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LOS ANGELES TIMES INTERVIEW : Jaime Serra Puche : The Free Trade Agreement From the Mexican Perspective

August 01, 1993|SERGIO MUNOZ and JUANITA DARLING | Sergio Munoz is an editorial writer for The Times. Juanita Darling is a business reporter in Mexico for The Times. They interviewed Jaime Serra Puche in the secretary's office in Mexico City

MEXICO CITY — This week, the North American Free Trade Agreement--under which the United States, Canada and Mexico will create the world's largest free-trade zone by eliminating tariff and non-tariff barriers--will confront yet one more test in its sinuous and tortured route toward passage. Negotiations for the so-called parallel agreements to address labor and environmental concerns, apparently not included in the signed text of NAFTA, might finally be finished.

The race for ratification in Congress will now heat up and the Clinton Administration's commitment to the agreement must be proved beyond the rhetoric in two crucial arenas: the courts and Congress.

The challenge posed by Judge Charles R. Richey of the U.S. District Court for the District of Columbia--demanding an environmental impact statement on NAFTA before the President submits it to Congress--will have to be addressed legally.

At the same time, the battle in Congress to persuade the labor and environmentalist sectors of the President's own party will have to be fought politically--using these agreements as well as others. For example, roughly 100 Democratic congressmen sent a letter last week asking the President to postpone NAFTA until health-care reform is approved.

Waiting on the sidelines, but observing intently, will be Jaime Serra Puche, a 42-year-old economist, described by Federal Reserve Board Chairman Alan Greenspan as "one of the brightest and ablest public servants in the world." As head of the Mexican team to negotiate the agreement linking Canada, the United States and Mexico, no one else, apart from President Carlos Salinas de Gortari, has more at stake in the outcome.

Cool, congenial and self-assured, the commerce secretary gives the impression that no obstacle can stop him from achieving his goals--as his own experience demonstrates. Admitted to the doctoral degree in economics at Yale--although he did not speak fluent English--he did it on time and with honors. "Fortunately," he confides "there was a lot of math in almost every subject I took the first term. That gave me enough time to learn the language."

Author, teacher and a dedicated jogger, Serra is married to Joanna Wright and they have two children, Sebastian and Daniel.

Question: Some believe the Mexican government placed all its bets on a George Bush victory, ignored Bill Clinton and the Democrats, and that you are now paying the consequences. Is that so?

Answer: Our negotiation was from government to government. Besides, the reaction of the Clinton Administration has been very positive, and the bilateral relationship between Mexico and the United States could not be better.

Q: Then you don't believe that signing the agreement in San Antonio right before the election was a mistake that may have cost you political capital with Clinton?

A: The Mexican government signed the agreement with the American and the Canadian governments. Period.

Q: Those who oppose NAFTA maintain that NAFTA will mean job losses in the United States? How do you answer them?

A: There are two ways to look at NAFTA. You may see it as a zero-sum game--where one wins and the other loses; or you may see it as a positive-sum game--where both parties win. Every one of the 23 independent studies on NAFTA that I know of demonstrate that it is a positive-sum game. They say there will be job creation in the three countries due to the synergy of the three countries' economies. This would make the region more competitive vis-a-vis other regions.

Q: But how do you answer those who fear that low wages in Mexico may attract many U.S. industries to move there?

A: Those who say NAFTA is a zero-sum game use two arguments: One, low wages determine exports. If low wages could determine the behavior of exports, there would be no country with low wages. Countries like Haiti would be a true export power. Ironically, if you take a look at the export products that sell in the United States, you'll see they come from Japan and Germany--both high-wage countries.

Q: What is the other argument?

A: Some people say that once NAFTA is in place, businesses will not have to pay tariffs to export to the U.S., thus they will try to relocate in Mexico. Do you believe that a business that now pays 3.8% as an average tariff to export from Mexico to the United States will move to Mexico to have a 0% tariff after 15 years?

Q: In terms of job dislocation in the United States, what would happen if Mexican exports to the United States double in 15 years?

A: Mexican exports to the United States now represent .57% of the country's gross domestic product. If we were to double it, which would be fantastic, it would be 1% of the GDP. This percentage cannot create massive job dislocation . . . . Furthermore, I do believe that this is a positive-sum game, where the synergies and complementing economies will generate more jobs in the three countries.

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