Salinas Needs One More Win To Cap Career

THE BALTIMORE SUN

Mexico City. -- Of all world leaders in the past half-decade, Mexico's Carlos Salinas de Gortari can rightly claim to have been the most successful. He has changed his country according to his own design in ways that are nothing less than breathtaking.

What was a closed, overly protective economy hiding behind high tariff barriers and restrictions on foreign ownership and investment has been turned around 180 degrees.

Mexico has opened its doors to the outside world and has bet its future on becoming a first-class competitive trading power. It has done so while lowering triple-digit inflation to single-digit, selling off a thousand inefficient socialist-style public enterprises and throwing out discredited communal land policies dating back to the 1910 revolution. Its market-oriented emphasis on private sector development has achieved economic growth in excess of population growth and attracted vast sums of outside capital to finance its new ambitions.

Yet President Salinas cannot really claim his world championship until he caps his career with a fully ratified North American Free Trade Agreement. And this depends on the U.S. Congress.

The last few weeks have been worrisome to officials and businessmen in this huge capital city. The American labor and environmental movements plus pesky Ross Perot have been cranking up their opposition. A delegation of congresswomen, including Maryland's Helen Delich Bentley, paid a visit to border areas to emphasize the negatives Americans find so easily in the Mexican scene. Mexico-bashing, with its attendant danger of serious backlash south of the Rio Grande, is the order of the day among treaty foes. U.S. budget director Leon Panetta had to sound a warning that NAFTA might be heading for defeat unless U.S. free-traders launched a counterattack. President Clinton is still to be heard from in full voice.

Through it all, Mexican authorities have put on a show of stiff-upper-lip confidence. They figure the treaty is in good shape in the Senate, where 32 Republicans have rallied to the agreement their own George Bush negotiated. But the House is doubtful because important Democratic constituency groups are holding back until they can examine side agreements to upgrade labor and environmental standards in Mexico.

In the end, Mr. Clinton may have to rely on Majority Leader Dick Gephardt, a closet protectionist, to rustle up sufficient votes if the treaty is to pass. The president, whose acceptance of the treaty as written was his most courageous mid-campaign stand, still has one trump card. By pushing through labor-supported legislation to safeguard the jobs of striking workers, he could insist on some reciprocity from the AFL-CIO.

For Mexicans, NAFTA's precarious situation is loaded with irony since they have traveled so long a way to appease Yanqui critics. After they lost half their territory to the United States in the mid-19th Century, they largely defined their national identity in anti-gringo rhetoric. Their closed economy was an attempt to ward off American domination. Yet this xenophobic policy proved so self-wounding that it had to be abandoned after the economy collapsed in 1982 into a Washington-led international banking rescue.

It was then that a young Harvard-trained economist named Carlos Salinastook control of the Mexican budget. In 1988, he was elected to the single six-year presidential term allowed by the Mexican constitution. He soon launched one of the most sweeping reform movements seen anywhere in today's world.

Protectionist walls were brought low. Foreign-owned companies were welcomed, not only for maquiladora assembling operations along the border but for full-scale manufacturing with impressive productivity and quality-control standards. Unprofitable state-run enterprises were sold off to private interests. The resulting multi-billion dollar windfall was channeled into education and community development in an effort to re-connect the ruling PRI party to the masses before it suffered the fate of authoritarian regimes elsewhere.

President Salinas is set to leave office late next year with his popularity undiminished and his position as one of the great men of Mexican history secure. His has been a happier fate than that of George Bush, Margaret Thatcher, Brian Mulroney and even Helmut Kohl, whose unified Germany is deep in despond and crisis.

But NAFTA is needed to tie Mr. Salinas' achievements together. If ratified and implemented, it will make Mexico the southern anchor of a North American economic powerhouse of 360 million people and eventually transform it from a Third World to a First World country. A North American free trade zone will give Mexico the the heft and opportunity it needs to compete with other low-wage countries and to be the conduit for trade expansion throughout the Western Hemisphere.

NAFTA, however is far more than a trade treaty. In the opinion of authorities here, it will contribute to the liberalization of commerce worldwide that is necessary to avoid the threat of trade wars around the end of the century. It will moderate the huge migration flow northward of Mexican workers, many of whom will still be needed to do the dirty jobs U.S. citizens shun. It will vastly expand business and social contacts. And it promises historic accommodations between the two highly disparate neighbors fated to share the Rio Grande border.

Under President Salinas' guidance, traditional anti-American sentiment and chatter ended almost overnight once Mr. Bush signed the trade treaty. It was seen as a sign of respect and recognition from the colossus of the north. The populace responded to the Salinas idea that old attitudes must change and old grievances must be set aside. But there is now a danger, officials believe, that much of this progress could be lost if the treaty goes down in a barrage of disparagement and recrimination.

Mexico, of course, remains a poor country with millions of peasants and shantytown dwellers living in terrible conditions. It is currently capable of creating only 200,000 jobs a year for the million young people entering the work force. Many migrate; others drift into the "informal economy" that is a code phrase for bare survival. But the domestic side of the Salinas revolution is writ large in an 80 percent rise in school spending and a huge "Solidarity" movement that has spent $8 billion to bring running water, electricity and roads to millions of villagers living in primitive conditions.

From these undertakings is emerging a work force that inevitably will generate Mr. Perot's "great sucking noise" of jobs moving from the United States to Mexico. But that trend will continue with or without NAFTA. America's challenge is not to consider trade a zero sum game in which one country's gain is another's loss. Rather, it is a process that will increase employment and higher living standards in all of Latin America.

As one American businessman living in Mexico noted the other day: There is another "great sucking noise" -- that of $40 billion in Mexican purchases on the U.S. market, with the U.S. trade surplus now running above $4 billion. In transnational marketing, U.S. companies receive 80 percent of the money Mexicans spend on imports and find preferential entry into Central and South America.

When he was running for office five years ago, Mr. Salinas insisted he wanted to create jobs so Mexicans could remain in their own country rather than flood northward. He never has deviated from that goal, which he considered essential to a more balanced and friendly relationship with the United States.

President Salinas' economic liberalism has had a transforming influence north and south of the border. As Canada, Mexico and the United States try to muster the will to create a free market in which tariffs disappear and economic cooperation flourishes, the Salinas legacy may help avoid the trade wars that protectionists would impose on this continent and the world.

Joseph R. L. Sterne is editor of the editorial pages of The Baltimore Sun.

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