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Needed: A U.S.-Mexico Free Trade Agreement
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17045 |
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Section : |
CURRENT ISSUES
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8 / 1990 |
3,313 Words |
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B. Timothy Benett
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On June 10, President Bush and Mexican President Carlos Salinas De Gortari agreed to the concept of negotiating a bilateral free trade agreement (FTA) and instructed their respective trade secretaries, Ambassador Carla Hills and Jaime Serra Puche, to undertake the preliminary work needed to initiate formal negotiations. The trade officials are to report back to the two presidents no longer than their December summit in Monterrey, Mexico.
A quick reading of the degree of support in the U.S. Congress for this initiative was provided at the June 14 hearings on U.S.-Mexico economic relations conducted by the House Ways and Means Subcommittee on Trade. Both presidents must have been pleased by the generally favorable response. Salinas, for his part, had already received a formal endorsement in late May of such an agreement from the Mexican Senate, which conducted an in-depth examination of the concept in April and May (including a series of public hearings around the country).
The Business Roundtable and U.S.-Mexico Business Committee have also expressed support for a U.S.-Mexico FTA, although the AFL-CIO has announced its opposition. These groups are exceptional, however, in their degree of awareness of this initiative. Most private sector groups in the United States, and even many people in government, have yet to focus on this issue. This stands in sharp contrast to Mexico, and even Canada, where the prospect of a U.S.-Mexico FTA, and eventually a North American FTA, has been the subject of sustained attention and debate since the possibility was first expressed after a March 27 Wall Street Journal article reported on cabinet-level, bilateral discussions about the concept.
Most Americans are shaking their heads in wonderment at how these two neighboring yet distinctly different - in terms of economic size and development - countries could be on the threshold of negotiating such an agreement, because most of them are unaware of the substantial economic changes implemented in Mexico over the last five years and where U.S.-Mexico trade and investment relations currently stand. Even many in Washington are saying such a negotiation will take several years. In light of the progress of the last five years, however, a bilateral FTA between the United States and its third largest trading partner not only makes strong economic sense - and unreasonable leap forward - but also can be more quickly negotiated than was the U.S.-Canada FTA.
There are several key explanations of why considerations of an FTA evolved into an understandable, and perhaps natural, policy option. First, and foremost, is the extensive trade and investment liberalization that has occurred in the bilateral trade and investment relationship over the last five years. This substantial liberalization is primarily the result of unilateral action taken by the Mexican government and has been complemented by important multilateral and bilateral actions.
All of it stemmed from the decision by the de la Madrid and Salinas administrations to move Mexico away from an import substitution model to export-based growth. A fundamental part of this strategy has been the deliberate use of the trade policy tool as a means to force the necessary structural adjustments among Mexican producers to foster international competitiveness, while simultaneously providing lower-cost equipment and components to those restructuring
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