Give NAFTA Some Time
WELCOME to the club of disappointed world leaders! Ernesto Zedillo and Bill Clinton are only the latest heads of government to learn what Helmut Kohl, John Major, several French premiers, and others have discovered: International economic integration does not fulfill its promises overnight. Jobs, trade, and prosperity do not rise as quickly as rosy forecasts about the benefits of larger markets indicate.
When Presidents Zedillo and Clinton met in Washington this week, many of the matters on their docket related to NAFTA (the North American Free Trade Agreement), Mexico's trade surplus, unemployment leading to rising emigration (legal and illegal) to the US, and restructuring of Mexico's debt - to name just a few.
Despite their public optimism, the two presidents must have noted ruefully that NAFTA has followed in the footsteps of European economic union and east-west German integration in being slower to deliver than they, their predecessors, and many economists had promised.
Does that mean that Ross Perot, Pat Buchanan, American and Canadian labor leaders, and Mexican opposition leaders were right? Was NAFTA a mistake? No.
German unification, European integration, all the drawn-out rounds of GATT world trade negotiations, and, of course, the end of the cold war all led to excessive optimism about near- term economic benefits. But who would want to undo any of these forward steps?
One need only look at what GATT trade stimulus has done for standards of living in much of the world in the past half century to realize that lower tariffs and larger markets eventually benefit far more people than are hurt by readjustments in individual businesses to meet outside competition.
NAFTA is less than two years old. In its first year there were small signs of forecasts fulfilled. Mexican exports to the US and American exports to Mexico both increased. But then came Mexico's disastrous currency devaluation. That was caused by a dangerous drop in hard-currency reserves, not dealt with publicly lest it upset the Zedillo election. The ill-advised devaluation led to this year's recession, job losses, and disillusion with NAFTA.
A jobless Mexican will not be easily reassured. But there is longer-run comfort in the lessons from the earlier German and Japanese export miracles. Those had the advantage of being ''stealth'' economic miracles - started without ballyhoo. NAFTA deserves similar time to perform.