On a
daily basis, U.S.-Mexican relations are probably closer now than at
any other time in the history of the two countries. Yet Mexico's
population is still growing faster than its economy can supply
jobs, and its recent democratic, free-market evolution has slowed,
stalling the implementation of President Vicente Fox's reform
agenda. As a result, each year, more than a million Mexicans
illegally cross into the United States from Mexico looking for
work.
Mexico wants a labor safety valve and
closer integration with the U.S., as indicated by its promotion of
a comprehensive trade agreement in the 1990s and recent democratic
advances. But that will be impractical until Mexico implements
follow-on political and economic policies that put it in harmony
with the United States and Canada, its other continental trade
partner.
While economic integration may remain a
distant goal, better cooperation is possible. Offering to work more
closely with Mexico on trade and migration, the United States can
press its neighbor both to adopt reforms that will help its
workforce achieve parity in earning power and to develop common
procedures and competencies in law enforcement, immigration policy,
and defense. Perhaps integration may then come close to becoming a
reality.
Toward Closer Collaboration
The
three largest countries in North America are moving closer together
politically, economically, and defensively. Sharing history,
values, and culture, Canada and the United States have cooperated
on trade and defense since the end of the U.S. Civil War and the
confederation of Canada's provinces. It is perhaps the most
extensive bilateral relationship in the world, with $1.4 billion in
goods and services exchanged daily and 200 million people crossing
the border each year. Since the Canada-United States Free
Trade Agreement of 1988, businessmen and professionals from both
countries have been able to cross on a daily basis without
visas.
Mexico's history, values, and culture are
not as closely linked to the U.S. as Canada's. Its economy has been
less prosperous, although it had always been open enough to permit
substantial foreign investment in certain industries. Until the
1990s, Mexico had been a distant third partner--trading with the
United States and Canada but sustaining few political, economic,
and security ties.
That
began to change in 1994 with the implementation of the North
American Free Trade Agreement (NAFTA), originally promoted by
Mexican President Carlos Salinas de Gortari in the early 1990s.
Thanks to NAFTA, U.S.-Mexico trade has more than doubled in the
decade since NAFTA was enacted, and a string of political reforms
enabled the election of Mexico's first opposition president in 71
years as well as the evolution of a more independent Congress and
judiciary.
Although U.S. President Ronald Reagan
suggested the eventual creation of a North American common market
during his 1980 presidential campaign, it was 20 years later when
Mexican presidential candidate Vicente Fox forcefully advocated the
idea as
a second phase of NAFTA where in five to
ten years [the U.S.-Mexico] border will be open to the free flow of
people, workers, transiting in the border between our two
countries, same as we're doing with our products, services, and
merchandise.... On a 20- to 30-year period, we should try to look
for a common market of North American ideas.
Once
in office, Fox presciently presented an outline for a plan to help
Mexico's Central American neighbors become more prosperous and
therefore reduce the number of undocumented migrants trying to
enter Mexico from the south (Plan Puebla hacia Panamá). Fox
surmised that having underdeveloped neighbors would present
migration problems for his own country, but this proposal remains
on the drawing board.
Following the February 2001 meeting
between Fox and newly inaugurated U.S. President George W. Bush,
Mexico and the United States established the U.S.-Mexico High Level
Working Group on Migration. On September 6, 2001, the two leaders
agreed to work toward "matching willing workers with willing
employers" and "ensuring migration takes place through safe and
legal channels." But
the terrorist attacks on New York and Washington on September 11,
2001, temporarily stopped the discussion, even though pursuing U.S.
immigration reform had become the new centerpiece of Mexico's
foreign policy.
Shortly thereafter, U.S. Ambassador to
Canada Paul Cellucci suggested that improving security at the three
countries' ports and borders could lead to a trade-friendly
"fortress" North America. In November, then-Canadian Prime Minister
Jean Chrétien and President Fox discussed a NAFTA-wide
security zone. In
December 2001, the United States and Canada announced a "smart
border" accord to speed regular commuters and truckers through
checkpoints with electronic passes.
A
similar agreement with Mexico was announced in March 2002. Fox and
his Secretary of Foreign Relations Jorge Castañeda, who once
said the United States would have to accept "the whole enchilada or
nothing," agreed that Mexico would also welcome incremental changes
in U.S. immigration policy.
Barriers to Integration
However, more open borders on the U.S.
southern flank and a North American defense involving Mexico remain
impractical for a number of reasons. Outside of NAFTA and
collaboration on specific border issues, broad cooperation on
economic, migration, and defense interests is still in its infancy.
New political structures within Mexico have yet to gel,
monopolistic elites still largely control Mexico's economy, and
security institutions need to evolve so that Mexico can become a
true partner in continental affairs.
Politics in
Flux
Despite political reforms leading to fair elections in
2000, Mexico's democracy is still evolving and lacks
accountability. The Institutional Revolutionary Party (PRI) that
governed Mexico for seven decades still controls important unions
and state monopolies. While the Mexican Congress now balances the
once dictatorial presidency, recent elections have divided the
legislature among three major parties, none with a majority and two in
opposition that are prone to block President Fox's reform
initiatives.
Although Mexico's parties are
experimenting with internal primaries as a way of choosing
candidates for general elections, nominees for these races are
still picked largely by party leaders; no one can file for
candidacy straight off the street. Senators and 200 of Mexico's 500
congressional representatives do not represent specific districts;
they are elected at large and normally have little official contact
with citizens back home, and none can be re-elected as a reward for
effective service.
Despite local, state, and national levels of government that mirror
the U.S. system in theory, Mexican authority is still concentrated
in powerful national ministries removed from local input and
decision-making, complicating cooperation with municipal and state
authorities on the U.S. side of the border that are much more in
charge of local taxation, budgets, and decisions.
Throttled
Opportunity
Ten years of economic growth and membership in NAFTA have
yet to put Mexican employment and living standards on par with U.S.
and Canadian counterparts. Free trade has provided an opportunity
for growth and job creation, but policies and traditions continue
to hamper success. To its credit, the Fox admin-istration has cut
bureaucratic procedures so that small businesses can be opened in
one day instead of the previous average of 50 days; but high energy costs,
lack of affordable credit, moderately high taxes, and restrictive
labor laws still retard business and job growth.
Foreign investment in Mexico's large
telecommunications and energy sectors is limited by law to protect
state monopolies like the petroleum company Petróleos
Mexicanos (Pemex) from competition and privatization. Pemex executives
claim that the company loses $1 billion annually to internal
corruption. Outside Pemex, public corruption limits foreign
investment and may cost Mexico the equivalent of 9 percent of its
annual $373 billion gross domestic product (GDP), according to
former federal comptroller Francisco Barrio.
Some
20 percent of Mexico's workforce is in the agricultural sector
(compared to some 3 percent for the United States and Canada),
although the number is declining. Half of Mexico's agricultural
sector is hobbled by the ejido, an 80-year-old collectivized
land-tenure system that promotes continued cultivation of
uncompetitive small plots of five hectares or less while blocking
agricultural investment. Lacking full property rights and
access to modern farm technology, nearly half of all Mexicans
living in rural areas do not make enough to feed themselves and
choose to abandon farming in order to survive.
Meanwhile, Mexico's centralized education
system does not reach the countryside where a quarter of the
population lives. While 88 percent of U.S. citizens complete high
school, only 25 percent of Mexicans do so, according to a recent
comparative study.
Evolving
Professionalism
Mexico's defense and law enforcement agencies are only now
becoming professional institutions. For much of the 20th century,
the military primarily conducted civic action projects and defended
internal order. Until the late 1980s, it was considered one of the
worst equipped and most poorly paid in Latin America, although it
was better trained than the police.
While the U.S. and most other Latin
American militaries have long-standing close relations, there has
been little history of interaction between the Mexican and U.S.
armed forces except for during World War II. In 1998, cooperation
between the two nations' military security institutions improved
when President Ernesto Zedillo sent Mexican troops to the United
States for drug interdiction training. President Fox gave the military the
lead in counternarcotics by formally putting the Secretary of
National Defense in charge. Since then, Mexican authorities have
succeeded in apprehending the leaders of every major domestic drug
cartel.
Meanwhile, Mexico's police are still
making the transition from enforcing party loyalty for political
bosses to protecting the public. They earn between $200 and $500
per month, and some still make ends meet by soliciting bribes.
Mexico's judicial system is a hybrid between Spanish civil and
English common law, torture-induced confessions are still
admissible in trials, and many procedures remain
incompatible with those of the United States. Despite direct
intervention by President Fox to end bribery on the U.S.-Mexican
border, customs and immigration services are weak elsewhere and
plagued by corruption.
The Migration Dilemma
Migrant flow originating in and passing
through Mexico from Central and South America is largely
unstoppable. America has too much of a good thing--jobs, a working
justice system, schools, health care, welfare, and a tradition of
competitive enterprise that allows businesses to flourish. In
addition, U.S. borders are too porous; enforcement to keep out all
illegal migrants is impractical.
Mexican migration surged in the United
States during the 20th century in response to the availability of
work during boom times and lack of job opportunities south of the
border. At times, it has been organized and promoted to fill gaps
in the U.S. labor pool through such initiatives as the 1940s-era
Bracero program. But as illegal migration has increased during the
past 20 years, Washington has endeavored to restrict it by
strengthening enforcement and sanctioning those who hire
undocumented labor.
Studies suggest that large numbers of
unskilled migrant workers can impose extra costs on U.S. taxpayers.
According to the Center for Immigration Studies, two-thirds of
adult Mexican migrants have not completed high school, and their
tax contributions do not cover what they consume in social
services. In 1997, the National Research Council, an arm of the
National Academy of Sciences, estimated that the average immigrant
without a high school education creates a lifetime fiscal burden of
$89,000. The cost depends on many variables--including local,
state, and federal entitlements available to migrants--that can
change depending on budget constraints and the level of public
largesse.
The
good news is that Mexican population growth rates have gradually
declined from 2.5 percent in the 1970s to 1.7 percent in 2001. But the current
economic growth of less than 2 percent is not much above the
population growth rate, and the rate of job creation is not keeping
pace with the increasing workforce. Mexico needs millions of jobs
now--for those considered unemployed or working in the informal
sector (about half of Mexico's 39 million workforce)--and about a
million more each year to keep up with population growth. For instance, only
about 529,000 were created in 2000, despite a GDP growth rate of 7
percent. The following year, Mexico reportedly lost 350,000 jobs;
and in 2002, it gained only about 100,000.
The
U.S. Border Patrol and Coast Guard catch and return more than 1
million undocumented aliens annually. If not caught, they are at
the mercy of the elements or criminals who profit from smuggling
and sometimes abandoning them with deadly consequences. on May 14,
2003, a group of 17 illegal migrants died while locked in a
sweltering truck trailer parked at a rest stop near Victoria,
Texas. Understandably, President Fox wants an agreement that helps
Mexican migrants cross the border legally and safely.
For
their part, U.S. farmers, meat packers, and restaurants employ
migrants for temporary work, at low wages with little possibility
of mobility, that U.S. welfare recipients refuse. However, the number
of open positions, which fluctuates with weather and market
conditions and may also be reduced by automation, is not sufficient
to satisfy Mexico's employment needs. On the other side, U.S. ranchers,
farmers, and users of federal lands in the Southwest take heavy
financial hits from throngs of migrants and smugglers who cut
fences, leave gates open, drop garbage, contaminate water supplies,
and steal and damage equipment.
The Border and NAFTA Experience
Two
areas of existing collaboration between Mexico and the United
States point toward closer ties but also show the need for
continued leadership.
First, the 2,000-mile U.S.-Mexico frontier
has been the site of joint border control, water sharing, and
growing anti-smuggling efforts for decades. Entry points once
clogged with five-hour traffic backups have been expanded and
better staffed; waits have been reduced to an hour or less. The
Smart Border program has also expedited routine crossings where
implemented.
Since the 1960s, the region has been the
focus of development efforts with Mexico's creation of the Border
Industrialization Program, which launched the maquiladora or
assembly industry.
The binational Border Environment Cooperation Commission (BECC) and
the North American Development Bank (NADB) were established in 1993
to certify and finance water and sanitation projects. During the
same period, this semi-arid region experienced rapid growth,
expanding in population by 21 percent on the U.S. side and 32
percent on the Mexican side as investors from Japan and Europe
built plants there to compete in the U.S. market. Businesses on the
American side provided more than 60 percent of the materials used
by factories that, at one point, employed as many as 1.3 million
people.
Beginning in 2000, foreign competition
from countries like China--where labor costs $0.25 per hour
compared to $1.75 in Mexico--began to cut into Mexico's market
share. By 2003, it had lost 500 maquiladora plants and 290,000
jobs. Now, instead
of providing infrastructure for an expanding enterprise zone, the
BECC and NADB are facilitating sanitation projects for a region in
distress and for communities that, on the Mexican side, have
budgets to cover little more than administrative costs.
Second, the 1994 North American Free Trade
Agreement has greatly reduced barriers and opened markets, boosting
trade between the United States and Mexico from $100 billion in
1994 to $232 billion in 2002. To continue providing opportunities
for business growth, NAFTA must remain on track as a vehicle for
promoting competition.
Yet,
according to the U.S. Trade Representative, the most significant
development in trade with Mexico has been "a dramatic increase in
the number of new barriers Mexico has put in place to block imports
from its NAFTA partners on agricultural products." For instance, Mexico
imposed anti-dumping duties on high-fructose corn syrup (HFCS) in
1997. Then, in 2002, it lifted these duties only to slap a 20
percent soft drink tax on beverages made with HFCS. The Corn
Refiners Association reports that this tax has caused losses of up
to $620 million in HFCS export sales to Mexico and over $300
million in corn sales annually.
The
Mexican government has hindered U.S. pork exports by initiating an
anti-dumping case and constantly instituting new requirements for
alleged sanitary and phytosanitary reasons. Additionally, Mexico
has slowed U.S. pork exports by unreasonable testing for copper and
other metals. Other products affected by similar trade barriers
include rice, apples, and dry beans.
On
the U.S. side of the border, the United States has restricted entry
to trucks and surplus Mexican sugar. While U.S. truckers have
complete access to Mexican highways, Mexican trucks are confined to
the 20-mile zone north of the border. For deliveries beyond this
zone, goods must be transferred to U.S. carriers, thus benefiting
organized labor, which continues to oppose any further opening of
the border.
Under NAFTA, such limits were supposed to
end. The Clinton Administration failed to keep that commitment, and
the U.S. Circuit Court of Appeals for the 9th Circuit, on
environmental grounds, blocked the Bush Administration from lifting
that restriction even though Mexican trucks operating north of the
border would be subject to U.S. standards. The Supreme Court has agreed to hear a
Bush Administration appeal of this court decision.
The
United States also agreed to allow surplus Mexican cane sugar into
the U.S. market. To date, however, America has permitted the entry
of only a quarter of Mexico's surplus sugar, arguing that this is
according to an extra-official pact between both governments. While U.S. officials
might consider a side letter to NAFTA signed by only the United
States as valid, Mexico rightfully insists that the NAFTA accord
signed by both countries is the only one governing sugar. Thus, the
U.S. government is violating NAFTA to protect the American sugar
industry.
Trust and Reform: Keys to Successful
Collaboration
Greater integration between the United
States and Mexico is inevitable, whether by design or by
happenstance; but to benefit both countries, it should be guided by
sensible policies. Acting in its own interest, Mexico wants greater
economic integration with its NAFTA partners and, as part of that
agenda, would like to export its unemployed workers to the United
States to ease social pressures and assure a steady flow of
remittances, which could exceed $14.5 billion in 2003.
Some
1.2 million seasonal jobs exist on U.S. farms on top of those in
related industries where many Americans--including welfare
recipients--choose not to work. Tighter border enforcement since
the mid-1980s has not stemmed the flow, but appears rather to have
encouraged seasonal workers to stay.
For
now, the United States cannot defeat the practice without cutting
off employment to aliens seeking work or radically increasing
surveillance and deploying an army of border guards along the
frontier. Looking to the future, President Fox has proposed
creating a North American common market over 20-30 years and
opening borders to pool the continent's labor supply.
For
this to be practical, however, Mexico must unleash its stifled
economy and encourage foreign investment by ending monopolies and
corrupt practices, educating its workforce, and working toward
common procedures and competencies in immigration, law enforcement,
and defense. Only in this way can Mexico become better integrated
with the United States and Canada in a more cooperative market and
defense zone.
To
start down that road, both sides must raise the sagging level of
trust. Fox's ill-timed pullout from the Inter-American Treaty of
Reciprocal Assistance (Rio Treaty of 1947) just before the
September 11 attack on the United States created an image of
wavering support for the U.S. war on terrorism, as did his
insistence on migratory concessions in the face of emerging U.S.
security worries. Mexico's decision to vote against the
U.S.-sponsored U.N. Security Council resolution calling for Iraq to
disarm or face war rankled the Bush Administration further. At the
same time, U.S. preoccupation with the Middle East annoyed Mexico
as it saw an opportunity to forge closer institutional ties slip
away.
Those diplomatic miscommunications are
largely water under the bridge, however. To renew progress on the
border and cooperation on NAFTA, the Bush Administration should
seize the initiative to:
- Ensure adequate
staffing and expansion of entry points as well as complete
implementation of the Smart Border program to protect America while
expediting routine crossings for commuters and businesses.
- Focus on
eliminating the North American Development Bank. The NADB
should continue to provide analysis and advice and to help procure
private financing, but it must not undercut Mexico's efforts to
strengthen local government through reliance on a bi-national
bureaucracy. Instead, the Bank should promote the capacity of local
stakeholders to make decisions so that eventually it will no longer
be needed.
- Challenge Mexico
to open its markets to the full range of U.S. agricultural
goods by lifting barriers to Mexican goods. Instead of letting
Congress retaliate against Mexico with a costly trade war, the Bush
Administration should permit Mexico to sell its surplus sugar north
of the Rio Grande and press its Supreme Court appeal of the 9th
Circuit Court's decision that bars Mexican trucks from full access
to U.S. highways.
To
advance needed political, economic, and security-related reforms in
Mexico, the Bush Administration and particularly Congress should
use U.S. immigration reform and continued cooperation toward
economic integration as levers to encourage progress toward
compatibility. Specifically:
- The
Administration and Congress should streamline existing procedures
for granting non-immigrant temporary worker visas to help
identify and organize the flow of those entering the United States
for seasonal or temporary employment. Although the number of
temporary (category H2) visas is unrestricted, only a minority of
U.S. farmers and alien farm workers use established procedures.
This year, several bills have been introduced
that would reform the system, including the Border Security and
Immigration Improvement Act (H.R. 2899), sponsored by
Representatives Jim Kolbe and Jeff Flake (both R-AZ), and the
Agricultural Job Opportunity, Benefits and Security Act (H.R.
3142), introduced by Representative Chris Cannon (R-UT). Whatever
legislation results, it should:
Require employers simply to attest that they
made a reasonable attempt to hire U.S. workers first and eliminate
the current 45-day certification re-quirement that bottlenecks the
employment process.
Allow visa holders mobility to change employers
if necessary and accumulate credit toward resident status.
Require employers to pay taxes for
unemployment, medical, and Social Security benefits. Upon a
worker's permanent return home, the amount that the worker has paid
in Social Security taxes (and any accrued earnings) should be
transferred to the Mexican social security system.36
Prohibit migrant labor from receiving federal
means-tested entitlements. Welfare should not be an incentive to
migration. Nor should taxpayers bear the costs of subsidizing cheap
labor. As a further disincentive to large-scale migration, those
currently in the United States illegally should not be given
amnesty.
Expand binational employment information
systems to increase awareness of available seasonal and temporary
positions, and expand the restrictions on entitlements to
discourage speculative trips across the border.
Such measures will not stop illegal migration,
but they could reduce the numbers and result in more effective
bilateral migration enforcement and anti-terrorist screening.
- Congress and the
Administration should also press Mexico for political, economic,
and security reforms that will enable Mexico to become a
more integrated partner in the continental economy. Such
reforms--most already advocated by Fox--would:
Curb official corruption through better citizen
oversight of government at all levels, including open primaries to
allow any citizen to run for office, tying legislative
representatives to districts, and devolving authority to state and
local jurisdictions to collect taxes and manage local services,
particularly in the northern border zone. This would promote
compatibility and improved collaboration with neighboring U.S.
jurisdictions.
Phase out corrupt, inefficient state monopolies
to enable reinvestment, renovation, and private ventures in
Mexico's energy and telecommunications sectors.
Broaden access to credit for small Mexican
businesses to complement the streamlined licensing process and
enable access to loans at rates similar to U.S. and Canadian
rates.
Reform the land tenure system by titling ejido
holdings so that they can be sold, combined for more productive
use, or used as collateral for credit.
Improve primary and secondary schooling,
particularly in rural areas, to enhance employment prospects for
workers leaving Mexico's outdated agricultural sector. Stronger
local control over schools would improve accountability and loosen
the grip of national unions over the education system.
- The Bush
Administration should promote closer cooperation among Canadian,
Mexican, and U.S. military and law enforcement agencie s
to enhance regional defense and homeland security. Priorities
should include:
Establishing a tri-national security commission
to recommend cooperative procedures and re-forms. Members should
include representatives from the Mexican Defense and Interior
Ministries, Canadian Defense and Interior Ministries, and U.S.
Departments of Defense, Homeland Defense, and State, as well as an
observer from the Organization of American States.
Inviting Mexico to participate in combined
North American military exercises. Canada and the United States
participate in each other's defense exercises. If Mexico is to
become a partner in continental commerce and defense, it should
join the team.
Establishing exchanges with Mexican law
enforcement, immigration, and justice system personnel through
existing U.S. public diplomacy and foreign exchange programs.
Expanding training opportunities for Mexican
armed forces and law enforcement agencies beyond counternarcotics
to promote common standards and competencies.
Offering judicial and legal training to promote
compatible standards and competencies in the rule of law, backing
up gains in law enforcement and improving Mexico's in-vestment
climate.
Conclusion
Mexico's bid for increased cooperation and
integration is not a take-it-or-leave-it proposition. Because
Mexico is the United States' close neighbor and second largest
trading partner, its success inevitably helps to determine U.S.
success. To a degree, that relationship extends further south
throughout the hemisphere. President Fox's Plan Puebla hacía
Panamá makes it plain that conditions in other Latin
American nations affect Mexico and the United States as well.
Americans should welcome Mexico's
willingness to join in deeper commercial and security ties, as well
as appreciate the long-term vision of Mexican leaders like Ernesto
Zedillo and Vicente Fox who have nudged Mexico in the direction of
democratic and free-market traditions--the bedrock of U.S. and
Canadian prosperity. The United States should support that agenda
by improving existing areas of cooperation, reforming immigration
policy to address mutual concerns, and gently pressing Mexico to
undertake reforms that will help its workforce achieve parity in
earning power and develop commonality in law enforcement,
immigration procedures, and defense.
Progress toward integration can help to
ensure a stable and prosperous neighborhood. Such a pursuit should
not suggest creating a common market that over-promises,
over-regulates, and stifles innovation, nor should it result in
some supranational government. Rather, it should support a flexible
relationship that guarantees citizen freedoms as well as safety. It
should proceed as Mexico's reforms take hold.
Stephen
Johnson is Senior Policy Analyst for Latin America in the
Kathryn and Shelby Cullom Davis Institute for International Studies
and Sara J. Fitzgerald is a
Trade Policy Analyst in the Center for International Trade and
Economics at The Heritage Foundation.