The US and Mexico Debate Free Trade

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ON February 5, 1991, the US, Mexico, and Canada formerly proposed the creation of the North American Free Trade Agreement (NAFTA).

Negotiations began on June 12, 1991, and it took 18 months of intensive haggling over everything from auto parts to oil rigs until the three participating countries finally agreed on a free-trade agreement (FTA) on August 12, 1992. The FTA is going to take effect on January 1, 1994 provided all three governments authorise it through legislation. As planned, over the next 15 years, the FTA will eliminate all tariffs among Canada, Mexico, and the US and consequently reduce the cost of thousands of products. NAFTA in several areas is actually three bilateral deals. Still, in general, it would be a sound interpretation to view it more as an American-Mexican venture. For instance, whereas in 1990 the trade between Canada and Mexico hovered around US $2.3 billion, that of the US-Mexico had surpassed US $52 billion. In this article, the bilateral trade relationship of the US and Mexico within the general framework of NAFTA will be discussed.

The FTA has been the subject of many debates in the US and Mexico. The opposition to the Agreement in the US comes mostly from labour unions, pro-labour politicians, and environmentalist. They argue that the existing pollution along the border of the US and Mexico will only worsen once the FTA takes effect. It is commonly believed that due to less stringent (and thus less costly) regulations on the environment and worker safety in Mexico, the FTA will be a great advantage to businesses that shift their operations from the US to that country. Such a move certainly will not be liked by US workers left jobless. Mark Anderson (director of the AFL-CIO Task Force on Trade) says the FTA should be called "a free investment agreement instead of a free trade agreement.' Bob Filner, a Democrat representative from California, flatly labels the FTA as a scheme that would exploit US human and environmental resoruces. 'It is free trade for big business. We want fair trade for working Americans.' Another Congressman, Peter De Fazio--also a Democrat, from Oregon, calls the FTA an 'anti-worker, anti-consumer, anti-environment, anti-USA' plan. According to Senator Ernest Hollings -- a Democrat from South Carolina: 'NAFTA is the wrong idea, at the wrong time, for all the wrong reasons'.

The main Mexican opposition to free trade comes from intellectuals and small businessmen. Jose Angel Conchello, a political who supports the nationalist opposition leader Cuauhtemoc Cardenas, argues that Mexico is embracing the treaty too hastily. Professor Carlos Rico (at El Colegio de Mexico) philosophically explains that 'most of the concern is not about the FTA itself. In Mexico ... most people see this as almost unavoidable. It is the last moment in a process of silent integration of the Mexican economy to the US economy ... The concern ... stems out of... 'Jeretcia', the heritage of the ideology of the Mexican revolution and its influence on national autonomy ... what we are doing now is accepting the failure of a national project that started in 1910. We are accepting that a project that emphasized national autonomy and independence does not make any sense given the present circumstances. [People] are more concerned about the fact that the Mexican government seems to be so committed to [the FTA] that it might accept a less than perfect deal for the Mexican side'.

Officially, the FTA has been blessed by both sides. President Salinas of Mexico has made the FTA a linchpin of all his major programmes. If the FTA is not ratified by the US Congress, the Mexican ruling party will find itself without a very attractive platform for the next Mexican presidential elections, due to be held in 1994. A report released by the US International Trade Commission states that the FTA would 'enhance the US competitive advantage', improve US access to a growing Mexican market', give "certainty and predictability' to US investors, 'benefit US consumers with lower prices' for Mexican products, and 'decrease the flow of illegal immigration into the US'. The same report counts the following advantages for Mexico of an FTA: Providing 'secure access' to the US market, increasing Mexican employment, productivity and competitiveness, allowing Mexico to earn foreign currency to meet its foreign debt burden, and lowering inflation. According to Professor Morici, the US is going to gain more from free trade with Mexico than it did from its 1989 agreement with Canada.

Several important issues related to the FTA and its impact on the US and Mexico will be discussed in the following lines.

Political stability in Mexico

A politically stable system along the line of free marketer President Salinas has been endorsed by many Mexico watchers in the US. Professor James K. Galbraith (at the University of Texas) believes that the primary purpose of the free agreement is the 'stabilize Salinas and cement the structural changes going on in the …