Free Trade is Not Necessarily Fair Trade: Maquiladoras

Posted on November 5th, 2019

Free Trade is Not Necessarily Fair Trade: Maquiladoras

Free Trade is Not Necessarily Fair Trade: Maquiladoras

Recently there has been a lot of talk about the U.S.-Mexico border. Not long ago there was a different media storm about the mistreatment of women along the frontera due to the volatile combination of Fast Fashion practices and NAFTA.


North America Free Trade Agreement (NAFTA):

The North American Free Trade Agreement is a trilateral trade agreement between Canada, Mexico, and the United States. Economists suggest that, in the long-run, trade facilitated by NAFTA will benefit the three economies as well as improve the economic footing of the average citizen. Still, this turn to multilateral free trade has also negatively impacted a few communities significantly, namely, Mexican farmers and textile workers along the Mexico-U.S. border. This tension is an example of how Free Trade can differ from Fair Trade in its intended (and unintended) consequences.

Fair Trade establishes restrictions, enforces minimum wages, necessitates safe working conditions, and requires that attention is paid to environmental sustainability. Free Trade intentionally removes international economic barriers by removing things like taxes and tariffs––as well as worker protections (e.g., minimum wages). So, in essence, Free Trade means largely unrestricted imports and exports between countries. NAFTA establishes a network of Free Trade between these three countries, but it doesn't mandate Fair Trade.


Maquiladoras:

Maquiladoras, or maquilas, are large-scale manufacturing facilities along the Mexico-U.S. border that have received preferential tariff treatment through NAFTA since 1994. These facilities are predominantly staffed by women (it's about a 60-40 split) who make significantly less money than other non-skilled laborers in Mexico. And, compared to factory workers in the United States, maquila workers make about 1/6 as much. Maquilas were first erected in 1965 to bolster urbanization along the Mexico-U.S. border. Today, maquiladoras create over one million jobs in Mexico. And, due to NAFTA, the cost of labor in Mexico remains low; current custom fees and taxes are kept low for businesses in Canada and the United States.

While originally created to provide jobs for those already living at the border, the maquiladoras have instead prompted a flood of women looking for jobs to the border region. Maquiladora workers are paid but with low wages, and they work communally, but without a union. Yes, they are employed, but not under adequate working conditions.

Workers:

It is predominantly women who work in factory positions along the Mexico-U.S. border. They have more nimble fingers and often do not have the education to allow them to find other (i.e., better) employment. Unfortunately, because Free Trade is often predicated upon the fast and cheap exchange of goods, these women typically lack basic protections in the workplace.

Fast Creation:

Despite these drawbacks, NAFTA has been nominally successful in that it has achieved the economic outcomes identified as its goals in 1994 (e.g., to eliminate barriers to trade and investment between Canada, Mexico, and the United States). Unfortunately, it has also been successful in omitting Fair Trade practices.

Many maquiladora workers have suffered personal injuries while the national economies thrived. This dissonance has not ebbed since the 20th century. As a matter of fact, conversations regarding multilateral trade agreements persist. NAFTA has been successful in creating and trading low-priced goods through low-wage, but often high-risk, work. NAFTA has also been successful at speeding up fast creation in electronics, textiles, and car parts.

When consumers insist on fast-paced production and rock bottom prices, factory workers can be overlooked in favor of the economy as a whole. When consumers make choices that support companies that pay fair wages, consider the environmental impact of their factories, and ensure the health and safety of their employees, they are supporting workers and Fair Trade practices. Free Trade is not always Fair Trade.

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