MEXICO CITY — In the short term, a North American free-trade pact could boost migration to the United States, analysts say.
Some tariff-protected and subsidized Mexican industries would be forced to become more competitive and this is expected to cause layoffs, particularly among small- to medium-sized firms. And the sectors that benefit from NAFTA would provide more Mexican workers with enough money to journey north.
Depending on how NAFTA is crafted, the Mexican farm sector could be also hard hit. Negotiations over agriculture have been arduous due to the disparity in productivity and capital investment between the US, Mexico, and Canada.
For example, if NAFTA forces Mexico's 2.3 million corn farmers to compete head-to-head with US farmers - without the high subsidies and tariff protection they now have - about 850,000 farm workers would leave the countryside and about 600,000 would head for the US over a five-year period, according to computer models done by Raul Hinojosa-Ojeda and three colleagues, at the University of California in Los Angeles.
If NAFTA does not pass, protective barriers go up, and the Mexican economy stagnates, Dr. Hinojosa predicts a similar mass exodus by corn farmers.
The solution, he advocates, is to gradually lower Mexican trade barriers and subsidies and create a North American regional development bank. The bank would lend money for long-term development projects and provide short- to medium-term loans to communities in the three countries adjusting to the job losses brought about by NAFTA. The funding would last no more than 10 years.
A similar bank was set up in Europe when less-developed nations such as Greece, Spain, and Portugal were brought into the Common Market.