Under terms set by the North American Free Trade Agreement, or NAFTA, most of the remaining tariffs on agricultural products entering Mexico from the United States were eliminated January 1. Some Mexican farmers say they will be devastated by this and Mexican President Vicente Fox has agreed to discuss their concerns.
But some parts of Mexico's agriculture sector may never recover from the new competition.
Mexican farmers have left their fields in recent weeks to stage protests in front of the U.S. Embassy, the national Congress and at some border crossings. The main group behind the protests is the National Peasant Commission, whose leader, Heladio Ramirez, is calling on President Fox to renegotiate NAFTA.
He said President Fox should renegotiate the part of the free trade agreement that applies to agriculture. Under the terms of the treaty it is possible for a nation to cite an emergency in a particular sector and ask for an extension of tariffs, but President Fox refused to this before the tariff reductions took effect. Mr. Ramirez said there is an emergency in the Mexican countryside.
He is calling on the Fox government to declare an emergency and to take action to protect the small farmers who will lose their livelihood as a result of the free trade agreement provisions.
Although the Fox government has opened a dialogue with the farmers to prevent further blockades and other protests, the government has rejected the call to renegotiate the treaty. Foreign Minister Jorge Castaneda made the point directly in an appearance this week before a gathering of farm representatives.
He told them that this is not the answer to their problems and that they must understand that the free trade agreement between Mexico, the United States and Canada is now the law.
Other voices have also arisen to defend NAFTA from the farmers' criticisms. Free trade advocates note that the latest tariff reductions affect only a few sectors within the Mexican agricultural industry. Tariffs on chicken and pork dropped from around 49 percent to zero. Tariffs on other products, such as sorghum, apples, rice and soy came down from around two percent to zero. Tariffs on some other products, including powdered milk, corn and beans, will remain in effect until the year 2008.
Critics of the farm groups also note that they had eight years to prepare for the tariff reductions and waited until now to complain. The critics say the real problem facing Mexico's agricultural sector is the existence of thousands of small, inefficient farms, where peasants often still work with donkeys and mules. The average farm in the United States and Canada is around 100 hectares in size, whereas the majority of Mexican farmers typically operate on two or three hectares.
For the most part, the United States has remained out of this dispute, but the U.S. embassy has issued statements to counter some of the NAFTA critics. Embassy Press spokesman Jim Dickmeyer said the critics have overlooked the benefits the free trade agreement has brought to Mexico. "Twenty percent of Mexico's entire Gross Domestic Product is attributable to NAFTA, to the trade that has opened up since ten years ago when this treaty was signed. Mexico has an overall surplus under NAFTA with the United States," he said.
Mr. Dickmeyer said any free trade agreement anywhere in the world will be to the benefit of some and to the detriment of others. What is important, he said, is the overall benefit to the treaty participants. "Thousands of jobs have been created on both sides of the border because of the expansion of trade. There is no doubt that there are impacts in certain sectors. In the United States, truck farmers who grow tomatoes and avocados are facing very strong competition from Mexico both because Mexico has lower wages, but more importantly because there are great investments here in those areas and they are producing quite efficiently," Mr. Dickmeyer said.
Mexican farm groups have also complained about massive agricultural subsidies in the United States, which Mexico cannot possibly match. But Mr. Dickmeyer points out that most of the $190 billion in subsidies recently approved for the next 10 years apply to sectors where the United States already has a dominant position, such as in grains, and have little impact on Mexico.
For its part, the Fox government has increased Mexican subsidies by three billion dollars and has agreed to discuss further actions with farm groups in the weeks ahead. Hundreds of farmers, however, have already given up, saying they cannot live on what they earn from the land. Some say they will seek work in the cities, but many more say they will head north, to cross the border illegally and seek work in the United States.