Alberto Martinez welds steel at a maquila in Reynosa, Mexico owned by Metal Industries of Florida (photo: Lorne Matalon)
REYNOSA, Mexico–American-owned assembly-line factories known as maquilas that line the Mexican side of the border with the U.S. have been bracing for change since the election of Donald Trump. But not in the way you might expect. They clearly don’t want a border tax placed on their shipments to the United States, as the Trump administration has threatened. But they are embracing the possibility of an updated Nafta saying the current version makes it a harder to operate in Mexico compared to the U.S. It all has to do with time consuming paperwork.
Maquila managers and trade groups interviewed in both countries see regulatory uncertainty as an opportunity. “Nafta is 30 years old. It hasn’t kept up with today’s economy,” said Mike Myers, a Texan who runs a maquila owned by Metal Industries, a Florida company that makes vents for air conditioners and heating systems.
Mike Myers, a maquila manager in Reynosa, Mexico. He opposes a border tax but supports an updated Nafta. (photo: Lorne Matalon)
Maquilas are foreign-owned factories in Mexico, many American-owned, that produce goods for export. Mexican and Asian interests also own maquilas, which sprung up like mushrooms after the rain when NAFTA took effect in 1994. Maquilas leverage low labor costs in Mexico and duty free access to the U.S. market to produce everything from televisions to medical equipment to computer parts. Continue reading →
Rafael Avila harvests corn grown from seeds that trace their lineage to the Aztec and Maya cultures. In Mexico there’s a saying. “Sin maiz, no hay pais.” Without corn there’s no country.’ Despite that history, Mexico imports vast amounts of U.S. corn. (photo:Lorne Matalon)
MEXICO CITY — Every weekday, Antonio Godinez Vera turns imported American corn into feed for Mexican livestock. Some of that U.S. corn is also used to make tortillas, a staple of the Mexican diet. Corn is also a symbol of Mexico itself. Corn was born in Mexico 9,000 years ago. There’s even an expression here, “Sin maíz no hay pais,” meaning ‘without corn there’s no country.’ Legislation has been proposed in Mexico City to boycott U.S. corn in response to a suite of economic threats against Mexico voiced by President Donald Trump.
Corn mill owner Antonio Godinez Vera said a boycott of American corn would raise prices for Mexican consumers and damage the Mexican corn market. (photo: Lorne Matalon)
“A boycott could certainly hurt us,” Godinez told me in Spanish as the din of his corn mill echoed through a complex of machines and metal kernel grinders. Trucks laden with imported American corn sat in his lot. A boycott would also hurt U.S. corn growers from the Dakotas to the Midwest to Arizona, California and Texas. Mexico’s deputy economy minister Juan Carlos Baker told the Financial Times that negotiations are underway with Argentina and Brazil to offer them duty-free access to the Mexican market now enjoyed by U.S. growers under the terms of the North American Free Trade Agreement (Nafta). As a candidate, Trump called Nafta the “worst trade deal” ever signed in this country.
Corn imported from the U.S. is used primarily in animal feeds but market uncertainty has historically translated into elevated prices for tortillas, a staple of the Mexican diet. (photo: Lorne Matalon)
Mexican Sen. Armando Rios Piter has proposed the boycott. “Corn is from Mexico, from my country. So right now it’s an important position in nationalistic way but also in terms of trade,” he said at the door of the Senate chamber.
Corn has been cultivated in what is modern-day Mexico for nine thousand years. (photo: Lorne Matalon)
MEXICO CITY—Mexicans are anxious about the future of the North American Free Trade Act, and how the incoming administration of U.S. President-elect Donald Trump may seek to change or even withdraw from the agreement.
Mexican officials are now speaking with Asian nations about how trade between Mexico and Asia might change in a post-NAFTA era.
Mexican analysts expressed concern that new investment may slow down due to uncertainty about the agreement. “It’s the chilling effect on investment,” said Federico Estévez, a political scientist at Instituto Tecnologico Autonomo de Mexico, a leading Mexican university. “We’ve basically turned into an industrial economy on the basis of NAFTA.”
It’s been 14 years since the North American Free Trade Agreement took effect. Farm trade between the United States and Mexico immediately soared. It’s now four times what it was the year before NAFTA was signed. Two weeks ago, the few remaining trade restrictions on farm goods were dropped. U.S. officials is calling the move a win for farmers in both countries. But the reaction south of the border is quite different. Mexican farmers are taking to the streets in protest. The World’s Lorne Matalon reports from Xochimilco, Mexico.
Matalon: Under a cobalt sky and blinding sun, Rafael Avila moves slowly along a dusty brown path between 10 ft stalks of corn. Tending his 6 acres, he grips a small silver machete as he harvests corn grown from seeds that trace their lineage to the Aztec and Maya cultures. In Mexico there’s a saying. “Sin maiz, no hay pais.” â€˜Without corn there’s no country.’ But Avila says small farmers now demanding that NAFTA be renegotiated are missing the point. Avila blames the Mexican government which he says has ignored small farmers since NAFTA was signed in 1994.
Avila: “If we don’t have the weapons to compete, Mexico is dead. We will not advance as a nation.”