“If soccer was an American soft drink,” the late comedian Lewis Grizzard once observed, “it would be Diet Pepsi.”
Things are a little bit different in Mexico. Millions of Mexicans are said to be more interested in how their national team competes in the World Cup than they are in their own presidential election, scheduled for a week from Sunday.
I just hope they’re more interested in the outcome of that contest than I am in drinking Diet Pepsi.
The race is critically important for the future of Mexico, and it is being watched closely here in the United States. That’s because Mexican voters face a stark choice between a candidate who supports free trade and one who would turn back the clock on the international exchange of goods and services.
The first major candidate is Felipe Calderon of the National Action Party. He is a reform-minded politician in the mold of current president Vicente Fox, who is prevented by law from running for another term. Calderon has served as energy minister and as a congressman. He talks almost nonstop about employment. “My job will be to make sure you have a job,” he says, in a line that has become a semi-official campaign slogan.
His chief competitor is Andres Manuel Lopez Obrador of the Democratic Revolutionary Party, a former mayor of Mexico City and a member of the hard left. Obrador would align his country with Hugo Chavez of Venezuela and the emerging “Bolivarian” bloc of nations that also includes Cuba.
If Obrador is elected, Mexicans may discover that their best job prospects aren’t close to home but here in the United States--if they can sneak across the border and take up illegal work--because Obrador seems not to have the slightest clue about what makes economies grow. Mexico isn’t exactly a prospering country, and yet his principal campaign pledge involves boosting social-welfare spending. Where the wealth to do this will come from remains something of a mystery.
It certainly won’t come from the United States or Canada if Obrador’s economic vision becomes a reality. He wants to pull the plug on the North American Free Trade Agreement, which has delivered enormous benefits to his country. “It can be renegotiated,” he says of NAFTA. “We have to convince the U.S. and Canadian governments that there are things that don’t work.”
Well, nothing’s perfect--and one of the things that doesn’t work, with respect to NAFTA, is Mexico’s illegal tax on high-fructose corn syrup, which continues to hurt American corn growers and increases the price of Pepsi and other soft drinks for Mexican consumers.
But this isn’t the type of problem that Obrador means to correct. Instead, he would create new problems where none exist currently, such as by blocking American-grown white corn, beans, and dairy products from the Mexican marketplace. These tariffs are supposed to vanish completely in a year and a half – January 1, 2008. Our farmers have waited patiently since NAFTA was approved in 1993 for them to disappear. There’s no reason to renegotiate them now.
Thankfully, the Bush administration has said that it won’t re-open these long concluded trade talks. But there’s no telling what Obrador would do to renege on NAFTA, or how he would work to rebuild the walls of protectionism that have kept Mexico mired in poverty even as the economies of other developing countries have boomed.
If the next Mexican president is truly committed to economic growth--whoever he is--he won’t look to undo NAFTA. Rather, he will permit foreign investment in Mexico’s sclerotic oil industry as well as in coastal real estate that has proven to be attractive to retirees from the United States and Canada. Right now, both of these venues are closed to outside capital. There’s a good chance that Calderon would try to open them; Obrador, in contrast, has promised to keep the door shut and locked.
The election between Calderon and Obrador is too close to call. Obrador led for months, but Calderon’s television commercials have proven popular and they briefly put him in the lead. Since then, the race has become a literal ‘seesaw’.
One thing’s for sure: It won’t end in a tie. This isn’t World Cup soccer, after all.
From Truth About Trade and Technology.
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