Mexico Is Up for NAFTA’s Challenge : Trade: A senator’s remark about a ‘shotgun marriage’ typifies the emphasis on rhetoric over persuasive facts.

MEXICO CITY —  As a Mexican businessman, it strikes me that much of the discussion about NAFTA in the United States focuses less on the agreement and more on economic, social and political disparities between Mexico and the United States. This discussion ignores both the enormous progress Mexico has made in the last six years and the considerable benefits that trade liberalization will bring to both of our countries. For example, on June 14, Sen. Ernest Hollings (D-S.C.) described the North American Free Trade Agreement as a “shotgun marriage,” implying, in so many words, that Mexico is still too primitive to be a fit trading partner of the United States. A sober regard for the facts, however, makes a compelling case for Mexico and NAFTA.

Let me begin by acknowledging that Mexico is no United States. My country has only 1/10th the per capita GNP and one-third the population of our neighbor to the north. Mexican and U.S. social and political history differ considerably. The loss of half of our territory to the United States in the mid-1800s and subsequent U.S. domination caused Mexicans to equate patriotism with anti-Yankeeism. Unfortunately, wariness of our northern neighbor helped create a tradition of a heavily centralized state and spawn illiberal political and economic policies--protection, import substitution, state intervention. Those policies contributed to sharp socioeconomic disparities between our two countries. Plenty of blame, to be sure, rests with previous Mexican governments.

Lost in the too-frequent focusing on differences is the panorama of Mexico’s dramatic change over the past 10 years.

In the wake of the oil-price collapse and debt crisis in the early 1980s, Mexico embarked on a painful, long-term process of economic reform based on free-market principles. Under the great leadership of President Carlos Salinas de Gortari, Mexico’s decades-old traditions of protection and intervention were rooted out and replaced with massive privatization and deregulation.

The results are measured in facts, not words, and compare rather well to the recent history of other major U.S. trading partners. Since 1987, Mexico has reduced the numbers of inefficient state enterprises from more than 1,000 to 221. Revenues were used to retire debt and build reserves. Social and infrastructure spending has been greatly increased. In addition, the government cracked down on private and public corruption and strengthened enforcement of intellectual property rights.

These policies have directly and dramatically affected Mexico’s economy and trade patterns. Consider:

* Tariffs have been slashed from more than 100% to around 10%, and under NAFTA will be phased out entirely.

* Inflation was reduced from 160% to less than 10%.

* U.S. exports to Mexico have grown from $12 billion in 1988 to $40.6 billion in 1992.

What effect has Mexico’s economic modernization and trade liberalization had on the United States? Hundreds of U.S. companies from scores of states are engaged in an aggressive commercial relationship with Mexico, satisfying my country’s hunger for high-quality goods and services. According to the U.S. Department of Commerce, 800,000 U.S. jobs are currently directly related to exports to Mexico, two-thirds of which were created since 1987. Some examples: Caterpillar sold 11 big machines to Mexico in 1983. In 1991 it sold 1,200 machines, boosted in part by a huge highway construction program (managed by private companies). Aldus and Microsoft have seen software sales rise sharply, protected by new and strict anti-piracy laws. The state of Washington saw the value of its exports to Mexico triple between 1987 and 1991, from $83 million to $241 million.

In addition to the reforms described here, Mexico has greatly increased its spending to enforce environmental laws (many of which are patterned on those of the United States) and to improve working conditions. NAFTA has the most extensive environmental and labor standards of any trade agreement; implementing it will improve the environment along the Mexican-U.S. border.

As in the United States, some in Mexico would prefer the old days of xenophobic nationalism and protectionism. Moreover, many open-mined, progressive Mexican entrepreneurs stand to lose a great deal as the economy is thrown open to further foreign penetration. After all, every new American fast-food restaurant that opens on a street corner in Mexico means one less restaurant created and owned by Mexicans. But as we approach the final decision on NAFTA, responsible Mexican and U.S. leaders should promote the long-term interest of all citizens, while making sure to ease the transition of those in both countries adversely affected by trade liberalization.

Mexico has shown its fitness to join the United States and Canada in forging a vibrant, $7-trillion market of 360 million consumers. NAFTA is neither a “shotgun marriage” nor a marriage made in heaven. NAFTA is a partnership based on mutual self-interest and respect that will promote growth and stability in North America.