A Vision Test for Maryland's Congressional Delegation


Marylanders worried about the North American Free Trade Agreement should spend some time at the Greater Baltimore Committee's "4th Annual Tech Month."

The program, beginning next Monday, will fill October with workshops, seminars and conferences on the Baltimore-Washington region's promising future in biotechnology, telecommunications, computer services and other high-tech industries.

Attention: Congresspersons Helen Delich Bentley and Steny H. Hoyer. You ought to drop by.

The Greater Baltimore Committee envisions Maryland as an international technology center that exploits the economic potential of our biomedical research institutions, our heavy concentration of computer programmers and our financial and business services industries.

Attention: Congressmen Roscoe Bartlett, Kweisi Mfume and Albert Wynn. Have you ever toured the National Institutes of Health or Johns Hopkins? Alex. Brown & Sons or Baltimore's venture-capital firms? The University of Maryland's research labs College Park or the photonics department at the Baltimore County campus?

"What have we learned in four years of promoting the Greater Baltimore region's role as a leading technology incubator?" the GBC asks. "That technology and change are . . . the same. . . . That, when managed effectively, the rate of change for products, people and programs can be almost exponential."

Change excites the companies and industries that will star in the GBC's 4th Annual Tech Month. They leap at the opportunities. The GBC shares their enthusiasm: "What we do here in Maryland," it proclaims, "we do better than any one else on earth." The vision is bold. Confident.

There's a competing vision. It's frightened, defensive, protective. scared of change. It wants to retreat behind walls. It looks longingly backward to the 1950s.

These two visions of Maryland's future clash in the debate over NAFTA. The agreement would eliminate trade barriers among America, Mexico and Canada. President Clinton has whole-heartedly endorsed it.

But Congress must approve the agreement this fall. Watch how our representatives in Washington react to NAFTA. How they respond tells you whether they look forward. Or backward. Whether they're confident. Or scared. Whether they understand the realities of a global knowledge-based economy. Or not.

Congresspersons Constance A. Morella and Wayne T. Gilchrest have announced their support. But the rest of our state's delegation in Washington is either already opposed (Mrs. Bentley, Messrs. Wynn, Bartlett, Mfume and Hoyer) or undecided (Senators Paul S. Sarbanes and Barbara A. Mikulski and Congressman Benjamin L. Cardin).

In Maryland, a vote for NAFTA won't be as easy as a vote against it. Organized labor's diminished political muscle still packs a punch in our state, especially in Democratic primaries. Labor leaders are afraid lower Mexican wages will "suck" American manufacturing plants and jobs south of the border.

Ross Perot has fanned these fears with his new book, "Save Your Job, Save Our Country. Why NAFTA Must Be Stopped Now." He makes inflammatory predictions: 5.9 million American jobs will head south. Last week, The Economist analyzed his calculations and his arguments and concluded they were "lies."

The opposition to NAFTA rests on the fallacy that the cost of labor controls the location of manufacturing plants. If that were true, then African peasants would be more threatening competitors than German workers whose exports pour into this country even though German pay is 60 percent higher than ours.

Actually, the cost of labor represents a small and declining portion of the total cost of manufactured products. It is less important than organizational skill and manufacturing technology. Total cost and product quality determine where it is most economical to build a plant.

Mexican wages are only 15 percent of average American pay. But American workers are better educated, better trained and use more technology. So they more than make up for their higher wages with their higher productivity. For example, it's actually cheaper to build a car in the United States than in Mexico.

In fact, America's technological edge has already made Mexico a promising new market for American manufactured products. During the last five years, Mexico has liberalized its economy and unilaterally reduced its tariffs on American products.

As a result, American exports to Mexico have jumped from $12 billion a year to $41 billion. Our trade balance has swung from a $6 billion annual American deficit to a $5 billion annual surplus. These numbers translate into high-paying American jobs. NAFTA will create more good American jobs if Mexicans look north toward us, rather than east toward Europe or west toward Asia. They already buy most of their imports from us, rather than from the Europeans or the Japanese.

NAFTA will expand these opportunities. Take minivans. Mexican regulations now prevent their importation. But NAFTA will open the Mexican market. Minivans for Mexico could be manufactured at General Motor's Broening Highway plant. By highly productive and highly paid Maryland workers!

The arguments against NAFTA rest on another economic fallacy -- the notion that we can somehow preserve jobs for which productivity doesn't justify high pay. In a competitive world marketplace, those jobs will inevitably slip away, if not to Mexico then to Asia or someplace else.

America cannot compete on labor costs. We shouldn't want to. Instead, we should plan to compete on high skill, high training, high technology.

Ultimately, NAFTA raises the issue of free trade vs. protectionism. It comes down to whether we think we can compete on high productivity. If we can, rapid change offers opportunity. It will generate more and more high-paying jobs. If we cannot, we'll lose our high-paying jobs no matter how many free-trade agreements we run away from.

It's a matter of vision. Do we and our political leaders look backward in fear or forward with confidence? The GBC's 4th Annual Tech Month points ahead -- in the right direction.

Tim Baker's column appears on alternate Mondays.

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