Free-Trade Politics

Democrats are making a mistake by opposing free trade with Mexico. It's a key to future growth.

INSTEAD of offering an economic program, Democratic presidential contenders attacked the proposed Mexico Free Trade Agreement (FTA) in their first television debate. President Bush has quietly taken the FTA off of the fast track to keep it from becoming a negative campaign issue. But if voters decide not to return the president to the White House, free trade with Mexico could become a non-starter.None of the current Democratic presidential candidates supports the FTA. Texas Senator Lloyd Bentsen, while not a presidential candidate, is the only Democrat with enough Washington clout and personal contacts with Mexican leaders to guide the pact through a Democratic administration. Democratic presidential candidates, organized labor, and right-wing mavericks Pat Buchanan and David Duke all say the FTA will cause millions of Americans to lose their jobs to Mexican workers. But unemployment and the trade deficit have less to do with Mexico than with massive investments of private United States capital in other foreign economies. According to the 1991 Report on Foreign Trade Barriers prepared by the Office of the US Trade Representative, US companies have invested $66.9 billion in Canada, $37 billion in China, $23.1 billion in Germany, $17.9 billion in Japan, and $14.7 billion in Brazil for a total of $159.6 billion. This figure dwarfs the $7.1 billion in direct US foreign investments in Mexico. Instead of making the FTA a campaign scapegoat for America's economic problems, its opponents should address the underlying cause of unemployment and the trade deficit, notably, competition from the emerging Asian and European trading blocs whose member nations benefit from private US investments. For more than a decade the AFL-CIO has watched from the sidelines while US companies obtained tax breaks, restructured their finances - often through leveraged buy-outs that created massive unemployment - and invested in foreign companies. Opponents of the FTA fail to acknowledge that Mexico imported $28.4 billion in US goods and services last year, making it America's third largest trading partner after Canada and Japan. During his recent US visit, President Salinas de Gortari claimed that each billion dollars in exports from the US to Mexico generates 25,000 jobs for American workers. Arguments that the FTA will further distort America's balance of payments become less credible upon examination of US trade-deficit figures. Last year's trade deficit with Mexico was only $1.8 billion. But the 1990 trade deficits with Japan ($41 billion), Taiwan ($11.2 billion), China ($10.4 billion), and Germany ($9.4 billion) totaled $72 billion. Balanced trade with Mexico can help provide the steady growth the American economy needs to pull out of its recession. With the Uruguay round of world trade talks in limbo, the nations of North America need to coordinate their economic interests to counter the emerging trading blocs and their web of access barriers. Until its postponement, fast tracking the FTA was the nucleus of the administration's plan to create a hemispheric economic zone to meet that challenge. Democrats, meanwhile, continue to view Mexico within the context of Latin America instead of welcoming it into the North American economic alliance. The Democratic Party has not put forward a policy on Mexico or Latin America since the 1970s, when President Jimmy Carter's proclivity for micromanaging Latin policy became an irritant to hemispheric relations and produced frictions with Mexico. To regain the White House, the Democrats must forge an economic policy that links domestic expansion to North American free trade and reaches out to Latin America with a program that improves upon the administration's poorly funded Enterprise for the Americas' initiative. Washington's retreat on the Mexico FTA may cause the growing market economies of Latin America to look elsewhere for economic allies. Emerging from the Maastricht Summit, a stronger European Community will exploit the election year lapse in the US hemispheric trade program. Postponing free trade with Mexico means postponing a more competitive America.

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