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MEXICO: World Leaders in Free Trade Accords
By Diego Cevallos
MEXICO CITY (IPS) - Mexico’s “to-do list” this week includes adding free trade agreements with the European Union (EU), Israel, and three Central American countries to its collection of accords, bringing the total to nine - a world record -, but the promised benefits of more jobs, higher salaries and industrial development remain elusive.
Ranked 13th in the world among top exporters, Mexico is to sign an agreement Thursday with El Salvador, Guatemala and Honduras (known as the Central American Northern Triangle), to go into effect in 2001, after nine years of negotiations.
Then, on Saturday, July 1, Mexico will launch a treaty with Israel - hammered out over the last two years - and with the EU, following just one year of discussions. Only Israel has as many free trade treaties as Mexico, which is the only country in the western hemisphere with accords of this type with both the United States (through the North American Free Trade Agreement - NAFTA) and the EU, points out the Mexican government.
Mexico’s aggressive trade policy has produced many returns, but not all that were promised, stresses Enrique Quintana, a columnist for the Mexican daily “Reforma”. National inputs for manufacturing continue to represent a small portion of the total, sales by îmaquiladora companies (for- export production) have taken the lead and Mexican wages are still the lowest among all members of the Organisation for Economic Co-operation and Development (OECD), said Quintana.
Studies by the National Association of Importers and Exporters collaborate his assessment, indicating that less than six percent of all companies doing business in Mexico are exporters and those engaged in international trade are mostly subsidiaries of transnational corporations. Mexico began its free trade regime in 1993 when it signed NAFTA with the United States and Canada. Then, in 1995, it launched a trade agreement with Bolivia, another with Colombia and Venezuela, and a third with Costa Rica. In 1998, Mexico signed a trade treaty with Nicaragua, one year later it relaunched an expanded version of a 1992 agreement with Chile, and now it has completed negotiations with the EU, Israel and the Northern Triangle. But the list is still open. The number of potential new partners is extensive and negotiators have already begun to pursue more contacts. Belize, Ecuador, Panama, Peru and Trinidad and Tobago have been on the negotiating short list for several months. Later, Japan, Singapore and the European Free Trade Association - made up of Norway, Switzerland, Iceland and Liechtenstein - were added to Mexico’s trade agenda. With its stable and experienced trade negotiating team, the Mexican government emphasises that the nation’s exports have tripled since 1993, when it signed NAFTA.
Mexico was world leader in export growth in the 1990s, with an average yearly increase of 14.4 percent, far higher than the 5.4 percent international average. It also boosted its ranking from 21 to 13 on the list of the world’s major exporters, according to a World Trade Organization report released last month.
But Mexico has not been able to reduce the concentration of its international trade with the United States, which surpasses 80 percent. In 1992, the volume of trade between the two neighbours was just over 115 billion dollars and represented 28 percent of Mexico’s Gross Domestic Product (GDP). Seven years later, in 1999, the total exchange reached 280 billion dollars, or 58 percent of the GDP. The voices speaking out against free trade, primarily unions and the political opposition, which took a strong stand in Mexico against signing NAFTA, later lost much of their influence. Today, those calling for NAFTA to be repealed are the exception, though demands to revise the treaty continue, seeking to prevent further harm to companies that have found it difficult to compete in the expanded North American market. Local business associations, traditionally closely allied with the Mexican government, are taking part in the trade agreement discussions, though some representatives indicate that they are given only limited time and find it difficult to keep up with the abilities and knowledge of the official negotiators.
Political observer Quintana maintains that Mexico’s challenge in the next few years will be to ensure that the positive effects of increased exports are transmitted throughout the entire productive sector and are not limited to a small segment of corporations and regions.
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