Salinas: The wind machine billed NAFTA as make or break for Clinton. For President Carlos Salinas de Gortari of Mexico and his Institutional Revolutionary Party, it actually was. With elections coming next summer, the PRI risked losing its 65-year grip on power if NAFTA went down. Salinas has worked to convert Mexico’s socialist, nationalist economy into a capitalist, pro-American economy open to international trade. He privatized state industry, banks, insurance and commerce, and slashed tariffs from 40 to 10 percent. NAFTA was in effect a referendum on this revolution; had the Yanquis squelched it, Mexican bitterness could have swept Salinas’s party from office.
Jobs: For all of Ross Perot’s talk about a “giant sucking sound” south of the border, NAFTA will actually produce a net annual gain of 25,000 to 50,000 jobs. This shift will be lost in the churning U.S. marketplace where 15 million Americans gain, lose or change jobs “normally” every year.
Business: The United States, which already controls 70 percent of Mexican imports, has a $5 billion trade surplus that is sure to grow. The Mexican economy will be a sponge for computers and telecommunications, while soaring Mexican incomes will soak up more automobiles, processed foods and textiles. To hold off an immediate U.S. assault in financial services, Mexico has imposed a delay of several years in opening up its money markets. There will be scattered losers in manufacturing, including makers of clothing and natural-fiber brooms. in the long run, American agriculture could suffer, but phase-in agreements protect products like citrus and sugar for up to 15 years.
Free Trade: The biggest winner is the very idea of open markets around the world. The world was watching NAFTA as a test of American leadership. Had Clinton failed to best the protectionist forces, other governments would have demanded, in effect: if you can’t control your special interests, why should we? In December, the United States will try to conclude the seven-year negotiations over GATT, the General Agreement on Tariffs and Trade, which reduces trade barriers on a global scale (page 54). The big obstacle: French farmers who don’t want to lose their cushy subsidies. NAFTA could also clear the way for similar agreements with Latin American countries, probably starting with Chile in 1995. The failure of NAFTA would have jeopardized free-market experiments from Venezuela to Argentina.
Unions: NAFTA was supposed to be the big test of labor’s political clout, and the inability of all its PACs to buy a congressional majority is being written as labor’s obituary. Union leaders tried to argue that free trade is the source of all lost jobs. But that is largely a blue-collar myth, fostered not only on the left but on the right by populist demagogues like Pat Buchanan: manufacturing and construction jobs are shrinking because of technological innovations. Still, having struggled so with labor over NAFTA, congressional leaders may be wary of taking on future freetrade fights.
Perot: The jug-eared billionaire’s failed debate with Al Gore was written up like the encounter between Dorothy and the Wicked Witch of the West. Even so, Perot won’t just melt away: he has $2 billion, and the press needs a colorful target to kick around.
