Political Science

Introduction
The North American Free Trade Agreement 1992 (NAFTA) between the US, Canada and Mexico came into force on January 1, 1994 (Gillies and Moen 1998, 669).  The overriding purpose of NAFTA is to remove barriers to trade and investment between the three countries (Hakim and Litan 2002, 87). 

NAFTA was successful in these areas as trade and investment between the three countries more than doubled following its implementation (Hakim and Litan 2002, 89).  However NAFTA failed to address ongoing problematic areas for integration and free trade with Mexico.  Those areas are migration issues and the wage gap between Mexico and the other two parties to Canada. This paper examines these crucial areas that were left out of NAFTA, how those issues have been exemplified by the 1992 Agreement, the USs role in those areas and finally how the US can resolve or influence a resolution to these areas.

Wage Gaps and Migration Under NAFTA
Wage Gaps
The Inter-American Development Bank (2003) explains the consequences for the geographical distribution of labor in Mexico following NAFTAs implementation.  Approximately five years prior to trade liberalization under NADTA, approximately 46 percent of the manufacturing labor market existed in Mexico City with 21 percent on the Mexican States bordering the US (Inter-American Development Bank 2003, 158).  However, in 1993, just after the introduction of NAFTA, Mexicos manufacturing labor market fell to 29 percent with the border states manufacturing labor market increasing to 30 percent.  Those trends continued and by 1998, four years after the implementation of NATA, Mexico Citys manufacturing labor market fell to 23 percent and the border states share of the manufacturing labor market rose to 34 percent.  Over a ten year period from 1993-2004, the manufacturing labor market continued to cluster around the transportation routes to the US with significant decreases in those areas that are farther away (Inter-American Development Bank 2003, 158).

The consequences of these labor trends have rebounded to reflect a disparity in wages between Mexicos regions.  The wages for workers in the cluster areas have grown in comparison to those in the disconnected regions.  The significance of wage gaps have therefore grown since the implementation of NAFTA (Inter-American Development Bank 2003, 158).  Nevertheless, the reality is that NAFTA was never intended to influence wage gaps between the three signatories (Dominguez and de Castro 2009, 181).  Its primary purpose was to increase economic opportunities for populations of the three countries and this was believed to naturally follow from the removal of barriers to trade.  It was anticipated that by increasing trade and investment between the three countries, new job opportunities would emerge with unemployment rates falling in all three countries (Cavanagh and Mander 2004, 46).

While productivity in Mexicos manufacturing industry increased within the first three years of NAFTs implementation, wages fell by 21 percent (Chambers and Smith 2002, 18).  In general, the minimum wages in Mexico fell to within a third of its pre-NAFTA levels indicating that NAFTA has had no impact on the wage gap between Mexico and its two trade partners under the Agreement (Chambers and Smith 2002, 18).  Ultimately, the wage gap between the US and Mexico, prior to the implementation of NAFTA was at 8 to 1 and as of 2002, the wage gap was at 10 to 1 (Chambers and Smith 2002, 18).
It therefore follows that if anything, NAFTA has increased rather than reduced the wage gaps between Mexican workers and US workers. Mexicos President, Vicente Fox responded to this trend by proposing that NAFTA be modified from a Free Trade Agreement and establish a common market structure such as that used in the European Union (Condon, Sadka and Sinha 2003, 6).  This would allow for the greater and freer movement of persons between the three trade partners and thereby narrow the wage gaps.

Weintraub, Rugman and Boyd (2004) argue however, that the proposal for a common market as espoused by Fox is inconsistent with the USs initial and abiding goals for the formation of NAFTA (109).  The US in proposing and adopting NAFTA had only intended to make its markets available to Canada and Mexico in exchange for harmonious economic policies between the three countries (Weintraud, Rugman and Boyd 2004, 109).  In other words, the US was only willing to share its market with its NAFTA trade partners and is not willing to open its doors for the free movement of people across its borders.  In this regard, the wage gaps will not be closed if the only solution is to permit the free movement of persons between NAFTAs borders.

Migration Problems under NAFTA
Migration or the free movement of workers between the borders have had significant implications for  the wage gap between Mexico and its NAFTA trade partners particularly the US.  The US maintains a non-immigrant visa program which is not entirely liberal under its NAFTA obligations.  NAFTAs Article 1201(3) (a)  provides that nothing in the Agreements shall be interpreted so as to

Impose any obligation on a Party with respect to a national of another Party seeking access to its employment market, or employed on a permanent basis in its territory, or to confer any right on that national with respect to that access or employment(NAFTA 1992, Article 1201(3) (a)).

In other words, NAFTA enables the US to permit only temporary visas for entry into the US for employment purposes.  Moreover, by virtue of Article 1207(3) NAFTA parties may introduce quantitative restrictions on the services provided they serve other parties with notice (Article 1207(3) (a) ).  As Condon, Sadka and Sinha (2003) explain, the cumulative impact of these Articles is to enable the movement of the service provider across borders rather than to accommodate the movement of workers (89).

In other words, NAFTA specifically ignores the pre-existing labor migration problems between the US and Mexico (Cholewinski, Perruchoud and MacDonald 2007, 152).   The North American Agreement for Labor Cooperation (NAALC) a labor agreement formed under NAFTA also ignores the issue of migration.  All NAALC does is mandate that contracting parties ensure that labor standards are formed and enforced.  Ultimately NAALC has as its goal the improvement of labor and living conditions the promotion of innovation, production and quality free exchange of information with the view to greater understanding of each members labor laws and institutions promotion of adherence to and enforcement of labor laws and transparency with respect to labor law (North American Agreement for Labor Cooperation, Article 1).

Ignoring migration problems between the US and Mexico under NAFTA only exacerbated the problem.  Undocumented laborers in the US from Mexico continue to be problematic for the US (Hufbauer and Schott 2004, 111).  In the new millennium, legal immigration amounts to 130,000 and 200,000 annually when legal immigration from the rest of the world to the US is 737,000 each year (Hufbauer and Schott 2004, 111).  Approximately 95 percent of the documented Mexicans in the US are permitted entry under a family reunification visa program (Hufbauer and Schott 2004, 111).

Undocumented Mexicans in the US typically fall within two categories.  One group which amounted to 8 million in 2004 alone was already in the US (Hufbauer and Schott 2004, 111).  The other group of undocumented Mexicans in the US are those who migrate to find work and this number equals approximately 275,000 annually (Hufbauer and Schott 2004, 111).  From the Mexicans perspective, those workers should as a matter of human rights and social justice ought to be legalized (Hufbauer and Schott 2004, 111).  For one thing, the undocumented Mexicans are susceptible to abuse by private employers in the sense that they do not have the protection of labor laws which enforce minimum wages and safe working conditions.  Certainly, FAFTA under the auspices of the NAALC purport to have as its goal the improvement of working  conditions and labor standards.  If wage gaps and stringent visa work programs are not addressed by NAFTA, the propensity to migrate from Mexico and work in the US is expected to increase. It is therefore hardly surprising that it is generally believed by Mexicans that the legalization of these migrants is consistent with the concept of free trade within the meaning and general intent of NAFTA (Hufbauer and Schott 2004, 111).

Economically, it is argued that the legalization of Mexican migrant workers in the US would secure for Mexico a fair share of the labor remittance flows.  For instance in 2005, Mexican remittances totaled US17 billion which is only 2.6 percent of Mexicos GDP (Hufbauer and Schott 2004, 111).  In addition it is argued that should these Mexican migrants be accorded legalization in the US, their economic conditions would improve and they could return to Mexico (Hufbauer and Schott 2004, 111). 

From the US perspective however, many US citizens are immediately and tenaciously opposed to any migration concessions at all.  The security concerns emanating following the September 11 terror attacks have only strengthened this resolve. This is hardly surprising since a number of the named terrorists were subsequently found to have violated US immigration laws by remaining in the US after their non-immigrant visas expired. Adding to US concerns about legalizing undocumented Mexican migrants is the decline of the US economy,  Ultimately, the growth in unemployment in the US did not improve the chances of legalizing Mexican migrant workers in the US (Hufbauer and Schott 2004, 112). 

NAFTA did however introduce a minor remedy which permitted the issue of visa for professionals on a temporary basis under what is commonly referred to as a TN visa.  However, the requirements exclude virtually all unskilled Mexican laborers in the US.  In order to be approved for a TN visa the candidate must meet the requirements of a specific job classification, meet specific education and professional requirements and obtain a letter of sponsorship from a US employer.  The TN visas designated for Mexico was set at just over 5,000 annually and for Canadians the number was indefinite (Hufbauer and Schott 2004, 112).  However the US abolished the limits to the TN visas for Mexicans and simplified its process (Hufbauer and Schott 2004, 111).

Even so, while the TN visa program has improved the chances of Mexicos skilled workers obtaining visas to the US on temporary basis, there is no appreciable improvement in the wage gaps between Mexico and the US.  Therefore the propensity to migrate whether illegally or legally remains strong.  Moreover, unskilled Mexican laborers continue to be attracted to the US labor market (Hufbauer and Schott 2004, 113).

Conclusion
The International Organization for Migration (2006) explains that freer trade such promoted under NAFTA will only encourage migration.  This is particularly so in cases where the wage gap is so glaring as is the case between the US and Mexico.  While US laborers are not expected to migrate to Mexico as a result of the wage disparity, Mexican workers are expected to migrate to the US as a result of the wage inequities between the two regions.  This is particularly so, since Mexican workers were migrating to the US in large numbers prior to the implementation of NAFTA.  NAFTA chose to ignore the migration problems and the wage gap entirely.  The best that can be said is that NAFTA had hoped that by opening markets between the three North American countries, the economic conditions in Mexico would improve so that wages would improve.  However, nothing has changed and migration continues to be a problem largely ignored by the US or exacerbated by homeland security issues following the September 11 terror attacks.

The only viable solution appears to be the proposal put forth by US Mexican President Fox.  This proposal which envisages a common market approach to NAFTA would likely be the only solution since NAFTA itself has not changed the status quo.  Mexican employers would be forced to offer competitive wages and the US would be forced to protect its migrant workers.  However, as long as the US is concerned about protecting its borders from international terrorist, an open market which opens its borders is not a viable solution.  In the mean time, the US can only enforce its immigration laws and continue to modify its temporary work visa programs so as to increase the number of documented Mexican workers in the US and reduce the number of undocumented workers.  As Mexico loses more and more workers to the US it will likely be forced to increase its wages thereby reducing the wage gaps between the NAFTA parties and reducing the numbers of undocumented migrant workers.