Free Trade With Mexico

I read with great interest your front-page article “Mexico Free-Trade Pact Faces Hard Sell in Congress,” by Ronald Brownstein and Karen Tumulty (April 6). If I may, I would like to share with your readers certain ideas about the possibility of signing a North American Free Trade Agreement, now that Congress is getting ready to vote on whether to renew the President’s authority to continue negotiations with Mexico and Canada under a “fast-track” legislative procedure.

For many years, Mexico had an inward-looking economy that resisted competition from abroad. Since the end of World War II until the mid-1980s, the government adopted an import-substitution strategy that protected its “infant industries” from “predatory” international competition. When we realized that four decades of high tariff protection had created a national industry incapable of competing in foreign markets, we undertook a dramatic policy transformation. In only seven years, we became one of the most open economies in the world. Back in 1982, all imports required a license. Today only 2% of tariff items require a special permit. Likewise, in 1982 the average tariff was over 90%. Today it is 10%.

Opponents of the agreement do not present an accurate picture of Mexican law. Mexico’s federal labor law is more extensive than U.S. standards in areas such as the right to strike and collective bargaining. The Mexican social security system, for example, provides more benefits and services to Mexican workers than the U.S. system offers to U.S. workers. The same is true in the case of environmental concerns. Mexican environmental laws and regulations are based on the industrial countries’ legislation and experience. Our problem is lack of sufficient funds.

Opposition to the FTA is based on political arguments, not economic. Nowadays, there are more than 1,000 foreign-owned corporations in Mexico, and about 2,000 twin plants or maquiladoras , the vast majority from the U.S. For Mexico they are advantageous not only because they create jobs, but also because they pay salaries that are three times higher than the average wage. However, it is also important to note that for the U.S. they are profitable, too. It is false that, in the long-term, joint-production processes create unemployment in this country. On the contrary, it is estimated that for every job created in Mexico’s maquiladora industry, there is another one created in the United States.

It is precisely because we are so different that a trade agreement between our countries is so attractive. In essence, our economies complement each other.

JOSE ANGEL PESCADOR

Consul General of Mexico

Los Angeles