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UNCLAS SECTION 01 OF 05 MEXICO 004246 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR DRL/AWH AND ILCSR, WHA FOR MEX AND PPC, USDOL FOR 
ILAB 
STATE FOR EB/TPP, EAP/CM 
STATE PASS USTR FOR EISSENSTAT/STRATFORD/QUESENBERRY 
COMMERCE FOR ITA/OTEXA 
DHS/CPB FOR JLABUDA AND BFENNESSY 
 
E.O. 12958: N/A 
TAGS: ELAB ECON ETRD KTEX PGOV PINR CH MX
SUBJECT: THE LABOR SITUATION OF THE MEXICAN TEXTILE AND 
CLOTHING INDUSTRIES 
 
REF: (A) MEXICO 2858 (B) MEXICO 4150 (C) MEXICO 616 
 
MEXICO 00004246  001.2 OF 005 
 
 
 ¶1.  SUMMARY: Beginning on July 31, the Mexico office of the 
Friedrich Ebert Stiftung (FES) foundation, a German 
non-profit organization, and the International Textile, 
Garment and Leather Workers Federation (ITGLWF) held a two 
day seminar on the &Future of the Textile Industry in 
Mexico.8  The seminar was attended by representatives of 
various textile unions, labor lawyers, academics, NGOs, 
social activists, spokespersons for Mexico,s textile 
industry and Mission Mexico,s Labor Counselor.  The goal of 
the seminar was to present an overview of the textile and 
clothing industries which have lost over 300,000 jobs since 
2000, suggest urgent &next steps8 to strengthen these 
industries and form a working group that would recommend 
practical actions to implement these steps.  The seminar,s 
participants devoted a disproportionate amount of time to 
what they saw as unfair Chinese competition, the endless 
flood of contraband Asian textile and clothing products 
entering Mexico, and the shortcomings of the GOM in failing 
to support the textile industry.  They also focused 
considerable criticism on NAFTA and its impact on the Mexican 
textile and clothing industries.  In the end, the seminar,s 
participants were able to form a working group but it was 
prevented from reaching an agreement on &next steps8 when a 
union affiliated with Mexico,s main opposition political 
party effectively insisted on obtaining the perfect to the 
detriment of the good.  END SUMMARY. 
 
 
TEXTILE UNIONS AND INDUSTRY ARE CALLED TO ORDER 
--------------------------------------------- -- 
 
¶2.  From July 31-August 1, the Mexico office of the Friedrich 
Ebert Stiftung (FES) foundation, a German non-profit 
organization, and the International Textile, Garment and 
Leather Workers Federation (ITGLWF) held a two day seminar on 
the &Future of the Textile Industry in Mexico.8  The 
seminar was attended by various textile union representatives 
affiliated with Mexico,s three largest labor federations; 
the Confederation of Mexican Workers (CTM), the National 
Workers Union/Authentic Workers, Front (UNT/FAT) and the 
Revolutionary Confederation of Workers and Peasants (CROC). 
Also, present were labor lawyers, academics from several 
Mexico City area universities, national and international 
NGOs, social activists and spokespersons for Mexico,s 
textile industry. 
 
¶3.  The goal of the seminar was to present an informed 
overview of the Mexican textile and clothing industries which 
have lost over 300,000 jobs since 2000 (ref A), suggest 
urgent next steps to help these industries and to form a 
working group that would recommend practical actions to 
implement these &next steps.8  The main moderators at the 
event were Jose Rafael Ramirez Vera, the Secretary General of 
ITGLWF,s Inter-American Region and Ines Gonzalez Nicolas, 
the FES Coordinator for Labor and Gender Issues.  Between 
them they laid out an agenda for the seminar, kept the event 
on track, initiated a number of panel discussions and, with 
one significant exception, successfully moderated rivalries 
between the three labor federations, the social activists and 
spokespersons for the industry representatives. 
 
 
ACADEMIC PRESENTS HARD REALITIES OF THE TEXTILE INDUSTRY 
 
MEXICO 00004246  002.2 OF 005 
 
 
--------------------------------------------- ----------- 
 
¶4.  During the two day seminar various academics, from a wide 
range of perspectives, made detailed presentations about the 
state of Mexico,s textile industry and the reasons for its 
decline.  Of these presentations, perhaps the most 
comprehensive was made by Dr. Graciela Bensusan Areous of the 
Autonomous Metropolitan University-Xochimilco (UAM-X).  Dr. 
Bensusan,s presentation offered an overview of Mexico,s 
textile and clothing industries that underscored the problems 
of these sectors of the economy in which many different 
actors are at fault but did so without fixing an undue 
portion of blame on any particular person or group. 
 
¶5.  According to Dr. Bensusan,s own work and that of several 
other researchers she cited, in 2001 Mexico,s textile and 
clothing industries employed some 700,000 workers nationwide. 
 At that time the production of these workers accounted for 
75 percent of Mexico,s maquiladora (foreign owned-assembly 
plants) exports.  The main areas for textile/clothing 
production were the states of Coahuila, Puebla, the State of 
Mexico, Mexico City, Aguascalientes and Yucatan. The textile 
and clothing industries flourished in these states because of 
state government policies that favored foreign investment, 
low salaries and an abundance of manual laborers.  Moreover, 
from about 1998 until 2002 Mexico was the main supplier of 
textile and clothing products to the US.  All of these 
factors helped to make Mexico,s textile and clothing 
industries appear healthier than they really were.  After 
2002, world competition from China and other Asian countries 
overtook Mexico as the US, main supplier of textile and 
clothing products. 
 
¶6.  As part of her presentation Dr. Bensusan cited an 
International Labor Organization (ILO) study which listed a 
number of common factors among countries with large 
textile/clothing industries. The common factors included such 
items as: high employee turnover; poorly trained workers; low 
salaries; low levels of unionization and poor leadership 
among the unions that do exist; child labor; high level of 
off-the-books labor and unregistered businesses (informal 
economy Ref B); and sex discrimination. Using the state of 
Puebla as an example of prevalent practices in Mexico,s 
textile/clothing industries, Dr. Bensusan stated the 
following: 63 percent of the textile/clothing industry 
workers in Puebla are women; 57 percent of the workers are 
very young (exact age range not stated); the state has a 
large percentage of unregistered small family businesses 
operating on the informal economy; and only 15 percent of 
surveyed businesses were unionized. 
 
¶7.  Continuing on, Dr. Bensusan pointed out that Mexico,s 
labor laws in general, and their application in the textile 
and clothing industries in particular, has led to a wide 
range of problems.  She pointed out that business owners 
often complain that the high costs associated with full 
compliance with the country,s labor laws makes Mexico 
uncompetitive.  Dr. Bensusan acknowledged that full 
compliance with the law might be costly but stated that there 
were so few penalties for non-compliance that many 
businessmen simply ignored the law and then pocketed the 
savings. 
 
¶8.  She then went on to list other problems in the textile 
and clothing industries from the perspective of laborers 
 
MEXICO 00004246  003.2 OF 005 
 
 
being mistreated by management.  These problems included: the 
high number of temporary and part-time workers in the 
industry (60 percent of all industry workers in 2005); high 
rates of employee turnover (60 percent in the industry vs. 40 
person nationally for other manufacturing workers); firings 
without cause; non-payment of legally mandated employee 
benefits; widespread sex discrimination; and salary payments 
on piecemeal basis that is less than the legal minimum wage. 
 
 
¶9.  Dr. Bensusan then balanced her presentation with a 
discussion of workers being mistreated by the various textile 
labor unions. In this she faulted: the poor quality of union 
leadership which can perpetuate their mandates almost 
indefinitely; the difficulties unions have of standing up to 
government or to employers; a near total lack of democracy or 
openness within the unions; in order to avoid conflicts, 
union leaders will not strike no matter what. 
 
 
IT IS ALL CHINA,S FAULT 
----------------------- 
 
¶10.  A continuing theme repeated almost endlessly throughout 
the seminar was the issue of &unfair8 competition from 
China and other countries in Asia.  Complaints against China 
were made by union representatives, industry spokespersons 
and even the academics (although to a much less degree). All 
of the various union representatives at the seminar 
complained about China but the most often repeated and 
intellectually unproductive comment came from the senior 
leadership of the CTM.  The comments of the elder CTM leaders 
notwithstanding, to varying degrees, most of the seminar 
participants were in rough agreement on the topic of 
competition from China and Asia. 
 
¶11.  Almost without exception, the seminar,s participants 
described competition from China as &unfair8.  Many 
participants from the union and from industry underscored the 
injustice of expecting Mexico to compete on an equal basis 
with China which is not a market economy.  As such, the 
argument went, China allows its numerous state-owned textile 
and clothing businesses to operate at a loss (something 
Mexican firms cannot do).  It was also repeatedly pointed out 
that China provides its industries with numerous subsidies 
that are specifically prohibited by the WTO. 
 
¶12.  A great many seminar participants also mentioned that 
China does not have independent unions and does not respect 
basic worker rights.  According to the participants, an 
important element of the unfair advantage China has is that 
by not respecting worker rights (or environmental standards), 
it will always be able to produce goods at a lower cost than 
Mexico.  (Comment: Post notes that Mexico is not exactly 
flawless when it comes to respecting and complying with 
worker rights and environmental standards ) this was echoed 
by several NGO and labor participants.) 
 
 
EXCEPT FOR WHEN THE GOVERNMENT, OR NAFTA, ARE TO BLAME 
--------------------------------------------- --------- 
 
¶13.  The only actor to receive as much criticism during the 
seminar as China was the Mexican Government.  The criticisms 
against the GOM were not repeated as often as those against 
 
MEXICO 00004246  004.2 OF 005 
 
 
China, nor were they as emotional, but they were just as 
widely shared.  One speaker after another detailed the 
failings of the GOM, because of either incompetence or 
corruption, to support Mexico,s textile and clothing 
industries. The GOM,s Secretariat of the Economy and its 
Customs Services were the main focus of the participants, 
displeasure.  Economy was attacked for its perceived failures 
both nationally and internationally.  Nationally, it was 
faulted for things like failing to help lower electricity 
rates charged by the government monopoly to   facilitate 
shift work and thereby increase productivity; internationally 
it was faulted for not pressing forcefully enough for Mexican 
industry in the WTO (Note: Mexico is currently pressing a 
complaint against Chinese subsidies via the WTO,s dispute 
settlement process.). 
 
¶14.  Mexican Customs was faulted for not controlling the 
problem of contraband.  Mexico, the participants all agreed, 
was being overrun by contraband of all types but especially 
with textile and clothing products.  One presenter asserted, 
correctly according to many seminar participants, that 
because of the flood or contraband entering Mexico the 
country,s textile and clothing industries now only supply 20 
percent of total domestic demand.  The other 80 percent is 
being supplied by the purveyors of contraband goods.  (Note: 
One of the main reasons for the high level of contraband 
imports is that Mexico has extremely high anti-dumping duties 
in place versus a huge swath of Chinese textile and apparel 
products.  In December 2007, China will finally, under the 
terms of its bilateral WTO accession deal with Mexico, be 
able to challenge these anti-dumping duties before the WTO,s 
dispute settlement mechanism.  Mexican manufacturers are 
strongly lobbying the GOM to maintain these trade measures, 
while the GOM is considering whether they are consistent with 
WTO rules and urging industry to provide evidence to support 
their claims of dumping.  See ref C for more details.) 
 
¶15.  Coming in at a distant, but nevertheless significant, 
third place for criticism was NAFTA.  There was not as wide a 
range of agreement on the problems caused by NAFTA as there 
was on the evils of China or the GOM but what its critics 
lacked in numbers they made up for in emotion.  The main 
critics of NAFTA were the participants from Mexican NGOS and 
the UNT/FAT which is closely linked to Mexico,s main 
opposition party, the Party of the Democratic Revolution 
(PRD).  NAFTA,s critics asserted that the trade agreement 
was &imposed8 on Mexico when two developed countries ganged 
up on a developing country.  As a result, the critics said, 
Mexico was forced to compete internationally before it was 
ready.  NAFTA (and by extension the USG) was also criticized 
for creating the conditions in which triangulation (goods 
coming from Asia which are supposedly destined for sale in 
the US but which ultimately end up in Mexico as contraband) 
has so severely and negatively impacted the domestic textile 
and clothing industries. 
 
 
WORKING GROUP UNABLE TO PROPOSE NEXT STEPS 
------------------------------------------ 
 
¶16.  At about the mid-point in the seminar its two moderators 
proposed the names of several participants to form a working 
group that would be charged with taking the information 
presented during the two days of discussion and developing 
realistic next steps. The working group was composed of 
 
MEXICO 00004246  005.2 OF 005 
 
 
individuals from the three unions present: the CTM, CROC and 
the UNT/FAT.  Later Mission Mexico Labor Counselor was 
invited to join to help discuss the problems of contraband 
and triangulation.  (Note: Embassy,s ECON, CBP, and ICE 
offices are discussing possible joint actions against 
triangulated contraband networks.)  The first meeting of the 
group was informally called to order at the end of the 
seminar and as a courtesy the UNT/FAT was first for their 
ideas on next steps. 
 
¶17. Rather than address this subject the UNT/FAT asserted 
there was no point to discussing next steps while there were 
still so many issues related to union accountability, 
transparency, freedom of association ) a worker,s ability 
to join any union he or she wants, and inter-union relations. 
 The UNT/FAT then began a blistering attack on the CTM and 
CROC, but more particularly on the latter, which it claimed 
was doing everything possible in the state of Puebla to 
prevent workers dissatisfied with one union from leaving and 
joining another. The UNT/FAT remarks (which contain much more 
than a grain of truth) prompted the CROC and the CTM to 
defend themselves.  Ultimately, the time to discuss realistic 
next steps ran out and the only agreement reached was that 
the group would meet again soon at the offices of the FES for 
further discussion: exact date TBD. 
 
 
COMMENT 
------- 
 
If nothing else, the FES/ITGLWF seminar showed that the 
various elements of Mexico,s textile and clothing industries 
may not know what they are for but they certainly know what 
they are against. They are against &unfair8 competition 
from China, against contraband, against ineffective and 
corrupt government, against NAFTA and against each other.  It 
was disappointing that one textile union did not use the 
opportunity to discuss realistic next steps the industry 
could consider to help focus efforts on future actions and 
chose instead to advocate for a perfect resolution of all of 
Mexico,s (very real) labor union problems before it would 
consider joining efforts to develop solutions that might help 
real workers hold on to real jobs. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity and the North American 
 Partnership Blog at http://www.intelink.gov/communities/state/nap / 
GARZA