Md. looks to Mexico for trade Unions charge that Schaefer's mission could cost jobs.


Maryland officials, who have sought business with Kuwait, Japan, Eastern Europe and Canada, now are turning their attention south of the border. In his next trade mission, Gov. William Donald Schaefer plans to go to Mexico in the fall.

"This is an area where there are tremendous opportunites," says J. Randall Evans, secretary of the Maryland Department of Economic and Employment Development.

But trade with Mexico is controversial because union members contend Maryland companies will export not only products, but also jobs.

For example, Anthony Pulaski, a steelworker at Armco Inc., fears companies will relocate their manufacturing operations to take advantage of Mexico's low wages and lax enforcement of environmental laws.

Trade with Mexico has become an issue because the Bush administration is pushing for a free-trade agreement that will lift existing tariffs and trade barriers between the United States and Mexico. A similar agreement was reached with Canada in 1989, eliminating tariffs between the two nations by 1998.

In May, Congress extended the president's authority to make trade agreements free of amendment, providing the strengthened hand President Bush said he needed to tear down trade barriers with Mexico and other countries.

Talks between the United States, Canada and Mexico on the creation of a North American free-trade zone began in June and are expected to take two years.

In Maryland, officials strongly support a free-trade agreement, but they are not waiting until a treaty is signed. For instance, the World Trade Center Institute in Baltimore held a seminar recently to give advice to business people interested in

trade with Mexico.

But unions complain that the state could lose jobs to Mexico if current trade barriers are eliminated.

The garment workers, who already have seen work go to Asian manufacturers, are expected to lose the most jobs if a free-trade treaty is signed.

"It's like rocks being added to a bucket sinking in the water," says Clara Gummer, educational director with the International Ladies Garment Workers Union in Baltimore. She views each country targeted as a trading partner as yet another rock. "The more rocks you add, the more the bucket sinks."

But Evans says the state needs to look at the big picture. "We in Maryland are in a global economy with competition in quality and price all over the world," he says. "The sooner we get into that global economy, the better we will be."

Proponents of the agreement say that if the United States is successful in negotiating a free-trade treaty, North America will become a $6 trillion common market with 360 million consumers in Mexico, the United States and Canada.

Evans envisions that Maryland could play a powerful role in the North American common market.

"When you look overall at Maryland interests, we are a trading center with our port and airport. So the flow of trade is very important to us," he says.

While recognizing that jobs will be lost in some industries, Evans says he believes the skill and education of Maryland's workers will enable them to compete favorably with the lower-paid Mexicans.

Union members are skeptical. Most Mexican manufacturing workers earn less than a dollar an hour, compared with U.S. workers, who can make between $10 and $18 an hour for the same task.

Mexican garment workers earn between 94 cents and $1.37 an hour, compared with Maryland workers, who make between $5.50 and $6.75 an hour, Gummer says.

In addition to cheap labor, lax enforcement of environmental laws in Mexico also lures American manufacturers, union members contend.

"There's no doubt in my mind that unless those restrictions are strictly enforced on air and water quality, a lot of jobs are going to go to Mexico," says Pulaski, a member of United Steelworkers of America Local 3185 at Armco's Baltimore plant.

Jack Sheehan, assistant to the president of the United Steelworkers in Washington, says a number of the big steel producers have threatened to take work to Mexico because of their opposition to provisions of the U.S. Clean Air Act.

Nick Staffa, a retired General Motors worker and a member of the United Auto Workers Retirees Advisory Council, traveled with the council to Mexico earlier this year and toured GM plants in Matamoros.

Staffa described the plants as modern and productive. Workers are paid slightly above the minimum wage, earning between 50 cents and 80 cents an hour.

"They're still living in abject poverty," Staffa says. He says workers live in a shanty town with no fresh water and no sewage disposal.

Staffa is skeptical of the position that free trade will provide a market for American products. "The whole purpose is to exploit cheap wages of the Mexicans and cause us to lose our jobs," he says.

A study by the Center for International Business Education and Research at the University of Maryland at College Park found the apparel industry could lose 6,000 jobs nationwide, or about 1 LTC percent of the employment in that industry. Construction, furniture and service sectors also would lose jobs.

But the study concludes that the United States would benefit because free trade would open greater export markets and create jobs in chemical, rubber, plastic, metal and machinery industries. Employment in metal products alone would increase and create twice as many jobs as apparel would lose, the study says.

The U.S. International Trade Commission also believes jobs would be created in the United States because free trade would give Mexicans more money to buy U.S. goods. The commission estimates that an average of 22,800 new jobs will be created for every $1 billion of exports to Mexico.

Despite the trade restrictions now in place, Mexico is the United States' third largest trading partner behind Canada and Japan.

Mexico has established a program that allows U.S. businesses to ship components duty free into Mexico for assembly and re-export. There are nearly 2,000 so-called maquiladora plants, mostly clustered along the U.S. border, employing 510,000 workers. Under the terms of this program, foreign corporations can set up wholly owned subsidiaries, and plants are given special tax considerations as long as they produce almost exclusively for export.

The maquiladoras represent the third largest source of Mexico's foreign earnings.

Carol Kim with the U.S. Trade Center in Mexico City urges businesses not to wait for the trade treaty. "If you're waiting until everything is settled, you're too late," she says.

She cautions that developing business in Mexico frequently requires patience. A knowledge of Spanish is essential. Americans also are urged not to try pushing inferior products into the market.

Kim is an unblushing champion of U.S.-Mexican trade. "Mexico is by far the most exciting market out there today," she says.

Maryland-Mexico trade

Mexico ranked 25th as a Maryland trading partner out of 164 export markets in 1989, the most recent year for which figures are available.

* State's exports in 1989: $3.2 billion

* State's exports to Mexico in 1989: $25.3 million

* Mexico's share of Maryland's exports: 0.8 percent.

The best prospects for exports to Mexico fall into the following categories, according to the U.S. Department of Commerce:

* Agricultural equipment

* Computer systems, peripherals, software and services

* Electric power production and distribution equipment

* Hotel and restaurant equipment

* Medical instruments, equipment and supplies

* Oil and gas field machinery and equipment

Pollution control equipment

* Telecommunications equipment

Source: The World Trade Center Institute in Baltimore.

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