage in the maquila has maintained its purchasing power since 1985, whereas that of the minimum wage is falling constantly. This disproportion between the minimum wage and that in the export sectors indicates a growing fracturing of the Mexican economy, the dynamism of the export sector having for its counterpart a decline in internal demand.
The wage disparities between maquilas and the rest of industry is explained in part by the strong proportion of women (and of young women) who, in 1988, represented 63% of the workforce employed in the maquiladoras.
This proportion has however fallen noticeably, from 78% ten years ago. Finally, nearly two thirds of the workers in the maquiladoras come from the Mexican states situated further to the south.
But these diverse factors do not entirely explain the differences noted very logic of the maquilas that implies that wages are constantly squeezed.
This accounts for the paradox that in the automobile industry, wages are two times higher in the old zone of Mexican industrialization, for example the Ford factory of Cuautitlan, than in the more recent anc nodern factories like Ford of Hermosillo This brings out one of the great perverse effects of this form of industrialization — the growth that it permits is not based on a positive logic where rising development of the interior market mutually reinforce each other.
In the formula of the American trade unions, the AFL/CIO, the wages of the workers of the maquiladoras do not permit them to buy what they have produced. In more sophisticated terms, maquiladora industry leads to neither a "peripheral Fordism", nor the consolidation of performing national industries, as in the case
The growth of the maquila sector rests on low wages, the stagnation of the interior market, and the restructuring of national industry in accordance with a single logic, that of the multinationals of the north. Several statistical indicators confirm this - thus, between 1981 and 1988, the rate of integration, that is the part of value added locally in total reexports tended to fall, going from 30% in 1980 to 22% in 1988.
The share accounted for by wages stabilized itself after a significant fallback in 1983, immediately after the financial crisis. The rate of profit is obviously very high, even if Mexican workers are less productive, one car assembled in the maquila selling on the US market at the same price as a comparable Japanese car.
Labour supply in north exhausted
The northern states of Mexico are, in their great majority, the domain of agro-export and cattle rearing. What remained of the small peasantry furnished an easily available source of labour. Some 55% of the population of the state of Chihuahua worked in the agricultural sector in 1950 — at the beginning of the 1980s, this proportion had fallen to 2%.
The maquiladoras must then look to a labour force coming from further south or move on towards areas where labour is
FREE TRADE ZONES
Average hourly salary in industry (in $US)
Maquiladora 0.88
Taiwan 2.71
South Korea 2.46
Singapore 2.67
Hong Kong 2.43
Japan 13.14
United States 13.90
Source; Wall Street
Journal, September 22,
1989. still available, including regions as inaccessible and backward as the Sierra Tarahumara. This need for labour, in a country where it is, in principle, abundant, is explained by an extraordinarily high rate of turnover — a figure of 16% per month is cited in the case of Ciudad Juarez. This is also why the average age of the workforce is so low — 25 years at Ciudad Juarez (75% women), and 22 years at Chihuahua (85% women).
This model of industrialization based on low wages is all the more perverse when such a low level of wages provides no incentive for the capitalist to develop productivity — even if a Mexican worker is five times less productive than the equivalent in the United States, she remains three times more profitable when her salary is fifteen times lower.
There is then no incentive to raise qualifications, and modern technologies are only imported when they are absolutely necessary to meet quality norms. The technological level is an intermediary average between the out of date equipment of the old regions of industrialization, and the thrusting automation of the high wage zones. That is why the maquila cannot generate a process of fundamental modernization which could spread throughout the Mexican economy. If it spreads anything, it is the logic of wage austerity.
The most withering criticism of the maquila has come from the AFL/CIO, and for a reason. The attraction of the maquilas has been responsible for large-scale job losses north of the border.
In his testimony before the International Trade Commission in August 1987, Victor Munoz, a trade union leader from El Paso, explained how companies move out, "retaining only the management, the accounts and the commercial services" Thus the Zenith Electronic Corporation 2. Resolution number 137, AFL/CIO congress, November 1989. 3. Manuel Aguilar Mora, "Lejos de Dios; reflexiones sobre una tragedia nacional", La Batalla number 19, 25 October-November 1987.
International Viewpoint #196 • December 10, 1990
FREE TRADE ZONES has replaced its factory in Eransville, Indiana, which employed 1400 workers paid $6-7 per hour, for a maquiladora employing 5,000 workers, realizing a saving of $300 million a year in the process. At El Paso, 1,400 industrial jobs have been lost since 1980.
The AFL-CIO also stresses the impact of the maquila on the health of the workers and the environment.
A report by Leslie Kochan, entitled "Maquiladoras; the hidden CON costs of production south of the border" underlines several aspects - the risks of accidents because of toxic materials, the absence of adequate treatment of waste, the pollution of water and the dangers to the ecosytem by the accumulation of industrial refuse.
Despite the superexploitation, the organization of workers is little developed in the maquilas. There are numerous reasons for this, of which the proximity of the United States is not the least.
As Manuel Aguilar Mora notes?, in an article in the review of the PRT (Revolutionary Workers' Party — Mexican section of the Fourth International) the frontier zone produces "a polarization of the specific differences between the imperialist nations and the oppressed nations".
The division of labour which is introduced is brutal - on the Mexican side, poverty, low wages, prostitution, marginalization, and so on.... in short a social context which is hardly helpful to the organization of workers.
The very high rate of turnover of the workforce, the repression, the regional weight of PAN (the right opposition party), all combine to reduce the scope for working class action.
Zenith strike example to workers
The example of the Zenith strike shows how workers who do take action are dealt with. Towards the end of 1983, the workers at Zenith in Reynosa entered into struggle to increase their wages, which were $3.40 per day, and, thanks to the participation of 8,000 workers in the strike, apparently obtained some results — a wage increase, the right to freely organize a trade union, and to freely choose their own leaders.
But the wage increase was suppressed two months after the return to work. As to the new trade union leadership, it could never begin to function — its members were arrested by the local police, then dismissed by Zenith and placed on a blacklist by several other maquiladoras.
This strike became famous because of 26 us journalists were arrested and brutally 'V reporting in the course of which tw beaten by the local Mexican police.
A similar scenario took place during the strike at Ford Hermosillo in March 1987 — even if this was a partial success, the bosses and the local authorities did not give way on what is essential to them, namely the constitution of independent trade unions, genuinely representative of the interests of the workers.
Here, still more than in the rest of Mexico, the authorities and the trade unions linked to the regime function hand in hand. After all, social peace is, along with low wages, one of the principal arguments used to attract international investment.
### Status of maquiladora dependent on protectionism
The special status of the maquiladora made sense only in the context of a protectionist commercial policy. They existed as free trade zones, benefitting from an exceptional status. Things have changed profoundly today.
With the adhesion to GATT (the General Agreement on Trade and Tariffs) in 1986, then the progressive suppression of all import duties, Mexico has made a fundamental turnaround. In a coherent manner, legislation on international investment has been remodelled and softened in the extreme.
In cars, for example, a fairly binding regulation obliged the multinationals to realize a certain percentage of value added in Mexico, and forbade massive exports. Today, the differences between maquiladora industry and the implantation of any kind of multinational firm is blurred.
That is why it is possible to speak of the maquiladorization of the whole of Mexican industry, to the extent that the orientation of the government's economic policy accords an absolute priority to industrial exports. These have grown considerably since the oil shock, passing from $5.4 billion in 1983 to $12.2 billion in 1988 -their share of total exports is now 60%, this progression resulting in part from the lowering of oil receipts.
Opportunities in internal market abandoned
But this increase in industrial exports has been obtained according to a logic strictly linked to that of the maquila. On the one hand, there is an abandonment of the openings offered by the internal market - certain exports of intermediate goods like cement, glass, steel were inflated almost automatically by the lowering of internal sales.And above all, this industrialization is disarticulated, because it is determined essentially by the logic of the multinationals. Thus, in the most dynamic sectors, those of cars and detached parts, 93% of exports were realized in 1987 by General Motors, Chrysler, Ford, Volkswagen and Renault - in the same way, IBM and Hewlett-Packard were responsible for 80% of exports of computer material.
The development of maquiladora industry has been a prelude to the growing integration of the Mexican economy with that of the United States, an integration dominated by the interests of the multinationals and the Mexican bourgeoisie, and whose logic implies a continued pressure on wag es and the standard of living of Mexican workers. *
future -- and It is certainly necessary.