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U.S., Mexico Need More Than Ceremony

January 02, 1986|GUY F. ERB | Guy F. Erb is a business consultant in Washington and chairman of the U.S.-Mexico Policy Committee sponsored by the Overseas Development Council

Both Mexico and the United States will be sold short if Friday's meeting between Ronald Reagan and Miguel de la Madrid is no more than a ceremonial abrazo across the border. This year will be the last that they can work at constructive bilateral agreements before each becomes stuck with the "lame duck" label as domestic politics heat up for the U.S. and Mexican presidential elections of 1988.

So far, both men have had more success than their predecessors in moving their governments toward improved relations. Over the past 12 months the two countries have weathered storms stirred by differences of opinion about economic, trade and business policies, the Central American conflicts, the drug trade and the safety of Americans in Mexico and Mexicans in the United States.

Illustrating the perennial nature of U.S.-Mexico issues, the agenda for the Reagan-De la Madrid meeting in Mexicali features more of the same: Mexico's debt problems--made worse this year by the devastation from September's earthquakes--and the outlook for oil prices, trade, environmental issues, immigration and the problems of Central America.

This complex border relationship needs more than day-to-day management. The leaders of the two nations must constantly renew their commitment to improved bilateral ties and take steps to ensure that remembrance of old conflicts or misunderstandings do not overwhelm their good intentions. Behind the handshakes and the smiles of the Mexicali encounter are interest groups in each country with sharply divergent views on the appropriate direction for the bilateral relationship. The conflicting interests and policy prescriptions of different U.S. and Mexican constituencies are ever-present obstacles to presidential initiatives.

Washington advocates of a "hard-nosed" approach to Mexico's differences with the Reagan Administraton over Central America would link U.S. trade, debt or economic measures to changes in Mexico's foreign policy, even though such actions against our third-largest trading partner would harm U.S. economic interests. Such attitudes revive Mexican fears of gringo domination and strengthen resistance to De la Madrid's gradual opening of the Mexican economy to more competition, new flows of technology and foreign investment.

Opposition in Mexico to economic liberalization has both political and economic roots. Nationalists of left and right have joined hands with some industrialists who have benefited from a generation of protection against imports. Mexican hesitancy about closer trade and investment ties with the United States matches that of many U.S. unions and businesses that are concerned about the competitive challenge from Mexico's relatively low wages. De la Madrid's steps toward a more liberal economic regime have not quelled calls in Congress for protection against Mexico's exports and demands by U.S. industry and labor for an aggressive Administration approach to bilateral trade and investment issues.

The two presidents will not be without allies if they state their intention to forge a closer economic relationship. Significant business interests in both countries support the negotiation of a commercial agreement and other measures to promote more trade and investment. Mexico and the United States can work together, as their management of the debt crisis and trade issues in 1985 showed.

The debt story is well known, trade perhaps less so. Last year De la Madrid announced his intention to resolve a quarrel with the international pharmaceutical industry; he agreed to phase out Mexican export subsidies in exchange for the U.S. "injury test" in trade-complaint cases; he opened discussions of a bilateral commercial agreement; he supported President Reagan's call for multilateral trade negotiations, and he set the stage for his decision to bring Mexico into the international trading system through membership in the General Agreement on Tariffs and Trade. De la Madrid accomplished all those objectives by November; last month, to cap the year, U.S. and Mexican negotiators renewed a bilateral agreement on textiles and apparel.

Building on that record would bring benefits to both nations that transcend their foreign-policy divergences. But bridging the gaps that remain on debt, trade and investment will require a mutual commitment to reach agreements through compromises justified by overriding long-term interests. While U.S. banks are not Mexico's only creditors, their consideration of steps to ease Mexico's interest burden has become a key to resolving the next phase of the debt crisis. U.S. equity investors, particularly in research-dependent industries, have asked for changes in Mexico's treatment of intellectual property.

The terms of Mexico's GATT membership and of a bilateral commercial accord with the United States are two important trade issues that need resolution in 1986. The challenge before De la Madrid and Reagan is to set objectives that keep up the momentum of negotiations and provide the motivation that is necessary for compromise. This will require more than presidential abrazos across the border.

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