Can NAFTA Change Mexico?

Jorge G. Castañeda

From Foreign Affairs, September/October 1993

Article preview: first 500 of 4,601 words total.

Summary:  The Salinas regime has ardently pursued the North American Free Trade Agreement as a silver bullet to kill myriad political and economic problems. But NAFTA as it stands would exacerbate many of Mexico's enduring disparities and injustices. Short term adjustment costs and the possibility of backsliding on political reform have largely been overlooked. NAFTA must be designed to contribute to political reform. Otherwise, postponing the accord would not weaken Mexico-only Salinas.

THE RISKS OF FREE TRADE

Many Mexicans have welcomed NAFTA as an undisguised blessing, whatever its effects on the United States. In the government and among the general population the agreement is seen as a ready course to modernization. President Carlos Salinas de Gortari's policies have consciously supported this impression. His administration has determinedly pursued NAFTA as part of a dual strategy. Economically, the trade agreement was to provide Mexico's ailing economy with the foreign capital injections it has long required for sustainable growth. Politically, an expanding Mexican economy-one linked to the United States-would help lay the foundations for an eventual and controlled democratic transition.

Overlooked, however, has been the fact that NAFTA itself entails great risks. No country has ever attempted to develop an export manufacturing base by opening its borders so quickly and indiscriminately to more efficient and lower-cost producers. No nation today, not even the United States, has so willingly sacrificed an industrial policy or an equivalent form of managed trade. By unilaterally renouncing these advantages, Mexico will lose far more jobs in the next few years than it will create. Old industries and agricultural producers will die, be swallowed up or join with foreign ventures, long before the new jobs arrive.

Mexico is not a modern country. True, over the past half-century it has witnessed dramatic change. An inward-looking, illiterate and agrarian land has become an urban, partly industrialized nation with a growing middle class and a nascent civil society. But Mexico's underlying problems persist. It retains a largely corrupt and unchallenged state that possesses only the merest trappings of the rule of law. The enduring obstacles to Mexico's modernization-its repeated failure to transfer power democratically or to remedy the ancestral injustice of its society-remain and will require Mexico to continue to change itself, with or without a trade accord.

Any Mexican government's performance, as well as the virtues of a new relationship with the United States, must be measured against this background. Under certain conditions, NAFTA provides an opportunity to build a more prosperous, democratic and equitable nation. But NAFTA alone will not modernize Mexico. In the short term especially, the accord as it stands may only exacerbate the country's already stark disparities and dislocations. Rather than speeding and facilitating Mexico's long-awaited and much-hoped-for democratic transition, the near-term effect may be to slow the momentum for political reform. This must not happen.

WAITING FOR DEMOCRACY

Whatever political advances may have occurred under President Salinas, Mexico has yet to devise a system to transfer power democratically. The 1994 presidential succession promises to be as traditional a ritual as ever. The outgoing president will choose his successor, and then do everything necessary at the polls to secure his election. This system worked adequately for more than a half-century. But it dealt only with half the problem of modern government-order-leaving the other half-democratic representation-unresolved.

This quasi-magical procedure functioned properly only so long as everyone accepted its rules. But by the mid-1980s parts of the political establishment began ...

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