PERSPECTIVES ON TRADE : Business Is Business : U.S. investment abroad is inevitable; NAFTA just gives Mexico an edge to prosper, too.

The day the Japanese attacked Pearl Harbor, newspaper banners across Mexico cried out “Mexico Declares War.” An American who was visiting Cuernavaca remembers seeing thousands of men waving machetes in the streets, screaming, “Mata los gringos!” (“Kill the Americans!”) He hid under his bed until the hotel proprietor assured him that the peons finally understood that Mexico had declared war on Japan and Germany, not the United States.

I, too, learned firsthand that Mexico has not always loved “the colossus to the north.” I lived and worked there in the hills, the villages and cities for more than 20 years and have operated businesses in Mexico over the years since.

I was born and bred in South Philadelphia and am as American as cheese-steak. But Mexico has been my second home since the early 1950s. I went there to make my fortune prospecting after seeing “The Treasure of the Sierra Madre.” The Mexicans affectionately called me el gringo mojado (the American wetback). In those days, as now, “wetback” was the pejorative applied to Mexicans fording the Rio Grande going north; not many Americans crossed the river headed south to find their fortune.

Mexican children were taught that the United States-- “Gringolandia,” as it was contemptuously called--had stolen half of their country and was exploiting the other half. Always warm to individual Americans, Mexicans resented and often hated the U.S.A. Again and again, I would hear the plaintive cry, “Poor Mexico! So far from God and so close to the United States.”

Today, Mexican President Carlos Salinas de Gortari has offered the United States, on a Taxco-silver platter, a unique opportunity to redefine its relationship into one of mutual respect, friendship and security in the form of the North American Free Trade Agreement. Yet U.S. critics of the treaty, including political opportunist Ross Perot, warn about a “giant sucking sound” as American jobs are drawn south. No matter how many charts and graphs Perot uses in his multimillion-dollar media campaign, it’s still a phony argument. Any job that would be lost to Mexico or Sri Lanka or Singapore will be lost with or without a free-trade agreement. The cost of labor is only about 15% of the cost of manufacturing a product. Besides, any successful capitalist knows that it’s labor productivity, not wages, that counts.

My partners and I operate manufacturing plants and mines in the United States and Canada. We don’t expect to move any of these operations to Mexico if NAFTA goes into effect. We do expect a larger market to develop in Mexico for our U.S.-made products, which will allow us to employ more Americans.

In any case, the best way to erase a wage differential is to make sure that our low-wage southern neighbor prospers enough to offer its workers more money. That’s what happened in Japan, where labor costs rival our own, and is well under way in Korea and Taiwan.

I know the costs and benefits of Mexican trade barriers. In 1960, Mexico imported from the United States nearly all of the flux used in automatic welding there. That year, I built a plant in Mexico City to produce it locally. Once the factory was in operation, I persuaded the Mexican government to shut the border to U.S. flux exports, effectively awarding me a monopoly and ending the lucrative market for U.S.-based manufacturers. The United States and Mexico both suffered. I made money.

I’ve never understood why anyone should fear NAFTA. Mexico has a gross domestic product that’s only 5% of the $6 trillion GDP here. But if Congress fails to ratify NAFTA, Mexico’s traditional anti-American sentiment will once again intensify. And like the Humphrey Bogart character in “The Treasure of the Sierra Madre,” both of our countries will end up with sand, not gold, in our saddlebags. It’s enough to make me crawl under my bed.