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Today's paper. Last Updated: 06/01/2012

NAFTA Bears Fruit, Tempting Neighbors

SAN PEDRO DE LAS COLONIAS, Mexico -- About six years ago, this windswept dust bowl of a town had a ready response when presidential candidate Carlos Salinas de Gortari arrived to deliver his campaign message of economic reform, elimination of trade barriers and other measures to redirect Mexico's state-driven economy.


"They ran me out of town," Salinas recalled recently. "They threw tomatoes at me."


Today, San Pedro represents one of the success stories that Mexican supporters of the North American Free Trade Agreement repeatedly cite. Employment is up, commerce is up, American-owned manufacturing plants are moving in, and hope and optimism are in the air.


As NAFTA nears the first anniversary of its implementation, Latin American and Caribbean leaders are pressing for inclusion in the same trading bloc that appears to have vastly broadened Mexico's economic horizon and opened up a new range of employment possibilities for its people.


But even while leaders from around the region gathered in Mexico City last week to toast Salinas' economic successes and welcome newly inaugurated president Ernesto Zedillo Ponce de Leon, the United States appeared to be growing cooler by the day to expanding NAFTA-like trade ties farther to the south -- a foretaste of what Latin American heads of state can expect from the United States when they gather at the Summit of the Americas in Miami on Friday and Saturday.


The experience of San Pedro, situated in an isolated ranching and cotton-growing region of northern Mexico's Coahuila state, helps explain why the rest of Latin America is so eager to climb aboard the free-trade bandwagon.


Salinas was received here with such animosity during his 1988 campaign because the town was sinking deeper into poverty, with an unemployment rate of 70 percent, according to Mayor Gabriel Sanchez Garza. Most of the 115,000 inhabitants of the area surrounding San Pedro lacked indoor plumbing, clean drinking water or electricity. Commerce and industrial activity were scarce.


While campaigning for NAFTA, Salinas administration officials lobbied for American manufacturing companies to open plants here, arguing that the high unemployment rate meant labor could be secured cheaply.


Salinas later opened a $1.5 million industrial park and established a technical college that trains San Pedro students to operate and repair computers, robotic equipment and industrial machinery.


Three American companies, including the Sara Lee Inc. subsidiary that manufactures Hanes underwear and sportswear, have since opened factories here.


"NAFTA was what really changed everything," said Alberto Gallardo, human resources manager at the Hanes factory. "Everything is easier."


Gallardo said that as a direct result of NAFTA employment at his plant has jumped from 150 workers a year ago to 900. Hanes predicts employment of about 1,200 people here by 1996.


Peter Bruder, a garment manufacturer whose 400-employee plant produces blue jeans, said he opened his factory in San Pedro in the early 1990s in part to get away from major corporations setting up operations nearer the U.S. border. Instead he is competing with Hanes for skilled tailors.


But the economic infusion of the manufacturing plants has helped put money in the pockets of local cotton farmers, enabling them to buy seeds, fertilizer and insecticides. Sanchez said he expects a bumper cotton harvest next year.


Nationwide, the effects of NAFTA have been harder to gauge. The pact is still only in the preliminary stages of what is to be at least a 10-year phase-in. For example, American banks only received permission in October to begin competing in Mexico.


But the dire predictions of anti-NAFTA activists such as Texas billionaire H. Ross Perot, who warned that the accord would produce a "giant sucking sound" of U.S. jobs heading south, simply have not panned out.


Preliminary economic data suggest a positive economic trend for Mexico since NAFTA's implementation, Salinas said in his State of the Nation address last month. Between January and August of 1994, he said, total Mexican sales to the United States grew 22 percent over the same period in 1993, exports of manufactured goods rose 27 percent, and exports to Canada grew 36 percent.




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