Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, October 13, 1995 TAG: 9510130031
SECTION: EDITORIAL PAGE: A-9 EDITION: METRO
SOURCE: WILLIAM R. HAWKINS
DATELINE: LENGTH: Long
A recent report by the Organization for Economic Cooperation and Development concluded that Mexico's recovery from last year's peso crisis would take longer than political leaders have been willing to admit.
The OECD said Mexico's recovery ``would be a more protracted process'' because of heavy private-sector debt and a weakened banking system. The OECD projected a decline in Mexico's Gross Domestic Product of 3 to 4 percent this year. This isn't a slump, its a depression. At the same time, the Mexican people are expected to suffer an inflation rate of 50 percent.
This merely confirms what the Mexican Finance Ministry announced in August; that the country's output declined by more than 10 percent between the second quarters of 1994 and 1995. Retail sales have dropped 40 percent from a year ago as unemployment and interest rates have soared. The U.S. Treasury reported in September that private consumption dropped 16 percent in the first half of the year, and that investment was down more than 35 percent from last year.
The political leaders of both the United States and Mexico were doing their best to downplay these negative numbers on the eve of Mexican President Ernesto Zedillo's trip to Washington on Tuesday. Much was made of a loan repayment of $700,000 by Mexico. Yet this was only a token amount against the $12.5 billion loaned by the U.S. Treasury to Mexico so far this year (that's $12,500,000,000 or 17,587 times what Mexico repaid).
Despite its trivial value, President Bill Clinton claimed that ``This news is another important step on the road to financial recovery of Mexico. Today's decision sends a positive signal that the tough financial measures Mexico has been instituting are succeeding.''
Yet, Mexico's success has not been so great that the United States has closed its loan window. There is still $7.5 billion in the Treasury's slush fund (otherwise known as the Economic Stabilization Fund) earmarked for bailing our Mexico's finances. It should be noted that the $700,000 Mexico is repaying to the United States had to be borrowed from somewhere else; in this case from a bond issue denominated in German marks.
With the U.S. headed for another record trade deficit, German marks looked more attractive to investors. Mexico will add about $20 billion to the U.S. trade deficit. Where NAFTA supporters once promised a ``big emerging market'' in Mexico for American goods, there is only a ``big emerging deficit.'' Exporting to the United States is the only bright spot in the Mexican economy, thanks to nominally ``American'' corporations that have built factories in Mexico rather than in the United States. Mexican exports to the United States were up by 29 percent while imports from the United States were down 12 percent during the first six months of this year.
While in Washington, Zedillo will join Clinton in talking up the need to open NAFTA to new Latin members. Negotiations have already started with Chile. Critical to this enlargement of NAFTA is the passage of new ``fast track'' negotiating authority by the Congress to give Clinton the power to cut a deal with Chile, as well as with any other country that strikes his fancy. The ``fast track'' proposal is the bill sponsored by GOP Reps. Bill Archer of Texas, Phil Crane of Illinois, and David Dreier of California, all fervent philosophical advocates of ``free trade'' everywhere and at all times.
Under ``fast track,'' Congress surrenders most of its constitutional authority to levy import duties and regulate foreign commerce. The president is assured that whatever terms he accepts, including any changes in American law, will be implemented by Congress without alteration or amendment. Debate on the agreement will be limited and its passage expedited.
The general public, whose jobs and incomes are at stake, will be closed out of the process because their representatives will have abrogated their responsibilities to help craft the agreement. Only members of ``relevant committees'' need be consulted during the negotiations. Since the congressional committees charged with overseeing trade policy have long been stacked with members devoted to ``free trade'' there is little hope that any voices will be heard other than those of the great transnational corporations whose campaign funds always assure them access to the negotiations.
By their nature, these financial behemoths care nothing for American jobs, incomes or production capacity. That is what the ``free'' in ``free trade'' means to them; no more concerns about paying decent wages or abiding by safety and health rules or contributing taxes to the U.S. government. They are ``free'' to relocate their factories wherever labor is most impoverished and oppressed and where regulations are most lax and officials most corrupt. Latin America is full of such lands of liberty.
The politicians know the public is opposed to new trade deals that only boost corporate profits, not national prosperity. That is why Archer, the powerful chairman of the Ways and Means Committee, wants his bill hidden inside the omnibus-reconciliation package so it will not have to face a direct vote on its own merits. Opposition by the new, more populist, freshman Republicans plus the many House members (of both parties) who voted against NAFTA originally would doom the measure in open debate.
This effort to ``fast track'' the ``fast track'' bill can only be stopped if enough people back home let their representatives know they will not be fooled and will hold Congress responsible for future bad trade policies.
William R. Hawkins is president of the Hamilton Center for National Strategy in Knoxville, Tenn.
- Knight-Ridder/Tribune
by CNB