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October 1995, Volume 1, Number 4

NAFTA and Mexico

On October 10, Mexican President Zedillo came to Washington, and
repaid ahead of schedule $700 million of the $12.5 billion Mexico
borrowed from the US in March 1995. The US made available up to $20
billion to Mexico, part of a $50 billion international loan package.

The meeting included an announcement that the US would pay to
return up to 10,000 apprehended aliens to their homes in the interior
of Mexico in 1996 to discourage them from attempting to re-enter the
US, which often occurs when the Border Patrol processes, and then
simply returns to border gates, Mexicans apprehended in the US.
Mexicans who are apprehended would be offered the chance to volunteer
for repatriation to the interior of the country.

Before Zedillo's arrival, the Mexican ambassador to the US on
October 4 decried the "demagoguery" of American presidential
candidates who he said are trying to attract votes by pandering to
voter fears of unstoppable waves of illegal Mexican migrants.

According to Silva Herzog, Americans ignore the "economic
benefits" of Mexican immigrants in the US. For example, he said,
since most California farm workers are Mexican immigrants, "what
would happen if that flow of workers would be interrupted?" A North
Carolina grower told Herzog that, without Mexican workers, he "would
be out of business."

Herzog asserted that the number one security problem in Mexico are
drug cartels, which are now capable of landing commercial jets in
Mexico filled with cocaine.

Mexican President Zedillo's October 10 visit to Washington also
prompted reviews of NAFTA after 21 months. NAFTA linked the Mexican
to the US economy, and promised economic benefits to both countries.
In urging Congressional approval of NAFTA in November 1993, the
Clinton Administration predicted that NAFTA would lead to the
creation of a net 170,000 US jobs in its first full year, 1994.

Most commentaries noted that NAFTA did not create many net new
jobs, in the US or Mexico, because of the peso crisis of December
1994 and the subsequent recession in Mexico. In the US, the DOL has
certified that 41,000 US workers lost their jobs due to NAFTA-related
imports since January 1994. In Mexico, manufacturing employment has
dropped every month since September 1990, and one million Mexicans
lost their jobs in 1995.

NAFTA sharply divided US public opinion and the US Congress. Most
supporters of NAFTA point to signs that NAFTA is working, increasing
the efficiency of e.g., auto plants on both sides of the border, as
the plants specialize in only one model for a bigger market, rather
than producing several models. In other instances, US jobs that would
otherwise have gone to Asia may instead have gone to Mexico, which
means more US jobs producing parts for the Mexican plants.

However, Clinton Administration officials concede that NAFTA
illustrates how freer trade produces winners and losers, and the
losers tend to be more vocal and visible than the winners.

Peter Passell, "A Mexican Payoff," New York Times, October 12,
1995. Anthony de Palma, "For Mexico, NAFTA's Promise of Jobs is still
just a promise," New York Times, October 10, 1995. James Sterngold,
"In Nafta's complex trade-off, some jobs, lost, others gained," New
York Times, October 9, 1995. "Immigration rhetoric decried," Los
Angeles Times, October 5, 1995.

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