Magazine article The American Prospect

Time for a New Deal with Mexico

Magazine article The American Prospect

Time for a New Deal with Mexico

Article excerpt

Mexican President-elect Vicente Fox, fresh from a historic victory that ended 71 years of one-party rule in his country, dropped in on U.S. lame-duck President Bill Clinton just before Labor Day. He was brimming with ideas for further integrating their economies, including a proposal to open the border to more Mexicans seeking work in the United States.

The Clinton White House, which seven years ago sold NAFTA to Congress on the grounds that it would keep Mexican workers out, was unenthusiastic. Fox also visited Ottawa, where he proposed a single continental currency: the U.S. dollar. The Canadian response was frigid. "We're happy to maintain our own currency," sniffed Prime Minister Jean Chretien.

Despite the rebuffs, Fox has opened up a discussion that will not easily be shut down--nor should it be. A former president of Coca Cola Mexico, Fox is a flee-trader faced with the reality that NAFTA did not deliver on its promise to raise the living standards of ordinary Mexicans. Indeed, their frustrations voted him into office Even Bill Clinton, who considers NAFTA one of his legacies, expressed his concern to Fox that it did not raise wages in Mexico.

At the same time, as in the United States and Canada, Mexican stocks are booming and the country's rich are getting richer. NAFTA has so tied together the three countries in trade and finance that--as the 1995 bailout of the holders of depreciated Mexican bonds vividly showed--Washington has a bipartisan commitment to placing a safety net under the big players in Mexico's financial markets.

Fox is now telling Washington that it is also responsible for those at the bottom. So long as Mexico is a place where 40 percent of the population makes less than $2 a day, he says, U.S. borders will never be secure.

His solution is a North American equivalent of the European economic integration project. In addition to open borders and a common currency, Fox wants aid for schools, roads, and infrastructure from the United States and Canada similar to the "social cohesion" funds that the richer countries of Western Europe provide to Spain, Portugal, Ireland, and Greece to help them grow faster.

The Europeans are attempting to ensure not only a reasonable distribution of income among member states, but a convergence of domestic social and political standards to prevent the competition for investment from becoming a race to the bottom. In contrast, NAFTA imposes standardized rules to protect the rights of investors, importers, and exporters, but it leaves human rights and the protection of workers and the environment up to national governments. This has allowed the Mexican business and military oligarchy to attract investment by suppressing independent unions and environmental activists through harassment, arbitrary arrest, and brutality.

The "liberal" administrations of Clinton and Chretien have defended themselves by carefully limiting the subject of economic integration to trade and finance. Both claim to favor a social contract, but they say that insisting on it would affront Mexican nationalist sensitivity--which apparently permits gringos to dictate investor protections but not labor rights.

By proposing to extend NAFTA to labor market issues--including a demand for better treatment of Mexican immigrant workers in the United States and Canada--Fox has undercut the "Mexican sovereignty" argument for a narrow vision of North American economic integration. …

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