PRESIDENT Bush and Mexican President Carlos Salinas de Gortari used their Nov. 26 summit to sing the praises of a US-Mexico free trade agreement (FTA). If their tone seemed high pitched, it is partly because an odd coalition of labor, environment, and human rights activists may be forming in the United States to stifle the FTA. Opposition to an FTA in the US is led by organized labor, which is wary of cheap Mexican labor. Yet, most economists believe that fears of US job losses are greatly exaggerated.
First, if low-cost labor were the most important factor in plant location decisions, then countries like Haiti would be industrial powerhouses. Second, the US is already an open economy, with average tariffs of only 4 percent. Only those industries receiving special protection in the form of quotas or high tariffs may be affected. Ironically, sectors such as textiles and horticulture already depend on Mexican labor, making it hard to argue that US jobs are at stake. Third, US manufacturers have long been battered by the Asian formula of high-tech capital and low-wage assembly capabilities. A similar US-Mexico partnership would enhance the competitive edge of US products at home and in Asian and European markets.
Since the arguments in favor of an agreement are compelling, opponents are casting about for non-economic arguments to torpedo a FTA. Hence the new-found interest of rust belt constituencies in Mexican democracy. Opponents of an FTA argue that an agreement should be conditional on ending the irregularities that have long tarnished Mexico's electoral process.
Flawed elections in Mexico will make it easier for the enemies of an FTA to distract attention from the real issues. President Salinas should not play into their hands by failing to prove as deft in the electoral arena as he has in the economic.
POLITICAL reform takes two to tango. It takes a willingness to engage in meaningful electoral reform on the part of President Salinas, and it requires a willingness to negotiate responsibly on the part of the opposition.
Salinas is a gradualist in the political arena. He realizes that economic restructuring takes years to yield results and is politically vulnerable, especially in new democracies. Thus, he may be dragging his heels on political reform. Recent local elections in the state of Mexico, viewed by analysts as a bellwether of President Salinas's commitment to democratization, were rife with irregularities. The president's snail's pace on reform is beginning to look uncomfortably like intransigence.
Intransigence on the part of fledgling opposition parties can also derail political reform. The PRD, Mexico's nationalistic and populist opposition party, has refused to muddy its hands with the honorable work of democratic compromise. The PRD argues that the PRI is incorrigible and doomed to disappear in an orgy of insurrectionist fervor. It seems to prefer playing the card of international public opinion to both destroy the PRI and delay an FTA. Clearly, PRD leader Cuauhtemoc Cardenas has yet to learn that mutual tolerance is the first rule of democracy.
Both parties must find a way out of their stalemate by Mexico's midterm elections, scheduled to take place next summer. These elections will include seven gubernatorial races, the lower house of Congress, and half of the senate. The midterm elections will provide a test of Mexico's new electoral law and offer Salinas a chance to redeem his image as a true reformer. World opinion has set high standards for the young president, a tribute to his impressive performance in the economic realm.
A failure to perform credibly in the 1991 midterm elections will offer a gratuitous weapon to the foes of free trade. Protectionists who never gave a thought to democracy in Mexico will suddenly discover new-found convictions about the relationship between free trade and free and fair elections south of the border. These two issues should not be linked, least of all by cynical protectionists.
The US needs growing markets for its products, and it needs enhanced competitiveness. Mexico needs free trade, but it also needs democracy. Better to tackle both now, before the pressures build for a quid pro quo.