The NAFTA Debate, Part II: A Primer on Political, Security, andHuman Rights Issues

Report Americas

The NAFTA Debate, Part II: A Primer on Political, Security, andHuman Rights Issues

July 19, 1993 21 min read Download Report
Michael G.
Senior Fellow and Director of Government Finance Programs

(Archived document, may contain errors)

950 July 19, 1993 THENAFTADEBAIE,PARTII A PRIMERONPOLITICAL, SECURITY ANDRIGrnIssUEs INTRODUCTION If passed by the Congress, the North American Free Trade Agreement (NAFTA) will remove m ost tariff and non-tariff baniers between the United States, Canada, and Mex ico. Building on the existing US.-Canada FreeTrade Agreement (FTA the NAFTA will create the worlds largest and wealthiest market-some 360 million people, with an economic output o f approximately $6 trillion. The NAFTA also would accelerate North Americas economic growth, bolster its global economic competitiveness, create new U.S. jobs, address environmental concerns, and improve the standard of living for citi zens of a11 three n ations.

Despite the trade pacts benefits to the U.S. economy, opponents of the NAFTA have mounted a fierce campaign to derail it. Labor unions like the AFL-CIO have made defeat ing the NAFTA their number one priority for 1993, claiming, without evidence, t hat it would be a disaster for millions of working people in the US., Canada, and Mexico2 Other opponents, such as Texas billionaire H. Ross Perot and environmental organiza tions, also charge that the NAFTA will cost American jobs, increase pollution, es pecially along the US-Mexico border, and encourage U.S. companies to move to Mexico to take advantage of cheaper labor.

Opposition to the NAFTA is based not only on labor and environmental concerns, but on accusations regarding political, security, and hum an rights conditions in Mexico 1 For more information on environmental and labor issues relating to the NAFTA, see Wesley R. Smith, The NAFTA Debate, Part I: A Rimer on Labor, Environmental, and Legal Issues, Heritage Foundation Buckgrounder No. 936 April 9,1993.

John R. Oravec, AFL-CIO Lists Problems with Mexican Trade Pact, The Jouml of Commerce, March 1,1993. 2 These include Mexicos purported lack of democracy, its poor human rights record, ram pant corruption, and a flourishing drug trade. Some who hav e made these charges are Senators Tom Harkin of Iowa and Jesse Helms of North Carolina, as well as Representa tive Charles Range1 of New York.

These and other Members of Congress are not the only ones linking the cause of human rights to the NAlTA. During his confirmation hearings before the Senate Foreign RelationsCommittee last-January Secretq of State.Warren Christopher asserted that human-rights and democracy will be the cornerstones of Americas foreign policy. In response to the criticism by NAJTA op ponents, the Clinton Administration is quietly urging Mexican President Carlos Salinas de Gortari to hasten the pace of political; law enforcement, and human rights reform in Mexico.

Salinas, however, already is making such reform a top priority His democr atic re forms have liberalized the Mexican political system. Salinas also has imprisoned many federal police officials involved in drug trafficking and appointed as Attorney General Jorge Carpizo, former director of Mexicos Human Rights Commission and a s t aunch supporter of anti-narcotics and anti-corruption initiatives within the government More over, he has waged an effective campaign against drug cultivation and traffkking inside Mexico. method of attacking these problem at their roots is by bringing Me x ico closer to the U.S and Canada, which the NAFTA will do. Better economic ties with its northern neighbors will help modernize Mexican society, thereby producing the stable, democratic, and pros perous country which NAFTA critics purportedly want. The NA l TA is a key element in Pssident Salinass modernization program, and the pacts repudiation would be a seri ous setback for the causes of democracy and human rights in Mexico. A defeat of the NAFTA would embolden Mexicos authoritarian opponents of political and economic re form. It also could trigger an increase in the flow of drugs and illegal immigrants across the Rio Grande into the U.S. as Mexicans turned to illegal drug trafficking and immigra tion as unemployment grew, and as border cooperation between the two countries deteri orated While human rights, security, and political problems do exist in Mexico, the best CORRECTING THE RECORD: ANSWERING NAFTA CRITICS political reform, security issues, and human rights. Unless they are answered satisfacto rily, the NAFTA could go down to defeat in Congress Q: How successful are Salinass efforts to promote democratic and electoral reform Critics of the NAlTA have raised a number of questions regarding Mexicos record on in Mexico A: Salinas is well known for his f r ee market revolution. Less well known, however, are his democratic reforms. For example, after taking office in 1988 in what critics charge were fraudulent elections Salinas orchestrated the July 1990 passage of a new electoral law, known as the Federal C ode of Electoral Institutions and Procedures (COFIPE).

This made possible the creation of a non-partisan Federal Electoral Institute (IFE) to oversee elections and a multiparty Federal Electoral Tribunal to settle election dis 2 putes. Salinas also mandate d preparation of a new voter registration list, the issuance of new voter credentials, and multiparty observation of polling stations on election days.

Salinas executed other reforms as well. Last November, for example, he called for greater disclosure of campaign financing, limits on election expenditures by his own Institutional Revolutionary Party (PRI and equal access to the media for all political groups. Mexico's-two main opposition parties,Cthe center-right National Action Party PAN) and the leftis t Party of the Democratic Revolution (PRD), however, argue that these reforms are inadequate. They maintain that the PRI uses state funds to promote its candidates and that its strong control over the Mexican press gives it an unfair ad vantage. While elec tion rigging still occurs in Mexico the Organization of American States and other outside observers concur that incidents of it are increasingly isolated and are not supported by the Mexican government.

Many of Salinas's political reforms are paying off for Mexico's ooposition parties.

The PAN, which often has supported much of Salinas's free market and political re form program, today controls three of the 3 1 state governorships: Baja California Norte, Guanajuato, and Chihuahua. Only four years ago, PRI members occupied all the governors' offices. The July 1992 election of PAN candidate Francisco BarrioTer raza as governor of the northern border state of Chihuahua has become a symbol of the Salinas Adm i nistration's efforts to democratize Mexico's electoral system. Barrio Terraza's election was not tainted by the usual fraud and intimidation that had plagued previous elections in the state of Chihuahua Reaching Out to the Opposition. Gubernatorial electi o ns held that same month in the PRD stronghold of Michoacan, the home of former PRD President Cuauhtemoc Cardenas, were called free and fair by a team of impartial election observers that in cluded U.S. Embassy officials and specialists from Mexican and U. S . universities. Fol lowing months of protests, however, PRI gubernatorial candidate Eduardo Villasenor who had defeated PRD candidate Cristobal Arias in the election by a margin of two to one-was forced to step aside only three weeks after he was sworn in to office. The im petus for Villasenor's ouster came from Salinas himself. The Mexican president had sacrificed a PRI governorship to prevent further chaos and violence, and to reach out to the political opposition.

Negotiations are underway between the PR I and the major opposition parties to launch a new round of electoral reform in Mexico. The new electoral law is likely to in corporate high priority opposition demands, including electoral college reform and the addition of a third senatorial seat from e a ch state for minority parties. In exchange PAN and PRD leaders will pledge to end all future post-electoral protests. This is the first time since Salinas was elected in 1988 that the PRD actually is participating in the political reform process. If the g o vernment and opposition parties succeed in brokering a new electoral code, it will be a major victory for Mexican democracy 3 3 The Office of the President of the Republic of Mexico, "The Mexican Agenda 1 lth Edition, April 1991, pp. 69-75 3 Q: Why is Sal i nas promoting democratic reform A: President Salinas has pledged to transform Mexico from a backward, socialist, and iso lated nation into a modem country fully integrated into the global economy. Salinas knows that Mexico cannot escape the democratic and free market revolutions that have swept the globe, especially in Latin America. Salinas understands that in order to sus tain-economic growth;he has to liberalizethe Mexican political system. He also be lieves that only-a strong executive branch-of govern m ent can implement the many diffi cult free market reforms needed to modernize the Mexican economy. As The Wall Street Journal noted last June 15, The [Mexican] government strategy is somewhat paradoxical Mr. Salinas is using the sweeping powers of the Mex ican chief executive to diminish the power of his successors.

Salinas understandsthat political reform in Mexico depends on the implementation of the NAlTA. He is counting on the NAFTA to bring Mexico the investment and trade it needs to continue growing e conomically. For Salinas, the free trade pact will institutionalize his free market program and bind the hands of his successors, who oth erwise might attempt to undo many of his accomplishments.

This being the case, the best means to ensure that Mexico s tays on course toward democratic reform is through closer ties to the U.S. If the U.S. Congress defeats the free trade pact and isolates Mexico, it will inevitably weaken Salinas, who has staked his reputation on the agreement A defeat of the NAlTA also c o uld divert foreign in vestment from Mexico and trigger a return to protectionist trade policies, damaging Mexicos economy If Mexico remains a poor country, its chances for genuine demo cratic development will be reduced greatly Q: What is Salinas doing ab o ut human rights abuses in Mexico A: Human rights violations have long been a problem in Mexico. Since the Mexican Rev olution early this century, the country has been ruled by a single party-what is now known as the PRI. The PRI has maintained political s tability through a mixture of polit ical patronage, corruption, and intimidation and repression of opposition groups.

The Salinas Administration has addressed human rights conditions directly. The most important step to advance the cause of human rights in Mexico was the June 6 1990, creation of the National Commission for Human Rights (CNDH The CNDH though linked administratively to the Mexican Secretariat of Interior, is financially and politically autonomous from the government. It is tasked with invest i gating and issu ing recommendations on human rights complaints human rights issues, and has sponsored approximately 350 training courses and semi nars on the need for safeguarding human rights. The work of the Commission has been supported and applauded b y international human rights groups, including Amnesty In ternational, and is being modeled at the state level in Mexico.

Although human rights violations have not been eradicated, there is some indication that measurable progress is being made. According to the Bureau of Human Rights and Humanitarian Affairs at the U.S. State Department, 588 police and other govem Since its inception, the CNDH has published some 180 reports and studies on 4 ment employees in Mexico have been disciplined for human rights c o mplaints since the CNDH was founded. Of these, criminal charges were brought against 246 state em ployees, and investigations are still pending in 141 cases. The CNDH also was respon sible for the release last year of some 500 prisoners that it determined had been de tained illegally!

Another measure taken by the Salinas government to protect human rights was the creation of the so-called Pluralistic Committee of Citizens on March 12, 19

92. This nine-member citizens group represents various political par ties. It was established by the Office of the Attorney General to review the daily activities of federal prosecutors and the Federal Judicial Police. Its task is to ensure that human and constitutional rights are observed and respected by Mexican law enfo r cement officials. Like the CNDH the Committee acts independently of the Mexican government. Its responsibili ties include: supervising conditions in Mexicos federal prison system, verifying that all detentions are carried out in a lawful manner, reviewing the selection and promo tion procedures within the Attorney Generals Office and the Federal Judicial Police and developing new methods of reporting and reviewing complaints against public of ficials Q: How bad is Mexican corruption and how will it affect t he NAFTA A: Allegations of corruption in Mexico most recently made headlines when a British citi zen, a broker for International Business Machines (IBM) in Mexico, charged that three government officials solicited over $1 million in exchange for their hel p in securing a government contract. The contract was to supply the Mexican Communications and Transportation Secretariat with a new nationwide air traffic control and radar system This allegation represents a common but increasingly rare form of Mexican c o nuption in which government officials seek bribes in return for contracts, licenses, or conces sions from the government a hard line against corruption In January 1989 he arrested Joaquin La Quina Hernandez Galicia, head of the notoriously corrupt and pow e rful Oil Workers Union on arms smuggling, tax evasion, and murder charges. La Quina had been considered untouchable by Mexican officials? Soon thereafter, Salinas placed Eduardo Legorreta one of the PRIs most powerful leaders and the head of Mexicos large s t brokerage firm, behind bars for massive stock fraud. The Salinas Administration also arrested Mi guel Angel Felix Gallardo and Rafael Car0 Quintero, drug kingpins linked to the tor ture and murder of U.S. Drug Enforcement Administration (DEA) agent Enri que Camarena Salazar in 19

85. These attacks on crime and corruption were unprecedented for a Mexican president and reflect a new attitude in Mexico toward law and order.

This past year Salinas stepped up his campaign against graft, corruption, and lawles s ness in Mexico. The appointment of Jorge Carpizo as Attorney General sent a clear sig Almost immediately upon taking office, Salinas sent a signal that he planned to take 4 5 For more information, see: Mexico Human Rights Report, Bureau of Human Rights a nd Humanitarian Affairs U.S. Department of State, 1992 Larry Rohter. Mexican Labor Chiefs Feel the Heat, The New Yo& Times, February 27, 1989 5 nal to criminals that they can no longer break the law with impunity. DEA Administra tor Robert Bonner says tha t 'The [new] Mexican Attorney General recognizes the challenge to professionalize the Mexican federal judicial police and the federal crimi nal justice system in Mexico.d To crack down on criminal activity and comption in the Mexican countryside, Carpizo h a s ordered roadblocks on federal highways to check for weapons, drugs, or stolen vehicles. The Mexican Attorney General's office also announced on June 16 that it has dismissed 67 federal narcotics agents, some of whom will be charged with criminal offense s and inappropriate relationships with un derworld figures.

The NAlTA will lessen corruption in Mexico as business practices there become more professional as they are now in the U.S. and Canada. The free trade agreement if approved by the U.S. Congress, w ill make business and financial transactions in Mexico more transparent. As this happens, fewer politically inspired contracts will be set aside exclusively for domestic companies. As government and other projects are opened up to the scrutiny of foreign competition, the amount of corruption in the Mexi can economy will decline Q: How successful is Mexico in fighting the war on drugs?

A: The May 24 killing in Guadalajara by drug cartel members of Cardinal Juan Jesus Po sadas Ocampo, the number two man in M exico's Roman Catholic hierarchy, proves that drug violence remains a serious problem in Mexico? The enormity of the drug problem was further dramatized on June 3 when U.S. and Mexican authorities discov ered a 1,450-foot tunnel stretching fromTijuana to t he outskirts of San Diego. Jack Hook, a spokesman for the U.S. Drug Enforcement Administration, estimates that drug traffickers could have used the 1.5 million tunnel "to ship multi-ton quantities of co caine into the U.S. undetected i Opponents of the fr e e trade agreement with Mexico often cite the fact that as much as 70 percent of the cocaine entering the U.S. from South America is transhipped through Mexico. They argue that the increase in cross-border commerce caused by NAFTA will provide new opportun ities for drug traffickers to smuggle cocaine, mari- juana, and heroin into the U.S.

The S alinas Administration, understanding that such security-related problems re quire strong action, has sent a clear signal to the drug cartels. In addition to the arrest of 86,000 individuals on drug-related charges over the past four years, Mexican Fed- er a l Police officials announced on June 10 that top drug boss Joaquin Guzman Loera was arrested in Guatemala along with five of his closest associates. According to the Mexican government, Guzman was the intended target in the Guadalajara shootout 6 7 Dianna Solis, "Mexico'sTop Law Official Faces Battles with Drug Cartels as Violence Mounts The Wall Sfreef Journal, June 1,1993.

Mexican law enforcement officials believe that the assassins mistook the Cardinal, who was arriving by car at the Guadalajara airport , for a rival drug syndicate boss. Others believe that Posadas may have been the actual target because of his active campaign against drug trafficking and abuse in Mexico U.S. and Mexico Hunt for More Drug Tunnels The New YorkTimes, June 4, 1993, p. A1 1. 8 6 action against some of the most powerful Mexican drug traffickers."1 Salinas has done more to fight the international drug problem than any of his prede cessors In 1992, the government of Mexico seized nearly 40 metric tons of cocaine 213 pounds of he r oin, and 405 metric tons of marijuana. Mexican anti-narcotics author ities also destroyed some 16,944 acres of opium-producing poppy plants and an esti mated 29,887 acres of marijuana Under Salinas, the eradication of drug cultivation fields has increased by 30 percent annually, to reach a total destruction of 21 1,624 acres of marijuana and poppy. This means that 38,950 metric tons of marijuana and 37 metric tons of heroin never found their way to American streets. Moreover, in 1992 alone, Mexican law enf o rcement officials arrested 27,577 individuals on drug-related crimes Formidable Anti-Drug Air Fleet. The Salinas Administration is placing special em phasis on the eradication of drug farming fields. The efforts made to destroy drug crops in Mexico have n o precedent anywhere in the world. The Mexican Secretariat of National Defense and the Attorney General's Office deploy an average of 10,000 men to locate and eradicate drug cultivation fields using US.-supplied aircraft for transpor tation and aerial phot o graphy. Mexican counternarcotics officials operate more than 150 aircraft, including reconnaissance and spray helicopters, as well as fuced-wing air planes This makes it the largest anti-drug air fleet in the developing world. The num ber of personnel ass i gned to these missions is increased significantly during the peak growing season in the spring and early summer. The result has been the destruction of 75 percent of the total estimated drug crop in Mexico. Mexico's drug field eradication activities were especially successful in the first two months of this year. Compared to the previous year, eradication of marijuana and poppy fields increased 88 percent and 34 percent, respectively.

Mexico's vigorous campaign against illegal drugs was highlighted in July 1992 when the government announced that it was taking over all of the costs of its coun ternarcotics programs. These had been funded previously by the U.S which appropri ated some 26 million in anti-narcotics assistance for Mexico in 19

92. Under the new plan, the Salinas government will fund its own anti-drug program by selling automo biles, airplanes, homes, property, and other assets seized from drug traffickers. Since taking office in 1988, the Salinas Administration has confiscated more than $1 bill i on in drug-related property and over $100 billion in illegal narcotics. As the U.S. anti 12 9 Robert L. Bartley Drug-War Death: Cardinal's Blood to Purify Mexico The Wall Srreet Joumal, June 9.1993 10 Tim Golden Mexicans Capture Drug Cartel Chief in Prela t e's Death The New Yo& Times, June 1 1, 1993 11 For more information see International Narcotics Control Strategy Report U.S. Department of State Bureau of International Narcotics Matters, April 1993 12 "Drug Control Efforts Made by Mexico (December 1988 F e bruary 1993 A Comprehensive Report Embassy of Mexico, April 12, 1993 7 drug assistance is phased out, Washington nevertheless will continue to supply special ized law enforcement training and technical aid to Mexican authorities Q: How will the NAFTA affe c t the war on drugs A: According to a senior U.S. anti-narcotics official (who wishes to remain unnamed a rejection.of the NAFTA would result in a serious setback in U.S.-Mexican coopera tion in the fight against drug trafficking. Salinas would view it as a slap in the face says the official, and his government would likely be far less willing to work closely with the U.S. in interdicting drugs and destroying drug crops in Mexico. A rejection of the free trade pact, therefore, would present an added strain in bilateral ties that could impair law enforcement cooperation on both sides of the border governments ability to wage an effective campaign against the drug traffickers.

Scarce financial resources that could have been dedicated to fighting international criminal activity might be channeled elsewhere. Moreover, if investment in Mexico is curtailed and exports to the U.S. limited in the wake of a NAFTA defeat, Mexican un employment will rise. With increasing levels of unemployment and poverty, more Mexican s would turn to drug cultivation or trafficking to em a living. This could in crease the amount of drugs being grown in Mexico and sent to the U.S A rejection of NAlTA also would hurt Mexico economically, hobbling the Mexican Q: How will the NAFTA affect t h e problem of legal and illegal immigration A: The U.S a nation of immigrants, continues to admit more foreign nationals than any other country in the world. For many years, large numbers of Mexican workers have been coming to the U.S legally or illegally, in search of higher wages and a better life In 1990, for example, there were approximately 4.5 million Mexican-born resi dents living in the U.S This number, which does not count all illegal aliens, represents about 21 percent of all foreign-born resident s Germans, with 1.2 million residents, or 5.4 percent of total foreign-born residents in the U.S make up the second largest group.13 Moreover in 1992 alone, the U.S. Border Patrol arrested 1.2 millionpeople attempting to cross illegally into the U.S. from Mexico.14 Some, such as California Re publican Representative Duncan Hunter, and Ralph Naders Public Citizen lobbying group, argue that the NAFTA will only invite more Mexican immigration into the U.S.

The NAFTAs critics, however are mistaken. As economic growth in Mexico leads to gal gains in wages and living standards, some of the pressure to emigrate will sub side. The NAFTA will mark the beginning of an unprecedented experiment in eco nomic integration. The free trade pact will help raise Mexican livin g standards through sustained economic growth. The increase in foreign direct investment in Mexico under a NAFTA is expected to be in the 25 billion to $52 billion range from 1992 to 2000 l5 According to the Washington-based Institute for International Eco n omics, eco 13 U.S.-Mexico Trade: Pulling Together or Pulling Apart? U.S. Congress, Office of Technology Assessment, January 1993, pp. 1161 17 14 Mexico: Respect Restored, The Economist, February 13,1993, p. 4 8 nomic growth rates in Mexico under the free t rade pact could reach as high as 6 per cent a year over the next decade. This economic surge will produce an estimated 609,000 new jobs south of the border over the next ten years. l6 Many of the new jobs will be in rural areas and smaller cities. This wi l l shift control from the bureaucrats in Mexico City to entrepreneurs in the regions. Indeed, one of the reasons Mexico City is so large-its population is around 20 million-is because over centralization of the economy has led tormass migration from the co u ntryside to Mex ico City. Once they are concentrated in Mexico City, the next step for Mexico's poor is to look for a job in the U.S. According to Marshall Breger, Senior Fellow and labor expert at The Heritage Foundation Once Mexican workers are uprooted from their homes in the search of better employment, they are then more likely to continue mov ing northward looking for new sources of income. Decentralization of the Mexican economy will stop this trend Further, once the NAFI'A is in place, wages in Mex i co are expected to grow by as much as 16 percent over the next several years.17 The al lure of higher paying and better quality jobs in Mexico will convince many Mexicans to stay at home and contribute to their own economy Q: What will be the long-range p o litical consequences of a NAFTA defeat A: The U.S. has a tremendous stake in the success of Salinas and the NAFTA. Not only does the U.S. share a 2,000-mile porous border with its southern neighbor, but Mexico is a rapidly growing country with some 85 mil lion citizens. At present growth rates Mexico's population will increase to 100 million by the year 20

00. Prolonged political and economic crises in Mexico could cause an upheaval which, according to some of cial estimates, could result in as many as 10 m illion refugees fleeing to the U.S. This 18 would create enormous economic and social problems for American border states.

This dangerous scenario need not happen. Two nations that once were referred to as distant neighbors" have developed over the past f our years into economic and politi cal partners. Relations are better today than at any time in history. Salinas and other Mexican leaders will view a defeat of the NAFTA as a direct rejection of Mexico by the U.S. government. The increasingly cooperative ties developing between Washing ton and Mexico City may be damaged irreparably 15 "Investment,Trade, and U.S. Gains in the NAFTA U.S. Council of the Mexico-U.S. Business Committee,The Council of the Americas, 1992, p. 12 16 Gary Clyde Hufbauer and Jeffrey J. Schott, NAFTA: An Assessmnr (Washington, D.C The Institute for International Economics, February 1W3 17 For more information on the impact of the NAFTA on the Mexican economy see Potential Impact on the U.S.

Economy and Selected Industries of the North American FreeTrade Agreement US. International Trade Commission, January 1993, p. viii 18 See Michael G. Wilson The Security Component of US.-Mexico Relations Heritage Foundation Buckgrounder No. 688, January 26,1989. p. 2 9 Q: How will the NAFTA help sp r ead economic prosperity and political stability throughout the Americas A: Latin America is experiencing a free market revolution unparalleled almost anywhere in the world. Statist and populist regimes from Mexico to Argentina have given way to government s committed to free trade, the privatization of state-owned industry, lower taxes; and.the free .market deregulation.of.theeconomy. Latin America also is the fast est growing export market for the U.S. in the world. U.S. exports to the region in creased 19 . 5 percent from 1991 to 1992, compared with 4.4 percent growth to the rest of the world. With U.S. sales jumping in 1992, Latin America and the Caribbean was the only region where the U.S. had a trade surplus-estimated at $886 million last year. Onein seve n dollars in U.S. exports now goes to Latin America and the Carib bean, and U.S. businesses are extremely competitive in the region. This trend has been accompanied by improvements in human rights conditions and a strengthening of re gional democracy. Toda y, the only remaining dictatorship in this hemisphere is in Cuba.

The spread of free trade policies in Latin America and the Caribbean began in ear nest following the 1990 decision by Bush and Salinas to launch free trade talks. This trend was reinforced f ollowing Bushs June 27, 1990, declaration of his Enterprise for the Americas Initiative (EAI). Under the leadership of the Bush Administration, the U.S. proceeded to sign free trade framework agreements with every major country in the hemisphere except Cu b a. l9 If the NmA is successful, then other countries in the hemisphere will be eager to build upon these accomplishments and remain on the course toward economic reform. Regional leaders are confident that free trade agree ments with the U.S. will attract badly needed foreign investment and boost exports to the US These countries also see freer trade and economic integration as a way to resolve many of the regions other problems, including drug trafficking, terrorism, environ mental degradation, and milita r y unrest. Such leaders as Carlos Menem in Argentina and Patricio Aylwin in Chile have said that free market policies and FTAs with the U.S. will help their countries sustain the economic growth needed to generate new jobs and raise living standards. This, they believe, will ease many of the social tensions caused by poverty, poor education, inadequate health care, and unemployment Q: What would a rejection of the NAFTA by Washington do to its ties with the rest of the hemisphere A: The NAFTA clearly is the driving force behind Washingtons Latin America and Car ibbean policy. If the NAFIA is defeated, not only U.S.-Mexico relations would suffer So, too, would U.S. relations with the rest of Latin America. Many governments in the 19 These agreements establish formal bilateral councils that monitor and analyze trade and investment patterns. They also develop policy suggestions on how to further open markets between the two countries and negotiate agreements on such issues as intellectual property rights. In ess e nce, these framework agreements are an important means of paving the way toward free trade agreements 10 region will see a rejection of the NAlTA as a signal that the U.S. does not care about Latin America, and is unwilling or unable to follow through on its commitments. Such a move also will indicate that Washington prefers protectionism to free trade.

Latin American and Caribbean leaders declare that regardless of what the U.S. does they will continue their historic process of free trade and economic int egration. They also stress that they will turn to Asian countries like Japan, South Korea, and Taiwan for free-trade agreements; The result could be that the U.S. would become isolated from its natural and fastest growing export market. U.S. exports thus w ould diminish job growth at home would be lost, and America would become less competitive in the global marketplace CONCLUSION The United States, Mexico, and Canada are on the brink of a new era. With the NAFTA, the three countries are poised to greatly e x pand their commercial and economic ties and to create a more prosperous and competitive North American economic commu nity. The NAFTA promises to build the worlds largest and wealthiest market, with some 360 million people and an economic output of over $ 6 trillion. Once approved, the free trade pact also will help sustain progress in other vital areas of cooperation, including anti-narcotics efforts, environmental protection, immigration, and human rights.

The U.S. has a choice. By ratifying the NAFTA,.th e U.S. Congress will not only keep US.-Mexico relations firmly on track, but help launch a free trade and free market revo lution throughout the rest of the Americas. If it is defeated US.-Mexico relations almost certainly will sour and protectionism coul d once again emerge in the Americas. The re sult will be lost markets and jobs for the United States.

The free trade pact with the U.S. and Canada will consolidate democracy and greater respect for human rights in Mexico A defeat will remove one of Mexicos principal in centives for reform-linking internal reforms to external free trade policies. Under the best of circumstances, the loss of NAFTA will strain bilateral relations and curtail coop eration in a wide variety of areas In the worst case, a rejecti on of the free trade pact could trigger anti-American hostility in Mexico and even unleash political and economic instability south of the border. Either way, not only the U.S but all of Latin America will be the loser.

Michael G. Wilson Senior Policy Analyst 11


Michael G.

Senior Fellow and Director of Government Finance Programs