PERSPECTIVE ON TRADE : Competitiveness Begins at Home : U.S.-Mexico integration will continue, NAFTA or not. Washington should be debating a domestic jobs policy.

Most of the debate within the United States about the North American Free Trade Agreement has taken place between proponents and opponents who concur that the agreement will have major effects in both the United States and Mexico, but who disagree strongly about the nature of that impact.

Those who favor NAFTA usually suggest that it will expand trade, increase employment on both sides of the border, benefit American consumers, reward attractive leaders, lock in positive reforms in Mexico and induce needed adjustments in the United States--and even that it will contribute toward an opening of democracy in Mexico and better conditions for Mexican immigrants in the United States.

Skeptics typically assert that the proposed agreement will have grave consequences on both sides of the border: displacing workers and farmers, exploiting labor and restricting its rights, fouling the environment, legitimating what is portrayed as an authoritarian and corrupt Mexican oligarchy and serving transnational alliances of capital rather than working people.

Interestingly, these lines of argument on both sides took shape long before a NAFTA text actually existed and could be analyzed. Once the NAFTA text was negotiated and initialed and the U.S. election campaign ended, the debate has become increasingly shrill, mainly involving the ever-less-nuanced and balanced juxtaposition of arguments and counter-arguments. Successive positions have been presented by both sides with apparently growing conviction--about the great “sucking sound” of jobs heading south or about the need to rescue Mexican President Carlos Salinas de Gortari, about the principles of free trade or the urgent priority of labor standards and environmental protection. Some participants in the debate regard NAFTA as the vital keystone to America’s strategy for regaining international competitiveness; others see it as a dangerous weakening of the U.S. economic role or a needless distraction from a “laser-beam” concentration on domestic concerns.

From Southern California, the content and tone of our national debate on NAFTA seem flawed.

First, anyone who thinks the question of economic relations with Mexico can be put aside while our country attends to its domestic agenda simply does not understand the blurring of the U.S.-Mexico border and how the line between domestic and international policy has been eroded as a result. When 65% of the students in the Los Angeles public schools are Latino, more than half of them speaking Spanish as their first language, education becomes an international policy question.

When more than half the babies born in Los Angeles County are Latino, public health has a decidedly international dimension. So do questions of jobs, public services, narcotics, environment, police-community relations and inter-ethnic tensions. Managing our national relations with Mexico and its effects is an unavoidable priority. It is a concern at the nexus between international and domestic concerns; it is a quintessentially “intermestic” challenge, as Bayless Manning put it 20 years ago.

Second, it makes no sense to discuss and debate NAFTA as if it were possible to choose whether to have close and intensifying connections with Mexico, or whether labor-intensive industries should move south. For more than a generation, there has been an accelerating process of economic, demographic and social integration between Mexico and the United States. This is particularly evident in Southern California, where the population of Mexican origin has doubled in the last 10 years.

Without a NAFTA or any bilateral accord, trade between Mexico and the United States has risen from less than $30 billion in 1985 to more than $75 billion in 1992. Without a NAFTA, an estimated 15,500 jobs moved from California firms to companies operating in Mexico in the late 1980s, and the pace has been increasing. Without a NAFTA, U.S. direct investment in Mexico grew by an estimated $8 billion in the past five years. It is rather late in the game to debate whether the United States and Mexico should be closely connected, or to think that the United States unilaterally can stem the flow of capital and jobs across the border.

The process of what Clark Reynolds of Stanford once perspicaciously called “silent integration” between Mexico and the United States has become vocal, indeed boisterous. It is no longer a matter of political will or state decision; people of all classes and sectors are building thickening connections. Although these connections raise some problems, they also present solutions to the concrete needs of migrants, employers, workers, investors and consumers. The U.S. debate should take this plain fact into account as a premise for policy, not denounce or ignore it.

The central issue for the United States is whether the net benefits to this country of closer connections with Mexico are likely to be greater as a result of an unnegotiated and somewhat haphazard process of functional integration, without any mutually agreed framework, or whether the interests of the United States and of most of its citizens are more likely to be advanced within a thoughtfully negotiated framework--the current NAFTA text, one modified by side agreements or a newly negotiated accord.

Posed that way, the answer seems self-evident: The interests of most U.S. citizens are more likely to be protected within a negotiated framework, one subject to ratification within the political processes of both countries and Canada. Dropping the idea of a trade agreement would not end job flight, it would not curb U.S. investment in Mexico and it would not deter Mexican migration to the United States. It would just assure that these processes will be shaped by market forces alone, without national policy objectives being articulated or pursued, and it would in effect forfeit the strong leverage the United States can wield in negotiations.

The question really worth debating is the exact content of that framework--which by its very nature must take into account a balance of diverse interests in Mexico and in Canada, as well as in the United States. How can these various interests best be reconciled, how can the benefits be shared most equitably and how can the costs--and there are inevitably costs--be compensated and alleviated?

For various reasons, we have never had a thoughtful national discussion framed in these terms. The Bush Administration pushed hard for NAFTA and the “fast-track” procedure without adequately taking into account the diverse views of various concerned groups or seriously weighing alternative visions of U.S.-Mexico relations.

Candidate Bill Clinton’s favorable stance on NAFTA early in the primary season effectively removed the agreement as a focus of public discussion while the accord was being negotiated, until Ross Perot put it on the agenda. Clinton then seized the political middle ground with his advocacy for NAFTA plus side agreements on labor and the environment, but he did so without deciding in advance how meaningful and enforceable the proposed agreements had to be in order to meet his standards. If he winds up shying away from pushing NAFTA, it will be for reasons that have little to do with the merits of the agreement and everything to do with domestic politics--and the danger of being blamed for job losses that are likely to occur anyway but that will be widely attributed to NAFTA if it is put into effect.

Freer trade with Mexico and Canada, as well as significant U.S. encouragement for Mexican growth and development, are both integral to the strategy for regaining national competitiveness that President Clinton and his advisers have been trying to design. Before the Administration can make a coherent and persuasive case for a supplemented NAFTA (or conceivably for renegotiating a modified text), however, it has to fashion a coherent national economic policy that can be approved by Congress--evidently no easy task.

In an important sense, therefore, the need for a more thoughtful and balanced NAFTA debate, whatever its timetable, is a subset of a larger question--how to design a sustainable national economic approach. That is the nub of the problem; all the rest, as the Rabbinic sages say, is commentary.