One Year into NAFTA, Dire Predictions Don't Bear Fruit

Article excerpt

By Nancy Nusser

Cox News Service

MEXICO CITY _ Ross Perot's giant sucking sound seems more like a gentle breeze.

One year after the U.S. Congress passed the North American Free Trade Agreement, the Texas billionaire's predictions of wholesale American job losses to Mexico haven't materialized.

Instead, NAFTA advocates say, jobs created by a 20 percent increase in Mexican-American trade have more than offset any job losses.

Although Mexico's political instability has created some investor jitters, the future of NAFTA looks bright. That success could ultimately lead to similar trade agreements with other Latin American nations.

"Hemispheric free trade will evolve along the lines of NAFTA," said Jeffrey Schott, a senior fellow at the Washington-based International Institute for Economics.

He was speaking of what economists see as a massive free trade bloc that eventually will extend from Canada to Argentina. The way to begin creating the giant network of ties is expected to be among the topics in Miami next month when President Clinton hosts a summit of the hemisphere's leaders.

Much work remains to be done before a North and South American Free Trade Agreement can be achieved. "Very few countries are ready," Schott said. "The exception is Chile."

NAFTA, which links the United States with Mexico and Canada, was approved by Congress last November after a hyperbolic debate that included dire forecasts by Perot and unions that hundreds of thousands of jobs would be lost as manufacturers moved south to take advantage of cheap Mexican labor.

A year later, U.S. businesses are moving south at a good clip. More than 200 firms have moved operations to Mexico in 1994, producing and selling products ranging from electronics to scuba diving suits.

Ford spent $260 million renovating and expanding its car manufacturing plant in Mexico's Queretaro state. General Motors is replacing its Mexico City factory with a new one in Guanahuato state.

Forty foreign banks, many of them American, have said they will break into Mexico's banking market when it opens to foreign competition next year.

Several U.S. communications companies, including AT T, MCI and Sprint, are expected to move to Mexico to vie for the $7 billion long distance phone market when that opens up in 1997.

The southward trek is visible in places where Mexicans are wealthy enough to afford U.S. products, like Mexico City's Polanco neighborhood. Its wide, tree-lined avenues are lined with flashy U.S. franchises such as McDonalds and the Gap.

"The U.S. is invading us," said Mexico City resident Inez Jimenez Martinez. …