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U.S.-MEXICO FREE TRADE: THREAT TO WNY ECONOMY?

President Bush's proposal for a free-trade agreement with Mexico, where the average wage is 57 cents an hour, is drawing strong opposition from a coalition of House members worried that a pact would speed the pace of this country's industrial decline.

Rep. Henry J. Nowak, D-Buffalo, said in an interview he thinks an open trade border with Mexico "could erode the long-term positive effect the Canadian free-trade agreement is having on the area's business environment."

Nowak also warned that a Mexican FTA could unleash an even greater exodus of American manufacturing jobs than was spurred by the "maquiladora" promotion that sent at least 1,200 Trico Products Corp. jobs to so-called twin plants along the Texas-Mexican border.

Nowak is one of three dozen Democratic House members who sent a letter to President Bush a week ago criticizing Mexico's "autocratic" government, its Third World social climate and its "very weak" environmental standards.

The letter also condemned Mexico for being one of the world's "largest suppliers" of narcotics to American dealers and users, and closes by warning "there is no precedent for negotiating an FTA (with) a "trading partner at Mexico's current level of economic development."

The majority of the signers are members of the House Ways and Means Committee, which would have to approve any new trade pact. Many of them also are sponsors of a 1990 resolution that will be reintroduced next month, calling on the administration to insist that any agreement with Mexico establish a level playing field on wages, social policy and respect for this country's environmental codes.

Last Sept. 26 President Bush notified the committee that he was using his powers to begin "fast-track" negotiations with Mexico. The administration must complete these talks sometime this spring. The exact deadline is based on the number of days Congress meets.

The negotiations are the cause of mounting anxieties in Canada. Fearing its American markets could be undermined, particularly for automotive products, Canadians are becoming more vocal in their demands that the two-way talks become trilateral, with Canada given equal status at the negotiating table.

Surprisingly, Canada's bid is being supported by a group of Mexican intellectuals led by author and diplomat Carlos Fuentes.

"Our three nations," the Mexicans said in a Nov. 28 letter to their government, "have a common, continental agenda that stretches beyond narrow short-term considerations."

One of these considerations, the Mexicans said, is their country's "cheap labor."

"That comparative advantage is too . . . humiliating and unproductive for Mexican dignity; too costly in jobs and welfare for American and Canadian workers; too destructive for our common environment and civilization," they said.

However, Senate Finance Chairman Lloyd Bentsen D-Texas, told The Buffalo News he will oppose Canada's becoming a full partner.

"Mexico certainly didn't participate when we were negotiating the U.S.-Canada free-trade agreement," said Bentsen, whose committee would have to clear any new trade agreement. Canadian Trade Minister John Crosbie last week announced that Canada won't be a mere observer, and it won't negotiate a two-way deal with Mexico.

Bentsen warned that Canada might use three-way talks to reopen the two-year FTA with the United States. Jack Devore, spokesman for Bentsen, said the senator is worried that bringing Canada into the talks will delay them, taking them beyond the Spring 1991 deadline, effectively killing any chance of an American agreement with Mexico.

Malcolm McKechnie, a Canadian embassy spokesman, sidestepped a question about whether a two-way agreement with Mexico would harm this country's trade accords with Canada. McKechnie did say, however, that "complications" in administering aspects of Canadian trade with this country could result.

The most vocal opponent of widened trade with Mexico is the United Auto Workers union. Steve Beckman, the UAW's economist, warned that Ford already has relocated half its Escort production to Mexico, and that Volkswagen closed its Pennsylvania plant in 1988, replacing that production with a new factory in Mexico.

Tom Fricano, the UAW's New York regional director, said a two-way agreement with Mexico would have a "devastating" effect on Buffalo-area employment. Regional employment in auto and parts manufacturing stands at about 20,000 now, he said, down about 8,000 from the late 1970s. It is the largest block of industrial employment left in Western New York.

"You simply can't compete with Mexican wages," he said. Fricano said the average wage in auto production is $15 an hour in Buffalo, not including benefits. In Mexico, the autoworker is considered "among the elite and they only make $1 an hour and have virtually no benefits," he said.

Fricano, who oversees the UAW in New York, New Jersey and Pennsylvania, says the threat to industrial jobs is regionwide, but is not well understood.

Told that Gov. Cuomo was supportive of an FTA with Mexico in a speech last Monday in Washington, Fricano said, "if he understood what is happening, he'd be absolutely against it. Nobody is more supportive of working people than Gov. Cuomo."

PROS AND CONS TO U.S.
OF MEXICAN FREE TRADE
Benefits to the U.S.
Better access to cheaper labor and parts.
Access to a growing export market.
100% ownership of Mexican subsidiaries.
Financial and service sector expansion.
More reliable source of petroleum.
Mexican political stability enhanced.

Costs to the U.S.
Jobs lost in auto and other industries.
Painful restructuring of agriculture.
Downward pressure on U.S. wages.
Small business gets new competition.
Mexican border areas may benefit most.

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