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Mexico Takes New Steps to Curb Imports

GOING against the spirit of the North American Free Trade Agreement (NAFTA), Mexico is adopting a series of controversial measures that impede the flow of imports from the United States and other countries.

Among the steps taken recently:

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* Tariffs on imported beef went from 0 to 15 percent last month for live cattle. Shippers of fresh and frozen meat are now paying a 25-percent duty on their products.

* Quality standards are being applied on about 80 imported products ranging from bicycles to electronics. Some exporters have missed the Christmas selling season due to the requirement that all products be tested and certified by Mexican laboratories. The laws, which will cover 300 products, have been on the books for years but have only begun to be enforced since Sept. 24.

* Mexican citizens returning from the US in vehicles or on foot can no longer bring in $300 worth of goods duty-free; Mexico reduced the limit to $50. Both Texas and Mexican merchants are up in arms. A Nov. 29 protest by about 6,000 Mexicans in Nuevo Laredo turned into an ugly riot, causing about $20 million in damage to Mexican customs offices.

There is speculation in the business community here and abroad that these steps are part of a strategy to reduce a deluge of imports that are putting local industries out of business. Or, it is a tactic to give the impression that the government is taking steps to curb imports.

"It's a puzzling, silly game on the part of the government to alleviate the fear that there is a disproportionate amount of imports," says economist Roberto Salinas Leon at the Center for Free Enterprise Research, a Mexico City-based think tank.

Imports of capital, intermediate and consumer goods through the first nine months of this year are up 28.1 percent, according to government figures. Exports have grown only 4.4 percent over the same period. This is creating a widening trade and current account deficit. There are concerns that the growing current account deficit may force a currency devaluation. The National Confederation of Chambers of Commerce recommended on Dec. 3 that steps should be taken to curb imports, including more rigorous appl ication of Mexican product-quality standards.

But economists say the steps taken to date would only marginally reduce the flow of imports. The Mexican government denies there is a broad policy to limit imports.

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"No. Definitely not," says an official at the Secretary of Commerce and Industrial Development (SECOFI). But the official allows that in the specific case of beef imports, Mexico is trying to protect local industry - as is permissible under the General Agreement on Tariffs and Trade - from an "oversupply" of meat. Government figures show a 513 percent increase in the volume of beef imports in the last 3 1/2 years.

But as US officials note, the tariffs are temporary for US and Canadian meat. If NAFTA is ratified, in 1994 the tariffs will go back to zero.

As for enforcing the Mexican product standards, the SECOFI official says consumers are complaining about factory rejects being sold in Mexico as first-rate goods. He also says standards are being applied with new vigor to Mexican manufacturers to push them to be more competitive with importers.

Importers are upset by delays in certification which are common because most of the labs in Mexico are not independent testing firms, but actually run by domestic manufacturers of competing products.

The explanation given for allowing only the first $50 as duty free is that Customs and the Treasury Ministry are trying to bring law and order to the border in preparation for NAFTA. Treasury officials say they are cracking down on contraband goods and bolstering federal finances.

"These are sectoral, administrative problems. The overriding policy continues to be one of an open economy," says Ernesto Cevera Gomez at The Economists and Associates Group, a Mexico City consulting firm.

Mr. Salinas argues that a developing country such as Mexico should not fear high imports as long as the composition is primarily capital and intermediate goods.

"Mexico should have a trade deficit of $30 billion [it is now about $17 billion]. That's what it needs to modernize its production plants to be competitive," he says.

"A current account deficit of 6 to 8 percent of GDP is a typical pattern for an under-capitalized economy. Look at South Korea, Taiwan, post-war Japan, and Germany."

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