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Text File | 1994-05-02 | 11KB | 214 lines

<text> <title> The U.S.-Mexico Agreement </title> <article> <hdr> Foreign Service Journal, June 1991 The U.S.-Mexico Agreement: Why an FTA Would Do us Both Good </hdr> <body> By Susan Kaufman Purcell. Ms. Kaufman Purcell is vice president for Latin American Affairs at the Americas Society in New York. She served on the State Department's Policy Planning Staff from January 1980 through June 1981. For years, the United States had a relationship with its neighbor to the south that seemed to alternate between thin cordiality and undisguised testiness. Now, however, economic liberalization in Mexico, greater pragmatism in the United States, the end of the Cold War, and increasing globalization of the world economy are causing the interests of both countries to converge. This growing harmony of interests means that for the first time in many years both countries have become important to each other for positive rather than negative reasons. The 2,000-mile shared border has come increasingly to be viewed on both sides not as a curse but as an opportunity. Support for greater economic cooperation, however, is still fragile. In the United States, organized labor fears massive job losses to lower-paid Mexican workers. And in Mexico, political leaders are under strong pressure to show positive results from recent policies of liberalization and economic opening to the United States. Greater integration with the United States, represented by the Free Trade Agreement, would enable them to do so. Thus, important political and economic dimensions of the U.S.-Mexico relationship hinge on a successful conclusion of the agreement. Warming up Recent decades have been somewhat troubled ones for the bilateral relationship, as Washington viewed the world through an East-West prism while Mexico viewed it through a North-South one. In the 1950s and 1960s, when Mexico's economy was growing at 6-8 percent annually, the United States paid little attention to Mexico, and was criticized for taking its neighbor for granted. Later, when the United States did focus on Mexico in the 1970s and early 1980s, it was often with exasperation: Mexico's Third World moralizing sounded empty to Washington when viewed against a record of inefficient, if not corrupt, domestic administration. The United States, nevertheless, responded rapidly to Mexico's economic crisis in August 1982, helping Mexico avoid an economic and political collapse. The United States provided enough aid and support to allow Mexico's economic transformation, without providing so much help as to make the economic restructuring unnecessary. Mexico, in turn, subsequently gained U.S. good will by repudiating demagogic leaders and electing more responsible presidents--Miguel de la Madrid and Carlos Salinas de Gortari--who not only reformed the economy, but also sought to rebuild a constructive and cooperative relationship with the United States. Opening the economy Within Mexico, the big news has been the country's transformation, beginning in 1985, from a closed and highly protected economy into one of the most open economies in the world. The catalyst was the debt crisis of 1982, which made it impossible for Mexico to continue borrowing money in order to sustain its highly inefficient and expensive development strategy. The liberalization of the Mexican economy was paralleled by a more positive attitude toward private investment, both domestic and foreign, as well as a desire for greater economic integration with the "colossus of the north." Although these changes predated the end of the Cold War, they were reinforced and accelerated by the collapse of communism in Eastern Europe and the disintegration of the Soviet economy and political system. Both developments undermined the legitimacy of statist development strategies and of socialist alternatives to capitalism. They also ratified the new economic direction being taken by the Mexican leadership. Emerging competition from the new Eastern European democracies for limited amounts of investment capital also caused President Salinas to deepen the economic reform process. Believing that the world was divided into regional trading blocs, he became more convinced that Mexico's future was tied to that of North America. At the same time, the United States adopted a fresh attitude toward Mexico. The end of the Cold War meant that U.S. policy toward Latin America could finally downplay security concerns and give greater importance to economic ones. The coming of Europe 1992, combined with Japan's growing economic integration with Southeast Asia, likewise led Washington to think in terms of a North American free trade area that eventually might include the entire Western Hemisphere. The idea of expanding the U.S.-Canada free trade agreement to include Mexico seemed a logical first step, given Mexico's newly liberalized economy. Liberalization by fiat Although the new, more constructive bilateral relationship looks promising, whether it will continue to deepen remains unclear. President Salinas is in a race against time, as pressure on him grows to show that his economic policies can produce growth. Mexico's economic liberalization in the mid-1980s did not flow from popular demands. Instead, the initiative came from above and was met with substantial opposition, both from vested interests with a stake in the highly protected economy and from large segments of the population who had been led to believe that Mexico's identity as a nation depended on maintaining its distance from the United States. This opposition helped produce an unprecedented challenge to the candidate of the dominant party, the PRI (Partido Revolucionario Institucional) in the 1988 presidential election. The Mexican economy's low, negative, or zero growth during the preceding years was also important to the slim electoral margin of Carlos Salinas de Gortari. Cuauhtemoc Cardenas, the candidate of the left-of-center opposition front, the Party of Democratic Revolution, denounced the election results as fraudulent and proceeded to launch a broad-based attack on the policies of the Salinas Administration. Knee-jerk opposition Ironically, the left-of-center opposition essentially advocates a return to the economic past. Its approach has more in common with the traditional policies of the old PRI, from which Cardenas defected, than with those of President Salinas. The Cardenistas believe that the economic opening is going too far and too fast. They continue to favor development led by the state rather than the private sector, and they remain suspicious of foreign investment. They are particularly wary of the growing economic integration between Mexico and the United States, arguing that Mexico should look to the south rather than to the north in forging economic alliances. The Cardenistas, however, also advocate greater democratization of the political system. To date, they have focused on electoral fraud, which they claim explains the PRI's dominance in Mexico. As part of their campaign for democracy, they have joined forces with the right-of-center opposition party, the PAN (Partido de Accion Nacional) in an effort to make the country's electoral process more transparent and enable opposition parties to play on a level playing field. They have also invited foreign observers to oversee local elections and regularly publicize their grievances in the U.S. media, arguing that their access to the Mexican media is thwarted by the governing party. The Cardenistas believe that the PRI's economic reforms could not have been implemented had Mexico had a democratic political system. They are correct. In a very real sense, the Mexican government was ahead of its own people. There was little domestic understanding of or support for a drastic reversal of economic policy in the