THE market-opening objectives that were sought in vain by
President Bush on his recent foray to Japan should be pursued
closer to home - in Mexico and the rest of Latin America - where
they are far more easily attainable. Mexico is ready to sign a
North American Free Trade Agreement (NAFTA) with the United States
and Canada, providing for reciprocal reductions in import and
investment barriers, and most Latin American countries are eager to
Americans, even those who should know better, tend to spurn
Mexico and Latin America as a collection of poor countries without
much economic importance for the US. They think Japan is where the
commercial action is - where the high-profit markets are to be
Americans need to get the facts right. The US actually sells
more to Latin America each year than it does to Japan - and more
than one-half of those sales are destined for Mexico.
Living on less than one-tenth the income, the average Mexican
spends nearly as much per year on US products as the average
Japanese (about $300 versus $400). Not only is Mexico already a
booming market for US goods and services - prominently including
Detroit's automobiles - but the potential for expansion is also
enormous, probably greater than that of Japan.
In the first place, Mexico - along with most other Latin
American countries - is just beginning to recover its economic
dynamism after a prolonged slump that forced imports, wages, and
public spending to contract sharply.
Following a painful economic restructuring, Mexico has
established a sound strategy for sustained growth that will require
stepped-up purchases from abroad - most of which will come from the
US. For each dollar that Mexico spends on imports, almost 70 cents
goes to the US; the comparable figure for Japan is less than 25
cents. Stimulated by a free-trade agreement, an open and growing
market in Mexico would mainly benefit US exporters. Not so in
Japan, where European and Asian traders would score the most gains
from reduced protection.
Just as US sales to Japan mean more jobs for American workers,
so do sales to Mexico. Reciprocal market access with Mexico -
precisely what we demanded of Japan - is what NAFTA is all about,
and it will create employment at home.
Substantial economic changes inevitably cause disruptions,
however, and some American workers will lose their jobs. The US
government should stand ready to assist these workers generously
through, for example, retraining, resettlement allowances, and the
like. Rather than opposing free trade with Mexico, labor unions in
the US should fight for these kinds of benefits.
Economic advantage is a powerful reason for Washington to pursue
a free-trade pact with Mexico. …