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November 2002, Volume 9, Number 11

Mexico: Bush-Fox, Economy

A great deal has changed in the past year in Mexican-US relations. On September 5, 2001, President Bush said: "the United States has no more important relationship in the world than our relationship with Mexico." President Fox said he was working for the best interests of 100 million Mexicans in Mexico and 23 million in the United States, and made his top foreign policy priority the legalization of the three to four million unauthorized Mexicans in the US. However, Fox's credibility has declined as he has been unable to get the US to agree on any kind of legalization.

Mexico hosted the Asia-Pacific Economic Cooperation at Cabo San Lucas in October 2002, during which Mexico announced a free-trade agreement with Japan. APEC's 21 member countries have 2.6 billion people and account for nearly half the global economy.

President Fox and US advocates of a guest worker program hoped to restart immigration talks during the APEC meeting. Fox wants the US to increase the number of immigration visas available for Mexicans, expand US guest-worker program, and legalize the 3.5 million unauthorized Mexicans in the U.S. US advocates who want to employ Mexican workers legally, such as Laura Reiff, co-chair of the Essential Worker Immigration Coalition, expressed hope that, with an agreement to resume serious talks in October 2002, there could be a new legalization or guest worker program in place by the end of 2002, since Congress is likely to return after November 2002 elections.

However President Bush was noncommittal, saying "We have had a mutual desire to deal with the migration issue in a way that recognizes reality and in a way that treats the Mexican citizens who are in the United States with respect. We will continue to work on this issue." Fox invited Bush to Mexico to celebrate the tenth anniversary of Nafta, which would have increased the pressure for a breakthrough on migration, but Bush replied that the US may be at war with Iraq. Some Mexicans are urging Fox to bypass Bush, and to work with US Congressional representatives, employers, unions, and religious and ethnic organizations for a migration deal.

Agriculture. President Fox said he wanted to talk to President Bush about the farm "subsidies that the American government has decided to give, and how to prevent them from affecting Mexican communities and producers. Otherwise, what you'll have is more migration."

About 25 million Mexicans, a fourth of the population, depend on agriculture, which has been shrinking because of US imports of grain and meat allowed by Nafta. Growers of corn, rice, pineapples, sugar, apples and poultry are foundering in the sea of U.S. imports, and some of those displaced are migrating to the US. The Mexican Hog Farmers Association says that US pork imports in Mexico have more than doubled, and now account for 40 percent of the pork consumed in Mexico, compared to five percent before Nafta. The value of US pork exports to Mexico rose from $135 million to $345 million.

Beginning January 1, 2003, tariffs on all US farm products except corn, powdered milk and beans end (these remaining tariffs end in 2008). The 10-year adjustment period proved too short to make Mexican farmers competitive. Except for labor, Mexican farmers pay more for all inputs than US farmers, including much more for interest on loans.

There are an estimated 500 "hometown associations" formed by Mexicans in the US.

Matricula Consular. A government-issued photo ID is required for many US activities, including opening a bank account and boarding an airplane. Many local governments have announced that they will accept matricula consular IDs, issued by Mexican consulates for $29 to those presenting a Mexican birth certificate and one other picture ID. The INS warns, however, that some of the Mexicans they encounter have several IDs with different names. About 740,000 matriculas have been issued nationwide, according to the Mexican Consulate in Miami.

Mexico has been trying to crack down on smugglers, but not on the migrants attempting illegal entry to the US whose payments for service sustain the smuggling business (the INS makes a similar distinction between smugglers and migrants). In Altar, Mexico, near the Arizona border, Mexican authorities arrested a woman charged with helping 14 migrants who were later abandoned in the desert, where they died in May 2001. In August 2002, 13 smugglers were arrested, and 200 Central Americans were found in guest houses waiting to cross.

Those arrested said they simply operated guest houses. US officials said they were waiting to see what penalties were meted out; one local observer said the economy of Mexican border towns depends on smuggling migrants to the US.

Economy. Remittances to Mexico are expected to top $10 billion in 2002, up sharply from $5.8 billion in 1999; $6.5 billion in 2000; and $9.3 billion in 2001. Remittances first surpassed income from tourism in 2000. According to the Mexican government, 42 percent of remittances went to places with less than 2,500 residents.

Maquiladoras are usually factory assembly operations established by foreign investors in Mexico to import components, assemble them in Mexico, and then export the finished products. The number of maquiladoras peaked at 3,700 in October 2000, when their employment was 1.3 million. Since then, employment fell to 1.1 million, and 419 maquiladoras closed. Almost half of the maquiladoras are considered in danger of being moved abroad.

About 42 percent of maquiladora employment is linked to vehicles and vehicle parts; 20 percent to electronics, 17 percent to plastics, and 11 percent to textiles; 82 percent of the maquiladoras are in the five border states. Average hourly earnings are about $2.30 in Mexico, and $0.50 in China. Maquiladora exports are about $80 billion a year..

Many of the maquiladoras that close reopen in China. For example, toy maker Hasbro Inc. closed its Tijuana plant and shifted production to China; Baja California had 222,594 maquiladora workers in summer 2002. Mexico supplies about 12 percent of the imported manufactured goods sold in the US, but China is a close second, with nine percent.

Mexico may dam the Usumacinta, the biggest river between Texas and Venezuela, to generate electricity; the river now runs 600 miles from Guatemala's highlands north to the Gulf of Mexico. There is no doubt that Mexico needs the electricity, but protestors say that the one or two dams planned would flood Mayan artifacts.

The Mayans rose to prominence about 1,800 years ago in present-day southern Mexico, Guatemala, western Honduras and northern Belize, building great cities, palaces, temples and observatories to map the stars, all without metal tools. They created the only native American writing system and cut roads through the jungle. Dams provide about one-fifth of the world's electricity, and dams and other water-management schemes are found on 60 percent of the world's rivers.

Richard Boudreaux, "Frustration Marks Fox, Bush Talks," Los Angeles Times, October 27, 2002. Chris Kraul, "Free Trade Proves Devastating for Mexican Farmers," Los Angeles Times, October 26, 2002. Ginger Thompson and Tim Weiner, "Mexico Struggles for the Attentions of a Preoccupied US," New York Times, October 13, 2002. Michael Riley, "Federal authorities warn that 'matriculas' are not reliable," Denver Post, October 10, 2002.