THE PURPOSE of this study is to examine whether a slow but steady movement to free trade between Mexico and the United States would benefit both countries. The theme is controversial. Detractors in Mexico will interpret it as the latest U.S. device to exercise political and economic hegemony over Mexico. Detractors in the United States will object that, at best, free trade would lead to a flow of goods into the United States made with cheap Mexican labor and, at worst, would encourage Mexican labor to emigrate. Impartial economists in both countries will question whether it is feasible for two countries vastly unequal in economic strength to have free trade without the economic progress of the weaker country being held back. Each of these issues will be analyzed in the following chapters.
There has been considerable study of the effects of free trade between Canada and the United States but none of any significance about what the economic consequences might be if Mexico and the United States began to move toward free trade.1 Such study never seemed worthwhile. The conventional wisdom has been that the economics of free trade between Mexico and the United States would benefit only the United States because of the greater efficiency and higher productivity of its industry. The instinctive expectation in Mexico has been that if free trade actually did encourage greater specialization in each country, the____________________