Magazine article Management Review

Heading South of the Border

Magazine article Management Review

Heading South of the Border

Article excerpt


If the United States is looking for a little economic pick-me-up, it need look no further than South of the Border. A comprehensive bilateral trade and investment agreement between the United States and Mexico would be beneficial, claims the Business Roundtable, a high-powered association of 200 corporations represented by their CEOs. "Building closer ties with Mexico is an essential step in developing a comprehensive North American trade and investment strategy," according to a report released by the Roundtable last June. "The U.S.-Canada Free Trade Agreement was an important first step towards increased North American economic integration. Now, the time is right to develop closer economic ties with Mexico."

Why the increased interest in Mexico? The Roundtable offers several reasons: the United States is Mexico's primary export market and its largest supplier of imports; Mexico is the third largest trading partner of the United States; more Americans reside in Mexico than in any other foreign country; and the two countries share a 2,000 mile border. Also, the reality of world economic politics is inescapable. "The world is moving into trading blocs. Our major competitors--Germany and Japan--are strengthening their competitive positions in the world through economic integration." Germany is aligning itself with "lower-wage sectors such as Spain, Portugal and now Eastern Europe," says Kay R. Whitmore, president, chairman and CEO of Eastman Kodak and chairman of the Roundtable committee responsible for the report. "And Japan is doing the same in Asia. We cannot possibly compete in the future unless the United States pursues a similar strategy," he says.

The Roundtable is urging both U.S. and Mexican government representatives to begin negotiations for a Free Trade Agreement (FTA) after the Uruguay Round of GATT negotiations, but the time is now to begin developing ideas and objectives. The Roundtable, having many Fortune 200 companies on its roster, has the clout and business experience to offer recommendations to the government. Open dialogue between the private sector and the government of both countries is necessary for successful negotiations for an FTA. The Roundtable has outlined several goals for the completion of such an agreement:

* Liberalization of trade in goods and services, and increased investment between the United States and Mexico;

* Fostering policies that will enhance global competitiveness in the two countries;

* Increasing cooperation between the two economies;

* Establishing a mechanism for an ongoing dialogue between the two countries to encourage continued economic liberalization; and

* Providing effective procedures to resolve disputes. …

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