Again, People Are Mexico’s No. 1 Export : Free trade: U.S. goods are feeding consumer demand as Mexican job growth sags.

There is an emerging immigration scare in the United States. It can be partly attributed to typical election-year posturing by American politicians, from Pat Buchanan to Pete Wilson, and to equally predictable posturing on the part of an embattled Administration trying to look tough by hiring more border guards and building bigger fences. A cynic might even wonder if the gripping scene of dozens of Mexicans dashing across the border at San Ysidro into oncoming freeway traffic may have been stage-managed. In fact, serious factors are putting immigration back on the American agenda: jobs and trade.

The proposed free-trade agreement with Mexico is being sold in the United States--oversold--as a remedy for illegal immigration. In theory, as employment in Mexico shifts from the traditional, protected, inefficient domestic economy to the export sector, more jobs will be created than those lost to imports from the United States. In theory also, the free-trade agreement will create more jobs north of the Rio Grande, thanks to increased U.S. exports, than those that will move south seeking lower wages, fewer regulations and a polluter-friendly environment.

Many models and studies have been carried out lately to determine these forecasts’ credibility; the conclusions so far are mixed. But we’ve already had four years of quasi-free trade experience to go by: the period since 1988, when Mexico acquired what President Carlos Salinas de Gortari has called “one of the world’s most open economies.” This period is a useful indicator because it also includes good and bad years for both economies.

In those four years, American exports to Mexico have grown far more rapidly than Mexican exports to the United States. While there is no perfect correlation between trade and jobs, this indicates that for now, more jobs are probably being created in the United States than in Mexico as a result of trade.

In aggregate terms, since 1988, Mexico’s imports have been growing at more than 2 1/2 times the rate of exports (excluding oil). The rate of growth of both indicators may drop, but the ratio between them remains stable. The bottom line, of course, is that Mexico ends up running a huge trade deficit: $10 billion to $11 billion in 1991. In comparison, between 1965 and 1980, South Korea’s exports grew yearly at almost twice the rate of imports, at a time when the country’s economy was expanding at a 10% clip.

Anyone who wants to look can see these numbers reflected in Mexican supermarkets, department stores and sidewalk tianguis. The country is being flooded with imports of all sorts--consumer goods and capital goods, some that once were manufactured in Mexico, some not--most of them from the United States. This is happening even in sectors of the economy that free trade is supposed to favor. Mexico’s textile industry, for instance, once a healthy exporter, is now running a trade deficit.

It may be that sharply increased exports to Mexico will create jobs in the United States, as the Bush Administration likes to argue. But, inevitably, the results will be felt most acutely in the job market in Mexico. If the economy south of the border is growing at only 3% to 4%, as has been the case the last three years, and imports are growing by nearly 30% on average, this means that more American suppliers of goods and services are meeting growing Mexican demand than Mexican suppliers American demand. Logically, jobs in Mexico are not going to rise, and could even drop. Which is exactly what has been happening.

Manufacturing employment in Mexico (with 1980 equal to an index of 100) rose only from 87.5 in 1988 to 88.2 in mid-1991. The so-called open unemployment rate, which does not reflect actual magnitudes but does indicate trends in the job market, went from 3% in 1989 to 2.6% in late 1990, but then rose to finish 1991 topping 3% once again. This shows that employment increased only marginally, if at all, last year, when the Mexican economy grew at its highest rate since 1981.

The effects of these trends are easy to see. The underground economy has come to the surface in Mexico City, exploding in a proliferation of street vendors crowding the capital’s avenues. The evidence is apparent also in the greater number of people crossing the border to find jobs in the United States.

Here lies the paradox: A U.S. recession and an undeniable, though modest recovery of the Mexican economy are taking place simultaneously, thus creating the ideal situation for a drop in Mexican emigration, but this drop is not occurring. The recession has not had much impact on low-skill labor in the United States, and the Mexican recovery has not created a wealth of jobs. In the short term, which could last several years, the United States cannot both export significantly more goods to Mexico and expect Mexico to create significantly more jobs for its people. In the long run, this may happen if a virtuous cycle of trade, growth and employment takes hold. For now, the United States seems to want to have the proverbial enchilada and eat it, too.