Mexico hasn’t slowed its quest for more trade pacts, either. The Fox administration is a big supporter, as is the Bush administration, of the proposed Free Trade Area of the Americas pact, which would link the countries of the Western Hemisphere in a single trading bloc. They’ve also sought agreements with Asian countries. In May, Mexico hosted the Asian Pacific Economic Cooperation Meeting in Puerto Vallarta.
One reason U.S. Hispanics were urged to support NAFTA is that they could become the bridge to facilitating trade between the two countries. With their knowledge of the language and culture of both countries, they would be at the leading edge of future business trends. But globalization has occurred at such a rapid pace that only U.S. Hispanic-owned companies mobile enough to meet global standards are finding success.
“Hispanic companies have an advantage in trading with Mexico, other things being equal,” says Van Whiting Jr., a senior fellow at the Center for U.S.-Mexico Studies at the University of California, San Diego.
Despite vociferous opposition to NAFTA and free trade both here and abroad, economists contend that the benefits – the U.S. economic recession notwithstanding – have outweighed the negatives.
“In the United States, we sometimes forget that the alternative to trade with Mexico is not usually domestic U.S. production, but trade with Asia. Trade with Mexico leads to specialization and a deeper integration of the two economies,” says Mr. Whiting.
One needs to look no further than Mexico’s maquiladora industry to see examples of that integration. Even before September 11, the plants began feeling the effects of a slowing U.S. economy. So far, layoffs are estimated to have reduced its 1 million workers by nearly 25 percent.
“Some maquilas have become world-class production sites, while others are still competing primarily on the basis of wage costs,” Mr. Whiting says.
To put it even more bluntly: “They’ve been kind of lazy, taking advantage of the peso devaluations to balance their profit-and-loss sheets,” says Pia Orrenius, a senior economist with the Federal Reserve Bank of Dallas.
She expects to see Mexico’s manufacturing sector experience the same trends witnessed in the United States – low-cost labor flight and more capital-intensive production. “They will employ fewer workers, but there will be a demand for skilled workers,” she says.
The trump card for future cross-border trade may lie in e-commerce initiatives. Already the concept of cross-border electronic transactions has transformed some industries, such as the auto supply industry, which has streamlined intra-enterprise communications in the area of inventory control and supply-chain management. E-commerce will have an even greater impact on these business-to-business services than on retail commerce, predict some.
“It gives us the opportunity to be suppliers to large companies from right here in El Paso,” says Mr. Acosta. He cites the U.S.-Mexico e-commerce project being pursued by the Holguin Group (“El Paso Maps Out a High-Tech Future,” September 2001) as one example.
For the time being, Mr. Whiting believes, companies on both sides of the border have their work cut out for them.
“We have yet to see the full adjustment of firms in both countries to the demands of truly world-class competitiveness,” he says. “This includes total quality production, just-in-time inventory and distribution, and low costs.”
While nobody can predict the future of trade between the United States and Mexico, some have a clear idea of where it isn’t going. It won’t be like the European Union, which allows for the free movement of people and goods between its member countries.
“In 10 years you will have free trade for 80 percent of the goods between Mexico and the U.S.,” predicts Boris Kozolchyk, president of the National Law Center for Inter-American Free Trade, a nonprofit group that has been working since 1992 to harmonize trade rules and regulations between the United States and its Latin American neighbors. “Now it’s roughly 50 percent or less. I don’t think we’ll be reaching the common-market stage like that in Europe for a number of years.”
Nowhere is the holdup to free trade more evident than in trucking. For seven years, Mexican truckers have been prevented from entering the United States, even though under the terms of NAFTA they should have had access beginning in 1995.
“In a free-trade agreement, it’s imperative that the rules are fair and equitable to both sides,” says Ricardo Calderón, an international business attorney in Eagle Pass, Texas, who was recently re-elected as president of the Texas Association of Mexican American Chambers of Commerce. “Right now I have Mexican trucking companies as clients who have to meet higher safety requirements than Canadian truckers.”
He believes international trade has created jobs for Eagle Pass citizens, “but not at the pace we would like it to be.” Eagle Pass still has unemployment above 25 percent. “Had it not been for NAFTA, our joblessness would be 40 to 50 percent,” he says.
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