Mexico's Future
Is it on the path to true democracy?
By David Masci

On July 6, a landmark election in Mexico handed significant losses to the country's ruling party for the first time in 70 years. Many analysts regard the election as the most honest in memory and say it has ushered in a new democratic era. Others worry that the ruling PRI party will subvert attempts to make Mexico a full democracy. At the same time, the nation has rebounded from the 1994-95 recession. . . .

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Has NAFTA helped Mexico's economy?

Daniel T. Griswold Director, Trade and Immigration Studies, The Cato Institute,. Position Paper, September 1997.	Vanessa Freidman Research Associate, Council On Hemispheric Affairs,. Position Paper, September 1997.

NAFTA: The Debate Has Not Died Down

More than three and a half years after it went into effect, the North American Free Trade Agreement (NAFTA) seems to have changed few minds.

Early opponents of the treaty between the U.S., Mexico and Canada, including organized labor and environmental groups, now argue that, as they predicted, it has been a disaster for American workers and for the ecology of the country's southern border. Longtime NAFTA proponents, on the other hand, say that it has boosted the economies of the United States and Mexico while causing little dislocation for American workers.

The ongoing debate is likely to heat up in the near future as President Clinton seeks congressional support for fast-track authority to expand NAFTA to include Chile and possibly other Latin American countries.

NAFTA also will be coming under greater scrutiny as the presidential election draws near. Two of the likeliest Democratic contenders for the office, Vice President Al Gore and House Minority Leader Richard A. Gephardt of Missouri, have been de facto spokesmen for and against the treaty, respectively. In 1993 Gore engaged NAFTA opponent Ross Perot (another possible presidential contender) in a now famous debate over the treaty. And opposition to NAFTA has been the cornerstone of Gephardt's populist economic message.

Economists predict that Mexico will take Japan's place as America's second-biggest trading partner by the end of the year. Above, a textile factory in Mexico.

Gephardt and other critics say the treaty has hurt the nation in a variety of ways, but mainly by accelerating the loss of high-paying manufacturing jobs in the United States. According to Robert Scott, an economist at the Economic Policy Institute, about 140,000 jobs have been directly eliminated as a result of the treaty with Mexico. In addition, Scott says, “We've lost the opportunity to create between 300,000 and 400,000 new jobs in the manufacturing sector that have [gone] to Mexico.”

Opponents also argue that the treaty has made it much easier to relocate factories in Mexico, giving companies extra leverage over those workers still employed in the United States. “We hear it from workers every day of the week,” says Thea Lee, assistant director for international economics at the AFL-CIO. “When they sit down at the bargaining table, they hear that threat of moving production to Mexico,” she says. “So even the workers who have kept their job in the United States have had their wages cut and their benefits cut back by NAFTA.” As a result, Lee argues, “the real median wage in the United States has fallen 4 percent since 1993, when NAFTA went into effect.”

Finally, opponents say, NAFTA has significantly increased environmental problems along the U.S. border. For instance, they point out, the Environmental Protection Agency (EPA) has said that hazardous waste coming from Mexico into the United States has increased 30 percent in 1995 alone. Levels of untreated waste, ozone and sulfates have also risen dramatically in border areas since NAFTA's adoption.

But supporters of the treaty, including the Clinton administration, argue that NAFTA has done a lot more good than harm for the United States. To begin with, they say, exports to Mexico have risen 36 percent over the last three years, creating 122,000 new jobs in the U.S.

More important, says Daniel T. Griswold, director of trade and immigration studies at the CATO Institute, increased competition from free trade has forced the country to reallocate workers from less competitive industries to more dynamic sectors of the U.S. economy. “It's better for the workers to be in internationally competitive industries instead of uncompetitive and protected industries,” he argues.

As for the environmental damage caused by the increased economic activity along the border, Griswold argues that halting free trade and economic development is the wrong way to attack the problem. “It's the responsibility of the Mexican government to control pollution in a socially responsible way,” he says. Furthermore, Griswold argues, the kind of economic development fostered by free trade is actually the best way to protect the environment. “Studies show that when a country's per capita gross domestic product reaches about $5,000, environmental awareness begins increasing” as people have the luxury to begin worrying about something other than food and shelter.

[1] Fast-tracking prevents Congress from amending treaties once they have been negotiated.

Footnote: 1. Fast-tracking prevents Congress from amending treaties once they have been negotiated.

[2] Quoted on “The NewsHour with Jim Lehrer,” July 11, 1997.

Footnote: 2. Quoted on “The NewsHour with Jim Lehrer,” July 11, 1997.

[3] Economic Policy Institute, Institute for Policy Studies, International Labor Rights Fund, Public Citizen's Global Trade Watch, Sierra Club and U.S. Business and Industrial Council Educational Foundation, “The Experiment That Failed: NAFTA at Three Years,” pp. 21-22.

Footnote: 3. Economic Policy Institute, Institute for Policy Studies, International Labor Rights Fund, Public Citizen's Global Trade Watch, Sierra Club and U.S. Business and Industrial Council Educational Foundation, “The Experiment That Failed: NAFTA at Three Years,” pp. 21-22.