In Mexico, Free-Trade Deal Has Clear Sailing
With little internal opposition, Mexico is committed to a trade deal that may undercut some domestic industries, but is expected to create 1 million jobs by the year 1994. US-MEXICO FREE TRADE
UNLIKE in the United States, there are no powerful political lobbies in Mexico opposed to a North American free-trade agreement. Seventy-one percent of Mexicans favor trade without conditions or restrictions, according to a recent poll by Este Pa'is, a new public opinion magazine.
``It's ironic. There's much greater consensus here than in the US, the home of capitalism and the free-market economy,'' says Roberto Salinas Le'on, an economist at the Center for Free Enterprise Research, a conservative think tank here.
Indeed, in Mexico a free-trade pact is considered inevitable. That view stems from two factors, analysts say. First, Mexico's ruling party has little real opposition. Second, a free-trade agreement is widely seen as the logical next step in a series of economic reforms begun in the mid-1980s.
The shift away from the socialistic, centralized economy of the 1970s and early 1980s began in the depths of Mexico's economic crisis. Collapsing oil prices, mismanagement, and corruption left the Mexican economy foundering and deeply in debt.
Under President Miguel de la Madrid Hurtado, Mexico started toward a market-oriented economy. Privatization of goverment-owned industries began. High trade barriers, designed to protect domestic industries, were dropped. In 1986, Mexico joined the General Agreement on Tariffs and Trade, the international system for setting trade guidelines.
Since taking office in 1988, President Carlos Salinas de Gortari has continued the process. But strapped for funds, Mr. Salinas is counting on a free-trade agreement to lure Mexican and foreign capital back to rebuild the nation. An estimated $50 billion to $80 billion fled the country during the 1980s, dubbed by Mexicans ``the lost decade.''
As a confidence-building measure, ``the free-trade agreement is a very important instrument,'' says Rafael Fern'andez de Castro, head of international studies at Instituto Technologico Autonomo de Mexico, a private university here. ``It would be the coronation of Salinas's political-economic policy.''
With a free-trade agreement, ``net capital inflows would increase substantially,'' says Abel Beltran del Rio, president of the Centro de Investigaci'on Econometrica de Mexico (CIEMEX), a Philadelphia-based economic forecasting firm that specializes in Mexico. Mr. Beltran del Rio says a free-trade agreement would send Mexico $11.4 billion in direct foreign investment by the year 2000. Without a pact, investment would be half that, he says.
CIEMEX also predicts that, if Mexico gains a free-trade agreement, it will mean almost 1 million more jobs by 1994 when Salinas leaves office and 2 million more jobs by the year 2000.
There is some opposition to the pact in Mexico. The pharmaceutical industry here, for example, issued a report this week that asks for the industry to be excluded from free-trade competition.
Yet, support for a North American free-trade deal can be found even among Mexican industries hit by the lowering of trade barriers in 1986. Mexico's textile and apparel industries, for example, lost 50,000 jobs to clothing imports from Asia.
The Mexican apparel industry sells most of its output domestically. But rather than worrying about losing more market share to US clothing imports, Mexican textile and apparel manufacturers are looking to gain free access to the Canadian and US markets. US tariffs on Mexican clothing are as high as 36 percent.
``True, we are in a difficult situation now,'' says Mayer Zaga Galante, president of Mexico's textile industry association. ``But access to the biggest market in the world, that's an opportunity.''
Mexican labor unions also generally see the arrival of foreign capital and companies as harbingers of better wages and working conditions. But analysts also say the broad support also reflects Mexico's political system.
``Public policy is dictated by the president and his team of advisers,'' says Roberto Salinas. ``This is a one-party system. The opposition can make noise, but it's only mild noise.''
Sensitive to such criticism, the Mexican Senate began hearings last month on the free-trade agreement. Two or three meetings will be held each month on how the pact might affect specific economic sectors.
But the meetings are ``a cosmetic debate'' and ``totally inadequate,'' says Ricardo Pasco Pierce of the Democratic Revolutionary Party, the leading opposition party.
Indeed, 62 of 64 federal senators are from Salinas's party and appear unlikely to vote against any agreement. The opposition, which supports free-trade talks but craves input into the process, has called for a national referendum before any pact is signed. But Mexican Commerce Secretary Jaime Serra Puche has rejected the proposal.
Mr. Fern'andez de Castro agrees the free-trade debate so far is superficial and is not taking place in Mexico's congress. Yet the news media here are providing an outlet for serious analysis.
``And if there really was a consensus that a free-trade pact was bad for Mexico, you'd see protests in the street,'' he says.