The Inside Assyria Discussion Forum

=> Wheeling, dealing Mexico goes crazy for

Wheeling, dealing Mexico goes crazy for

Posted by Jeff (Guest) jeff@attoz.com - Tuesday, April 6 2004, 1:19:18 (EDT) from 69.14.120.175 - d14-69-175-120.try.wideopenwest.com Commercial - Windows XP - Netscape Website: Website title:

April 2, 2004, 5:45PM Wheeling, dealing Mexico goes crazy for free trade But critics say pacts create mixed results By KEN BENSINGER Special to the Chronicle MEXICO’S TRADE DEALS Mexico has negotiated 11 free trade agreements, with 29 countries, in the past 12 years. Below, a list of each agreement and the year it was signed. 1993: USA and Canada (NAFTA) 1994: Costa Rica 1994: Bolivia 1997: Nicaragua 1998: Venezuela and Colombia 1999: Chile 2000: Israel 2000: European Union 2000: Guatemala, Honduras and El Salvador (Triangle of the North) 2003: Uruguay 2004: Japan* * Expected to be signed in the first half of this year. MEXICO CITY — Mexico has gone free trade crazy. Since it signed the North America Free Trade Agreement with the United States and Canada in 1993, it has eagerly kissed protective tariffs goodbye in deal after deal, averaging nearly one pact a year. Just last month, it nailed down the final details on its 11th free trade agreement, this time with Japan. When he announced the deal, Mexico's minister of the economy, Fernando Canales, excitedly explained that after the new accord takes effect next January, it will increase exports to Japan by 10 percent annually, expand Japanese investment in Mexico by $1.3 billion a year and create 270,000 jobs. Like the deals before it, this pact will eliminate most major tariffs between the countries and promises to give the economy a much-needed kick in the pants. Then again, so did NAFTA. So did the deal Mexico signed with Israel. And with Costa Rica. And so on. Defenders of these deals say the economic numbers back up their claims. They point out that since 1995, the economy in Mexico has grown at nearly twice the average annual rate as the U.S. economy and that Mexican exports have increased by nearly 12 percent in the past decade. But critics say free trade isn't helping most Mexicans, just a lucky few. The problem is that growth has slowed in recent years, and the economy shrank last year. Consumers here are seeing prices rise while their wages remain low, and Mexico continues importing far more than it exports. Worst of all, the number of Mexicans working in manufacturing jobs has fallen since 2000, dropping by 730,000 during those years. This marks a reversal of fortune from the years following the start of NAFTA. In the first two years NAFTA was in effect, the maquiladora manufacturing industry created 350,000 new jobs. But many of those have disappeared as the same multinational firms that came to Mexico to run low-cost factories are now turning to other countries seeking even cheaper labor. This is particularly the case with China, according to Gerardo Mancilla, an economist for International Consultants, which advises on trade issues. Last year, for the first time, China overtook Mexico as the largest exporter to the United States. Mancilla said the way Mexico's economy is structured, prosperity can make businesses less competitive with other countries by pushing up wages and other expenses. The only option for businesses has been toinvest in productivity improvements, which reduces the number of workers. This helps explain why even though Mexico's central bank now claims the economy has kicked back into high gear, with an annualized growth rate of 4 percent, unemployment remains a nagging problem. More consumer products One of the most visible effects of free trade is that those with money to spend have more choices than ever. New makes of car dealers are sprouting up, and huge Wal-Marts and Costcos are fast taking over the retail sector. Yet under their fluorescent lights are proudly displayed the fruits of free trade in agricultural products: grapes from Chile, apples from Washington and flour from Canada. lt's a reminder of a grim reality for many Mexicans, because since NAFTA took effect, hundreds of thousands of farmers have been forced to leave their land because they can't compete. This happens, critics say, because when Mexican products come face to face with foreign rivals, Mexico's problems tip the balance the wrong way. Poor roads, corruption, inadequate education and lack of credit are all on a long list that ultimately makes this a less attractive place to locate a factory. Worst of all for consumers, despite the promise that open borders would mean lower-priced imported goods, products in stores are still more expensive, thanks to inflation that far outstrips the tiny wage increases. The current minimum wage in Mexico City is 46 pesos a day, or about $4.20, and rose only a peso in the last year. "Free trade is supposed to mean free imports, the same marketplace in both countries," says Salvador Torres, a Guadalajara builder. "But except for food, everything I want to buy costs more here than in the U.S." Tired of paying as much as double for products made in the United States, Torres makes an annual pilgrimage to San Antonio, a two-day drive each way, to go shopping. What's to blame? It would be overstating the case to suggest that free trade is the lone culprit. But these deals open the door to tough international competition that exposes the country's other problems. Those who embrace free trade say the problem lies in how committed Mexico is to keeping up in an increasingly competitive world. "It isn't that free trade doesn't work; it's just that Mexico doesn't know how to take advantage of it," says Hector Rangel, president of Mexico's business coordinating council. Foreign investment lags The lack of commitment can be seen in the level of foreign investment. The possibility of increased investment in Mexico is regularly cited by officials as a key incentive for signing trade accords. Despite the deals, foreign investment is declining. Last year, foreign investment in Mexico fell to $10.7 billion, down 25 percent from 2002, and the lowest total since 1996. In one case that's of intense interest to the U.S. oil business, Mexico is even turning away investment. Thanks to protectionist feelings in the Mexican public, the country continues to bar foreign investment in its cash-starved oil and natural gas industry, and as a result it can't produce enough gas to meet its needs and must import it. Trade purists argue Mexico's free trade deals aren't really living up to their name because many barriers remain. Indeed, the deal with Japan almost didn't happen, thanks to Japanese demands on maintaining high tariffs and limited quotas on agricultural products like orange juice and pork. As it stands, Japan maintains high import tariffs on products like rice and gives sizable subsidies to many of its own industries. Protecting some products Mexico, for its part, wanted to maintain high duties on steel and automobiles, two industries it would like to protect. In the end, the two nations negotiated reduced tariffs in some areas, but both will keep some protections in place. Mexico's richest man, telecom billionaire Carlos Slim, has been a fierce critic of the results that free trade has brought to Mexico. He criticized the Japan deal, noting that Mexico imports from Japan roughly double what it exports to the island nation. Similar barriers to free commerce can be seen in pretty much every trade deal Mexico has hammered out. Unfortunately for Mexico, these trade deals often include concessions favoring the larger, richer country, which can afford to subsidize its own industries. Not that Mexico is blame free. It continues to insist on protectionist strategies as well, and limits importation of everything from beer to bicycles in an attempt to boost homegrown industry. The lesson that Mexico offers is that for such accords to be instruments of development, they have to be better negotiated, according to a new report on Mexican free trade prepared by two Spanish universities for the European Parliament. It adds that Mexico needs more direct foreign investment and implies that it has let a long series of free trade deals substitute for good economic policy. Nonetheless, politicians continue to say that trade deals are Mexico's best hope of building its economy. Mexican President Vicente Fox has been an advocate of free trade agreements and, with 2 1/2 years left in his term, it's a sure bet more deals will come. Indeed, he's already in talks with the United States and Canada to extend and amplify NAFTA to Central America. --------------------- - BACK TO INDEX - REPLY - QUOTE - EDIT - DELETE -

The full topic: No replies.

Accept: text/xml,application/xml,application/xhtml+xml,text/html;q=0.9,text/plain;q=0.8,video/x-mng,image/png,image/jpeg,image/g... Accept-charset: ISO-8859-1, utf-8;q=0.66, *;q=0.66 Accept-encoding: gzip, deflate, compress;q=0.9 Accept-language: en-us, en;q=0.50 Connection: keep-alive Content-length: 9474 Content-type: application/x-www-form-urlencoded Cookie: *hidded* Host: www.insideassyria.com Keep-alive: 300 Referer: http://www.insideassyria.com/rkvsf/rkvsf_core.php?.Amwx. User-agent: Mozilla/5.0 (Windows; U; Windows NT 5.1; en-US; rv:1.0.2) Gecko/20030208 Netscape/7.02

Powered by RedKernel V.S. Forum 1.2.b9