Big, Bold Ideas From the South

Mexican President-elect Vicente Fox is a big man, 6 feet 6, with a penchant for big ideas and the clout to make them work. Example: In July, Fox and his PAN political party ousted the PRI, the party that had governed Mexico for more than 70 years. Now, in his first postelection foray into the United States and Canada, Fox has floated some bold ideas aimed at reducing the enormous economic gap between Mexico and its neighbors to the north. How? Through deeper economic integration among the three partners.

Fox wants to build a process that would re-energize the North American Free Trade Agreement and perhaps lead, in 20 to 30 years, to a European-style partnership among the three countries. Grandiose? Perhaps, but the idea is worth discussing. The least that Washington and Ottawa can do is engage in a serious trilateral discussion on such issues as investment and immigration.

Given the economic divergence, Fox’s call for free flows of people, money, goods and services across the borders invites images of turbulence. In trying to frame the issue while he was in Canada and the U.S. this week, Fox spoke of “open borders, compensatory funds and a common market,” phrases that raise hackles among Americans. Knee-jerk opposition should not deter investigation.

On immigration, Fox is calling for an agreement that would gradually allow increased legal immigration from Mexico to the United States. That is a potentially explosive issue, but consider: Despite legal and physical barriers, some 300,000 Mexican immigrants cross the line, illegally, each year and find jobs in the United States. The problem is complex, and, so far, Fox’s only concrete answer to the issue is a guest worker program. That represents just a partial solution. Fox has to understand, as President Clinton pointed out to him, “We have borders and we have laws that apply to them, and so do the Mexicans.”

On his own turf, Fox has vowed to bring inflation, interest rates and fiscal deficits into line with those of Canada and the United States in less than a decade. But much more has to be done. To create the more than 1.3 million new jobs Mexico needs each year, its economy must grow at a 7% annual rate, exports must increase and foreign investment must almost double, rising to $20 billion from $11 billion. And to become more attractive to foreign investment, Mexico needs serious regulatory and legislative reform and to open key economic sectors, like energy and petrochemicals.

Initial reaction in Washington this week was cautious but positive overall. As president-elect (he takes office in December), Fox cannot yet negotiate any deals. He came to the United States to share ideas, and he got a hearing. Now he must sketch in the realities.