SUNS #4345 Tuesday 15 December 1998



MEXICO: OPINIONS SHARPLY DIVIDED ON NAFTA

Mexico, Dec 11 (IPS/Diego Cevallos) -- The government of President Ernesto Zedillo feels the North American Free Trade Agreement (NAFTA) has been a blessing for Mexico, but the opposition and labour unions charge that the country has derived little benefit from the pact.

The five-year-old trade agreement, which also includes Canada and the United States, put Mexico on the global trade map, multiplied its exporting capacity and improved employment and wages, says Trade Minister Herminio Blanco.

Since it took effect on Jan.1, 1994, it has turned Mexico into the tenth largest trading nation in the world, with annual gross receipts in excess of 220 billion dollars - 102 billion dollars more than in
1993, according to Blanco.

For Blanco, the criticism of NAFTA voiced by some business sectors, labour activists and politicians from both Mexico and the United States is absolutely groundless.

NAFTA, "sold" to Mexicans in 1993 as a "development model", is a success for its three members, but especially for Mexico, because "it put us on the map", Blanco said, adding: "We are no longer confused with Central America."

Unlike Blanco, the Action Network in Response to Free Trade, a group that exists in the United States, Canada and Mexico, sees NAFTA as a failure because it has led to the dismantling of national industry under pressure from foreign capital.

Its critics also claim that the Treaty does not promote the development of national industry, because it fosters regional rather than national perspectives. They say it has not reduced unemployment or improved wages, nor has it succeeded in curbing illegal immigration to the United States.

Blanco recognized that the benefits of the Treaty with respect to employment and wages were still not very evident, but he maintained that there were already clear signs of improvement. Between 1993 and 1998, the number of export companies in Mexico rose from 21, 000 to 34,000, and the wages of their employees went up by 19 percent.

NAFTA created a potential market of 375 million people in which about one billion dollars exchange hands each day. The NAFTA area is to be completely free of tariffs in 13 years.

Blanco admitted that relatively few businesses and workers were involved in free trade, but he said their number would keep growing in the years to come.

Official figures show that 300 firms, mostly transnationals, account for 70 percent of Mexican exports. 'Maquiladoras' (assembly plants), which use less than six percent national inputs, account for 40 percent of export sales.

The challenge is to involve small and medium-sized companies, which are those that employ most Mexican workers. This is why these sectors are receiving support and why Mexico is seeking other free-trade partnerships, according to the government.

Three weeks ago, Mexico and the European Union (EU) began negotiations to define a trade liberalisation agreement in the wake of an accord on political issues and mutual cooperation.

The EU is Mexico's second most important trading partner, although trading with the 15-member bloc is equivalent to only one-tenth of Mexico's trade with the US, which accounts for 70 percent of its trade.

Thanks to its closeness to and trade complementarity with the United States, Mexico has positioned itself as the second largest market for U.S. products, displacing Japan from that slot.

To continue opening its trade borders, a process which began in 1982, Mexico has signed free trade agreements with Chile, Colombia, Venezuela, Bolivia, Costa Rica and Nicaragua.

Other agreements are in the works. They are currently being negotiated with Ecuador, Panama and Israel. Mexico's trade-pact agenda also includes Honduras, El Salvador and Guatemala, although there seem to be some obstacles still to be resolved.
For Mexico, there is no going back on free trade, according to its government. Any party which takes over the presidency at elections due in the year 2000 will have to continue President Zedillo's open-economy policy, Blanco stated.

The center-left Democratic Revolution Party (PRD) has pledged to carry out an exhaustive revision of NAFTA if it wins the presidency because it views the Treaty as having failed.