"Poor Mexico, so close to the United States and so far from God."
This popular Mexican lament may be changing under Mexico's government of President Carlos Salinas de Gortari.
Last June, both President Bush and Salinas announced their intentions to negotiate a free-trade agreement between the United States and Mexico. Both are convinced that increased trade and investment, resulting from a free-trade agreement, will lead to economic prosperity for citizens of our two countries.
Mexico and the United States share a 2,000-mile border, one of the longest in the world. This has led to the flow of goods and people for decades. In fact, commercial ties between our two countries predate the Mexican Revolution of 1910. Most recently, in 1990, bilateral trade between the United States and Mexico was $60 billion, making Mexico our third largest trading partner after Canada and Japan.
As envisioned by the Bush Administration, a North American Free Trade Agreement between Mexico and the United States (and Canada, although we already have in effect an agreement with our northern neighbor), would create a free-trade zone from "the Yukon to Yucatan." Such an agreement is expected to generate $6 trillion in products, goods and services, and have more than 350 million consumers.
Both countries are seeking to eliminate or reduce barriers to the trading of goods, services and investments. It is believed that a trade liberalization of this sort will enhance and solidify the trading advantages currently enjoyed by U.S. manufacturers operating in Mexico.
For the United States, the Department of Commerce has defined the areas deemed negotiable as "everything except the free movement of (Mexican) labor." The United States hopes to cement an agreement on a secure flow of services, such as banking and insurance, capital investments and establishment of copyright protections.
Such a proposed agreement could benefit the United States in a number of ways. It could boost U.S. exports to Mexico and allow U.S. businesses to reduce their production costs by taking advantage of lower Mexican wages and less stringent environmental laws. The United States could also benefit by securing a more reliable source of foreign oil.
Mexico wants to ensure access to U.S. markets, stabilize its economy through foreign and domestic investment, and to increase business opportunities worldwide. Oil investments, however, are off the negotiating table. Many Mexicans view direct foreign investment, and particularly U.S. investment, in its country's oil industry as a national security threat.
While it is true that liberalized trade will increase the free flow of goods, products and services, it is doubtful that the proposed agreement will be free of complications and problems.
U.S. labor groups have voiced strong opposition to a free-trade agreement with Mexico, a country whose average wages range from 60 cents per hour to $2.30 per hour. Many union representatives believe that U.S. manufacturing jobs will be lost to Mexico. They charge that Mexico's weak labor standards, safety and environmental regulations will give unfair advantages to U.S. manufacturers.
Environmentalists contend that a trade agreement will make it possible for U.S. manufacturers to transplant operations to Mexico and thus avoid adherence to costly U.S. environmental laws and regulations.
Since both the Bush and Salinas administrations have resisted including labor standards and environmental protection standards on the negotiating table, members of Congress such as myself are reluctant to approve the "fast track" legislative procedure sought by the Bush Administration. ("Fast track" is a legislative process to expedite trade negotiations. Because it requires a "yea" or "nay" vote without amendments, its use is controversial.)
Without guarantees from the Bush Administration that the United States will not forfeit the hard-fought-for standards in environmental protection, worker health and safety, minimum wage levels, worker retirement benefits, and the right to freely and collectively bargain, I would be hesitant to favor a free-trade agreement sought by our government. This is not being protectionist or antagonistic to economic expansion. Rather, trade must be part of a larger development strategy for economic growth and prosperity both for Mexico and the United States.
Sooner or later, as the United States and Mexico engage in joint economic expansion, the need to establish standards to protect our shared environmental resources, establish and enforce norms for workers' safety and agree on standard wage levels will be essential. Without these protections, trade will not be free.