SAN FRANCISCO — Last week's inauguration of Vicente Fox as Mexican president opens a new era for United States-Mexico relations. As the elected leader who ended more than 70 years of rule by the Institutional Revolutionary Party (PRI), Mr. Fox presents an unprecedented opportunity for Mexico to break with its past. Expectations - and risks - are high.
Fox inherits an economy on the upswing. Economic reforms begun under former President Carlos Salinas and continued under Ernesto Zedillo have brought Mexico into the global economy.
Mr. Zedillo's unique contribution was to institutionalize democracy, allowing competitive elections and loosening the PRI's grip on the political system. His commitment to political modernization, going well beyond the economic modernization of his predecessors, has strengthened prospects for long-term stability.
The PRI also leaves a nation divided - a relatively prosperous, industrialized north, and an impoverished rural countryside to the south. While official unemployment appears low, underemployment is high and poverty is widespread. Some of Mexico's larger banks are shaky. Drug money has penetrated the political system, and corruption is endemic. Most important, the rule of law is weakly institutionalized, eroding citizens' sense of social justice and civic confidence.
Fox promises bold measures, but can he deliver? His proposals include opening the long sacrosanct oil and gas industry to private investment, overhauling the federal police, reforming the tax code, and new initiatives for peace in Chiapas. He also promises a government of merit, not party, and annual economic growth of 7 percent. Altogether, that's a tall order for a president whose National Action Party lacks a legislative majority. To succeed, Fox's characteristic boldness must be matched by even greater leadership skills.
One of Fox's most intriguing initiatives relates to the North American Free Trade Agreement (NAFTA), which facilitates the free movement of goods, services, and capital across the border. NAFTA has been a success for both countries. US trade with Mexico has surged and is on track to overtake trade with Europe, while in Mexico nearly half the new jobs created in the last five years are linked to NAFTA-related exports. Barriers to investment have fallen, deepening our nations' economic integration.
The great exception to this growing openness is people. Beyond legal immigration, which is substantial, nearly 6 million Mexicans live and work in the US illegally. Most are drawn by jobs and incomes they cannot find at home and help fill our labor gaps, taking the jobs that most Americans refuse.
US immigration policy has failed to stop this movement. Without thousands of miles of concertina wire it may be impossible, so long as US jobs beckon and the income gap between Mexico and the US remains large. The illegal nature of this migration subjects many migrants to physical danger, artificially low wages, and other insecurities.
Fox has taken up this issue with a bold proposal for deeper economic integration and a more open border, based on a North American common market similar to Europe's. Goods and citizens would move freely in both directions, with a continental market. Mexico would agree to accelerate investment in its hinterlands and to meet common budget and inflation goals, leading one day to a single currency. All of this represents a significant expansion of NAFTA. Recognizing the political barriers, Fox acknowledges that implementation will require a long-term process lasting decades, not years.
To call this ambitious is an understatement. Immigration is a sensitive issue in the US, particularly during economic downturns. Control of drug trafficking with open borders would pose challenges. Huge economic disparities between the US and Mexico raise the specter - real or otherwise - of mass movements of Mexicans north. Mexico's weak justice system raises other issues. Any way you look at it, the challenges are enormous, and whether the US is ready for this idea is an open question at best.
But Fox's proposal is worth considering. By tightly controlling border crossings, we may be encouraging undocumented workers who would return to their homes in Mexico to stay here, inadvertently expanding the permanent population of illegal immigrants. Arguably, if Mexicans were permitted to work and travel more freely - for example, through an expanded visa program for documented temporary workers - US labor needs could be met, more Mexican workers would earn higher wages in more secure conditions, and more would eventually return home. Documented aliens would also pay more taxes. Conceivably, an influx of younger, tax-paying Mexican workers could even help bail out the Social Security system, which is threatened by a declining ratio of workers to retirees.
On a broader level, integration of the global economy is increasing competition and worldwide interest in free-trade agreements, with the European Union a prime example. In this environment, deeper economic integration in North America may strengthen our global competitiveness.
The timing of Fox's ascendancy and a new US administration present an opportunity to think more broadly about US interests in Mexico and US-Mexico relations. The details of that vision are less significant than the dialogue that's begun. Fox's ideas should be cautiously engaged, not given the cold shoulder.
R. Sean Randolph, who is president of the Bay Area Economic Forum, was California's director of international trade from 1994 to 1998. These views are his own.
(c) Copyright 2000. The Christian Science Publishing Society