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June 1999, Volume 6, Number 6

Mexico: Remittances

Remittances. Western Union and Orlandi Valuta, subsidiaries of First Data Corp., and MoneyGram Payment Systems Inc. in May settled class-action lawsuits filed against them in Illinois, Texas and California that accused the companies of overcharging migrants who remitted money to Mexico by using unfavorable exchange rates. The companies agreed to provide discount coupons to those who had wired money to Mexico since January 1, 1987, and pledged more than $2 million (First Data) and $300,000 (MoneyGram) to Latino community organizations in the US. MoneyGram was owned by First Data Corp. until December 11, 1996.

About 25 million wire transfers have been sent through the companies to Mexico in the last five years. The companies usually offer a flat fee of , for example, $29 to transfer $300, but do not disclose that the recipient will receive an unfavorable exchange rate when the dollars are converted to pesos in Mexico.

The US-Mexican border area is booming. There are about 12.4 million people in the 25 U.S. counties and 35 Mexican municipalities along the 2,000-mile, Mexico-US border; 6.5 million people live on the US side and 5.8 million on the Mexican side. A report released by the Southwest Center for Environmental Research and Policy in May 1999 predicted that this population might double to 24 million by 2020 because of migration and high birth rates, with 10.7 million residents on the US side of the border and 13.4 million on the Mexican side.

Maquiladora employment continues to expand, and Mexico exported goods worth $118 million in 1998, up from $110 million in 1997, in part because of booming maquiladoras. Toymaker Mattel Inc. announced a $30-million factory in the northern Mexico city of Monterrey that will employ 2,500 employees. Some maquiladoras are beginning to offer or subsidize housing for workers: Sanyo was one of the first maquiladoras to donate land to build homes in Tijuana for its workers.

Beginning January 2001, maquiladoras may have to pay import duties on components to be assembled outside North America and some maquiladora profits will be subject to Mexico's 40 percent corporate tax. The prospect of duties and taxes has caused some maquiladoras to postpone investments. Mexico is trying to head off an investment slowdown by assuring maquiladoras that it will not charge a duty of more than five percent on components that are not manufactured in Mexico. However, wherever possible, Mexico wants maquiladoras to buy Mexican-produced components.

A drought in the Mexican border areas is hurting small farmers, many of whom are unable to get bank loans because of high interest rates.

Voters Abroad. It is not clear whether Mexicans abroad will be able to vote in the July 2000 elections; 10 to 15 percent of the votes expected in the 2000 elections could be cast in the US if there is absentee voting. According to one poll, 83 percent of eligible voters outside Mexico would vote if there were absentee voting.

Mexico's Federal Elections Institute estimated that 9.8 million of the 9.9 million Mexican adults living outside Mexico are in the US; this includes seven million people born in Mexico, and 2.8 million adult sons or daughters of Mexican immigrants who are eligible to seek Mexican citizenship. About 46 percent of the Mexicans in the US are in California, 21 percent are in Texas, seven percent are in Arizona, and six percent are in Illinois; half of the Mexicans in the US are in eight counties: Los Angeles, Orange and San Diego in California; Cook in Illinois; Harris, El Paso and Dallas in Texas; and Maricopa in Arizona. About 55 percent of Mexican-born citizens in the United States come from the six western Mexican states of Jalisco, Michoacan, Guanajuato, Zacatecas, San Luis Potosi and Durango.

There are significant obstacles to quick agreement by the Mexican political parties on absentee voting in 2000: the number of potential voters is large, and so is the potential impact of the votes they could cast. The 1996 reform law required Mexico to create a National Registry of Citizens and to issue a new citizenship identification card, which means that Mexicans abroad without this new documentation are unlikely to be registered in time for the 2000 elections.

The opposition parties want to allow Mexicans abroad to vote at Mexican consulates by presenting the current federal election cards; an estimated 95 percent of adult Mexicans have such cards. Mexicans abroad, under their plan, would have to show some continuing link to Mexico, such as proof they send remittances home.

Mexico has a 500-seat lower house of Congress and a 128-member upper house; the ruling PRI holds 48 percent of the seats in the lower house and 61 percent of upper house seats.

More than half of the potentially eligible Mexican voters abroad live in eight counties in four US states, and the 600 to 700 established home-town associations could serve as forums for candidates to meet Mexican voters in the US. Since the mid-1980s, 13 countries have established procedures for citizens abroad to vote, but that vote is often small, typically less than 10 percent of the votes cast in the home country's election.

Historically, Mexico has been ambivalent about its citizens who migrated to the US. The Mexican government has defended the rights of migrants in the US, but many Mexicans think of their countrymen who went to the US as traitors to Mexico. About 106 million persons living today were born in Mexico-- 98 million of them live in Mexico and eight million live in the US.

Lisa Romney, "Courts: MoneyGram, Western Union will offer coupons to customers who sent funds to Mexico," Los Angeles Times, May 13, 1999.