Latin-American Studies

MEXICO
The North American Free Trade Agreement (NAFTA) was adopted in 1993, to create a free market for goods within the North American region. Mexican policy makers had signed trade agreements with thirty two trading partners, with an aim of expanding the market and ensure affordable goods for consumers.  

During its early years, NAFTA made a positive economic impact for Mexico. Lower investment tariffs opened doors for American companies that were previously locked out by Asian firms. New jobs were created and exports grew three times. Per capita increased by 24 and the economy reached 594 billion dollars in 2003, making Mexico the ninth largest economy in the world. Andrs Rozental, the president of the Mexican Council for Foreign Relations, says that without NAFTA, the situation in Mexico would have beeen much worse.

However, the benefits of the agreement were short lived. NAFTA was not a solution for Mexico, but a means by which the country would have competed with others. It only generated wealth that the government should have invested in other sectors of the economy such as agriculture, but it never did. Thus, the benefits of free trade eroded quickly. In a global market, a nation has to be aggressive to match competition from other players (Christina and Geri 2003).

The agricultural sector is the one that suffered most from the effects of the North American Free Trade Agreement. After US traders had been given a freeway into Mexico, they flooded the country with subsidized agricultural products. By selling their products at lower prices than most local manufacturers and producers, they very quickly dominated the market and as a result, local companies lost business. By the year 2003, more than one million farm jobs had been lost, according to a new report by the Carnegie Endowment for International Peace, a Washington think tank..NAFTA has been a disaster for us, Mexico was never prepared for this (Christina and Geri 2003).

Coffee farmers, in particular, were not able to fetch better prices from their produce as big exporters like Brazil and Nicaragua came into the Mexico Market. At the same time, competition at the international market was rife, especially in the US, which opened its doors to major coffee growers. Similarly, the introduction of coffee farming in Vietnam had a far reaching impact on Mexican coffee, since Vietnams production increased rapidly, rising to the second largest exporter in the world after Brazil. If it were not for the NAFTA, Mexico could have been shielded from an international onslaught. In the long run, the effects of the agreement could be felt until today, since coffee under free trade still dominates the world market. As Tyler Bridges puts it, Worse, if you happened to be a landless peasant, employed by the day to pick coffee on someone elses property, you would probably be at your wits end by now, forced to abandon the countryside and trudge with your children toward a city to beg for your keep, just as thousands of Nicaraguan peasants have lately been doing (Bridges 2006). Since our production will be on a relatively small scale level, we would not be in a position to compete in such a competitive environment.

Overproduction and oversupply of coffee in the market will only favor well established producers, who produce in large quantities to offset expenses from a low profit margin.  Good examples of the established giants in the coffee industry are the big conglomerates Proctor  Gamble and Philip Morris, which dominate global coffee sales, cramming supermarkets with vast amounts of not-especially-good coffee, while paying rock-bottom prices to producers (Mann 2000).

In addition, farmers are highly exploited within the free trade market. A long chain of middlemen and brokers leave the farmer with as little as 26 US cents after deducting commissions and expenses. Caroline Whitby, chief executive of Transfair Canada, a coffee dealer which sells high-quality coffee supplied at above-market prices, says that There is a fair bit of exploitation at the level of these middlemen, since a parade of middlemen stands, hands outstretched, between the producer and the vacuum-sealed bag, and a grower might receive 25 cents or even less per pound of green coffee (qtd in Mann 2000).

For these reasons, fair trade seems to be the best option. It could pay farmers a living wage because it bypasses the middlemen, who often siphon off up to half the worldwide price of raw coffee, which hovers near  1 a pound.we work with these producers who are all in small- farmer cooperatives that are democratically organized (Mann 2000).At the same time, most health conscious consumers are taking to fair trade coffee, since it is not contaminated with pesticides and other farm chemicals. In Bolivia, farmers are planting as much organic quinoa as possible because of increasing demand in the United States, though t quinoa is only one of dozens of organic products that Latin American farmers are increasingly harvesting for export to the United States as they tap into the growing clamor for chemical-free products (Bridges 2006). Similarly, Bridges says that health-conscious U.S. consumers have long found benefits in fresh, pesticide-free organic products, and now U.S.-based investors are also learning that the benefits of going organic are not strictly financial.

Another big attraction of the fair trade coffee is its environmental significance. At a time of serious concerns about global warming, environmental conservation movements and non-governmental organizations are campaigning for farming methods that cause minimal pollution to the environment. According to Ryan Black, the Chief Executive at  a Californian company that imports acai, a type of coffee grown in the Amazon region of brazil,  This was a way to do something beneficial for the planet and a way to make money (Bridges 2006). Instant coffee, for instance, which is marketed within the FTA, is a big contributor to environmental pollution as more water is used to make it. Even worse is decaffeinated coffee, for the extra water and chemicals that are used to remove the caffeine content.

Similarly, FTA coffee is grown in cleared lands, leading to destructions of forest cover and animal habitats. This has a big impact on climate changes and extinction of some animals and birds. The pesticides and fertilizers used to on large coffee plantations also contribute to water and air pollution. On the contrary, organic coffee in the fair trade agreement does not add pollutants into the environment. Eighty five percent of fair trade coffee is shade grown under a canopy of existing forest, instead of higher-yield methods on cleared land (Peter 2007).

Therefore, given the failures of the FTA to protect small-scale producers from established foreign companies, it will be wise to invest in fair trade coffee. Mexico is still healing from the effects of the free trade agreement, and local farmers do not earn much from their coffee. Within fair trade production, we will be earning far above the market prices, and at the same time contribute to the conservation of the environment.
Finally, the fair trade agreement is in line with the UNs millennium goal of reducing poverty and conserving the environment. Fair trade addresses the firs goal, which is Eradicating abject poverty and hunger, and the seventh goal, Ensuring a sustainable environment. With this knowledge of global market trends, environmental concerns and the millennium development goals, we opt for the fair trade coffee.