Today, labor productivity in Mexico s export industries is typically 80 to 100 percent of U.S. levels, while wages and benefits are 10 to 15 percent of what U.S. workers earn. In a growing number of factories in Mexico owned by multinationals, labor productivity is even higher than in comparable U.S. factories because the Mexican plants are newer and the workers often get more training. Where labor is cheap to hire it is cheap to train. The disparity between wages and labor productivity is a result of the policies of the authoritarian Mexican government. Through a variety of measures, including government wage controls, physical intimidation of workers and official encouragement of employer associations that collude in fixing wage rates, workers pay in Mexico is kept down in order to attract more foreign capital.
Environmental degradation is permitted for the same reason.
Because Mexico is ruled by one political party, which in turn is dominated by an entrenched oligarchy, the country lacks effective political opposition, independent trade unions, an independent judiciary, strong environmental groups and similar institutions that in a democracy keep a check on government power. Hundreds of thousands of U.S. jobs have already been lost. It is designed to protect U.S. investors in Mexico from policy changes of future Mexican governments, freeing them to expand production in Mexico to sell goods in the U.S. market. Although the Mexican labor force is large, the Mexican market is minuscule because incomes are low, and it will remain so until the political structure is changed. Since in this case they are not, the free trade argument is irrelevant.