How to Make Fox’s Life a Little Easier

President-elect Vicente Fox is a man with big ideas, big dreams and a big heart. Soon, he will be bringing some of his ideas to Washington. Chief among them is his long-term proposal that the North American Free Trade Agreement be transformed into something resembling the European Common Market, with regional development funds to alleviate social inequalities, free movement of labor and open borders.

Senior voices in the Washington and Canadian establishments already have said that Fox’s common-market idea isn’t viable. “You Americans send money, and we Mexicans will send people,” was how one analyst described it. But such attitudes are not helpful. Fox and Mexican democracy are in a race against high expectations, and it is in the U.S. interest that both succeed. Preserving Mexican stability is a strategic interest on par with our interests in Israel, Egypt or Colombia, the largest recipients of U.S. aid. The real question is: What proposals can accelerate Mexican development and survive the grueling U.S. congressional process?

Entrepreneurial solutions based on the adage of giving a man a fishing rod rather than a fish will meet with more success than anything that smacks of international welfare or European dirigiste traditions. If politicians are in search of solutions, here are five ideas to consider:

* Expand the mandate of the North American Development Bank (NADBank) beyond its narrow mission of funding border infrastructure, possibly inviting Canadian participation. Why not permit the NADBank to finance infrastructure projects from Chiapas to Juarez? Development banks tend to be viewed more kindly in Washington than direct foreign aid. The NADBank has the virtue of built-in accountability, guaranteed by its binational board structure. Moreover, the NADBank has successfully leveraged small amounts of government support into private financing of major border infrastructure projects. This melding of private- and public-sector support for infrastructure development may find bipartisan consensus for increased funding in Congress.

* Increase the budget for NAFTA institutions such as the Commission for Environmental Cooperation (CEC) and the Border Environment Cooperation Commission (BECC). Environmental and infrastructure problems on the Mexican border have a direct impact on U.S. citizens, from air and water quality to hazardous waste, wildlife habitat and public health. The border has borne the brunt of increased NAFTA traffic and requires investment.

* Support the start-up of new micro-credit institutions, which Fox emphasized in his presidential bid. Expanding access to financial services to the poor is the fuel of nascent entrepreneurship. The U.S. AID micro-enterprise initiative has a modest $135-million-a-year budget, of which micro-credit is the largest component. To date, AID has two micro-credit projects in Mexico, a number that surely could be enlarged should interest be expressed by the Fox administration.

* Remove U.S. barriers to agricultural trade, which result in U.S. consumers paying $1.50 to $2 for an avocado that retails in Mexico for 20 cents. Mexicans pay around 40 cents for a pound of summer tomatoes, while Americans pay $1.30. Removing agricultural trade barriers would help the U.S. consumer, bring prosperity to rural Mexico and reduce immigration flows. Mexico might, in turn, address the monopoly conditions that currently hamper foreign investment in its telecommunications sector. No foreign-aid program can generate the billions of dollars of economic activity stimulated by good trade and investment policy.

* Fox has implied a willingness to exercise vigorous Mexican enforcement against illegal immigration and trafficking of human beings along the border in exchange for an expanded U.S. guest-worker program. Congress should take him up on the offer. Free movement of labor is an idea we can agree to revisit once wage disparities between Mexico and the U.S. narrow from the current 8-1 to 2-1.

Finally, our expectations about funding levels and trade breakthroughs should be realistic. These proposals hardly represent a fundamental shift in paradigm, but even so, they would take great political will to implement. The European Union currently spends around 1.3% of its gross domestic product on its Regional Development and Cohesion Funds; it anticipates spending 231 billion Euro from 2000-2006. Congress, by contrast, has scaled back foreign-aid programs dramatically. The situation is not more promising in Canada, where Official Development Assistance (ODA) has declined from .27% of GDP to an even more modest .24%.

Fox will get the most mileage out of his honeymoon in Washington if he is willing to push the envelope on antidrug cooperation and immigration control, support U.S. efforts to expand free trade and end anti-American posturing. The U.S. should be willing to think creatively, quit the condescending paternalism, avoid unilateral actions and end the Mexico-bashing. With a little pragmatism and a dose of creativity, this may this be a time of new beginnings on both sides of the border. *