Discord Along the Border : Trade: Mexican shoppers and U.S. retailers say Mexico’s current enforcement of $50 customs limit violates spirit of NAFTA.

Andy Carrasco walked across the U.S.-Mexico border on the way to the big Vons grocery store here knowing that, for all the talk of lowered trade barriers between the two countries, he can only buy $50 worth of duty-free groceries this trip.

“Free trade agreement? What free trade agreement?” wondered Carrasco, a Tijuana resident who makes two or three weekly shopping trips across the border here 18 miles south of downtown San Diego. “I’m buying fewer things and paying more taxes.”

Carrasco and countless other Mexican shoppers are furious over the newly toughened enforcement of a $50 limit imposed by Mexican customs on U.S. goods they can buy. It’s a ceiling they say violates the spirit of the North American Free Trade Agreement and contrasts painfully with the $400 limit that Americans enjoy when they go on sprees to Mexico.

Also incensed are retailers along from the 2,000-mile U.S.-Mexico border, from McAllen, Tex., to Calexico and San Ysidro, where a decades-long dependency on cross-border shoppers from Mexico has been disrupted. Downtown retailers in Laredo, Tex., for example, report sales have fallen more than 20% in two years.

“It’s harassment,” said Tony Tirado, former mayor of Calexico, and a vocal opponent of the limit. Lionel Flores, a manager at Shermo electronics store in San Ysidro, less than a mile from the border, said: “We’ve lost about 70% of our business. We’re going to change locations.”

Although the $50 limit per shopping trip has been law in Mexico for decades, Mexican customs only began enforcing the limit in late 1992, and shoppers and U.S. retailers say the enforcement has become tougher and the penalties harsher in recent months.

The protests came to a head in late August when Charles S. Meissner, assistant U.S. commerce secretary for international economic policy, met personally with retailers in McAllen and Brownsville, Tex., and then lodged a formal complaint with the Mexican government. He asked Mexico to bring the limit more nearly in line with the $400 maximum on what U.S. tourists can bring in from foreign countries.

Last week, Mexico’s president-elect, Ernesto Zedillo, weighed in on the flap, promising to review the $50 limitation because it has become a “source of irritation” with residents of both countries. “Somehow it has to be addressed,” Zedillo told an interviewer.

The customs limits were not addressed directly in NAFTA, the free trade agreement that went into effect Jan. 1 and which is designed to break down tariff barriers between the two countries over the next 20 years.

Meissner characterized the tiff as one of several post-NAFTA “glitches,” and said U.S. and Mexican commerce officials have begun meeting monthly to discuss trade problems in the wake of NAFTA’s enactment Jan. 1.

The timing of the toughened enforcement as NAFTA was being implemented is puzzling to some, but a spokeswoman for the Mexican finance ministry said the enforcement began when it did simply because the technology with which to enforce it was finally put in place at various border crossings.

But some border businessmen see political motives, speculating that the administration of President Carlos Salinas de Gortari wanted to appease political patrons who own retail operations in Mexican border states and to wean Mexican shoppers from U.S.-made goods that, despite freer trade, are either unavailable or priced too high in Mexico.

Others say it is part of a concerted effort to stamp out contrabando hormiga, Mexico’s huge, illicit flea-market industry.

For decades, Mexican retailers or their hirelings have crossed the border to buy U.S. retail goods and then cart them back for resale at prices that legitimate Mexican retailers can’t match--in effect using U.S. retailers as wholesalers.

The industry had grown so big that Mexican authorities, content for years to look the other way as loads of Levis, athletic shoes and hardware were brought across the border, decided to clamp down to recover the huge amounts of sales taxes it was losing.

Meissner said the Mexican government is addressing a “legitimate problem in that many small Mexican retailers were coming across the border and buying $500 to $1,000 worth of blue jeans or shirts,” and reselling them in Mexico.

A spokeswoman with Mexico’s Hacienda, the finance ministry, defends the limit by noting that Mexicans actually can buy more duty-free goods in the United States than the other way around, since Americans’ duty-free limit of $400 on purchases in Mexico and in other foreign countries is monthly, not daily. Mexicans can make as many shopping forays as they want, as long as they observe the $50-per-trip limit.

As a practical matter, however, the $400-per-month duty-free limit on U.S. shoppers is loosely enforced, as U.S. Customs has little way of keeping track of shoppers’ monthly allowances as long as they declare less than $400 worth of purchases per trip.

Longtime observers of the border economy such as Gerald Schwebel, a Laredo bank executive and past chairman of an association of businesses called Border Trade Alliance, hope NAFTA will eventually eliminate the need for strict customs limits, as U.S. retailers over time are able to freely distribute the goods in Mexico that Mexican consumers so obviously want to buy on this side.

“It’s a big deal when you realize that the retail industry remains the largest employer in the border area,” Schwebel said. “Stores all along the border area are reducing operations because of the loss of sales.”

Alfredo Lopez, who owns a computer repair shop in Tijuana, said as he strolled toward the shops in San Ysidro that Mexican officials know “nothing about life on the border”--how the economies are interdependent, how the cost of living in Tijuana parallels that of San Diego, and how much of a burden the 33% import duties represent.

Whether or not the $50 limit is ultimately relaxed, the Mexican government for now is cracking down on the limit, confiscating goods over the legal amount that are not declared and impounding the automobiles of shoppers who fail to declare excess amounts, according to Mexican shoppers interviewed in San Ysidro.

“They treat you like a thief when you cross,” said Maria Flores, a Tijuana resident interviewed as she walked back to the Mexican border carrying her weekly purchase of two bags of groceries. “I used to buy a little dress for $30 or $40 in addition to the groceries, but I’m afraid to now.”