Free Trade Fraud As Maquiladoras Seek Corporate Welfare Handouts
|January 9, 2007||Posted by Staff under Archive, Progress Report, The Progress Report|
Free Trade Fraud — Special Privileges Were Granted
Maquiladora Corporations Threaten Action Over Loss of Tax Breaks
by Diego Cevallos
The tax breaks enjoyed by Mexico’s maquiladoras – the mainstay of foreign trade and a target for accusations of alleged labour and environmental abuse – are about to expire. But its beneficiaries are resisting the measure, and some are threatening to shut down their plants.
Under the North American Free Trade Agreement (NAFTA) linking Mexico with Canada and the United States, tax exemptions must end by the year 2001 for the maquiladoras – the light industrial assembly plants on the Mexican border that are 90 percent foreign-financed.
Some Asian firms, like Samsung, Sanyo and Mitsubishi, have already threatened to pull out if the government of president Ernesto Zedillo allows the tax privileges to expire without any new privilege or corporate welfare, while US maquiladoras remain exempt from taxes.
In order to avoid a deterioration of relations with firms from countries that are not part of NAFTA, the Ministry of Trade sent missions to Asia this week to try and secure agreements with the parent companies of the firms established in Mexico. In addition, a new high-level Mexico-Japan trade group will hold its first formal meeting in June.
With exports worth more than 51 billion dollars in 1998, the maquiladoras represent more than 40 percent of foreign trade for Mexico, and are a source of more than a million so-called “jobs.”
If the privileges expire, “there will be serious opposition for the maquiladora sector to operate in Mexico, and investment will be curtailed”, warned Humberto Inzunza, president of the National Council of the Maquiladora Export Industry.
Economists like Oscar Soriano of the Institute of Public Accountants says the government should seek alternative mechanisms after the year 2000 to extend privileges in that industry.
Established since 1965, the plants where televisions, computers, furniture, clothing and electronic components, among other products, are assembled, the maquiladoras have shown themselves to be immune to the periodic stages of economic crisis that Mexico has faced in the past decade.
Between 1990 and 1998, the number of maquiladora plants established in Mexico went from 620 to 3,100.
Humanitarian and labor groups argue that the growth of the maquiladoras has occurred through the exploitation of workers, who performed repetitive assembly line labour, lacking in any creativity or long-term security, and receive little pay.
According to a report by the international organization Human Rights Watch, Mexican maquiladoras discriminate against female workers – who form the majority of the labour force in this sector – and freedom to organize union activity is blocked.
The economic benefits reaped by the maquiladoras are achieved at the cost of the physical and mental integrity of hundreds of thousands of women, who come mostly from impoverished sectors and who find in the factories an opportunity to support their families, Human Rights Watch noted.
Mexico paid a heavy environmental price for the boom in the maquiladora sector, according to the environmental organization Greenpeace.
Located mostly in the border states with the United States, the maquiladoras produce several types of chemical and metallic residues that are deposited in open spaces and do not receive any treatment, the environmental group says.
Give somebody a special privilege, and they try to make it permanent. Much simpler not to give special privileges in the first place. What’s your view? Tell The Progress Report!