Fox's Dream: A North American Common Market

In his first foray north of the border since his surprising election victory in July, Mexican President-elect Vicente Fox will head to Canada to visit Prime Minister Jean Chretien on Aug. 22, then fly to Washington for his first face-to-face with President Bill Clinton on Aug. 24. The former Coca-Cola Co. exec will also have meetings with Presidential contenders Al Gore and George W. Bush.

But these won't just be photo opportunities--not if Fox can help it. He wants to launch an effort to change Mexican-U.S. relations forever. Fox's goal: to present North America's political leaders with a plan to bury old suspicions and build a common market spanning the continent.

A common market with Mexico? That's really bold talk. It would mean eventually allowing the free movement of labor among Mexico, the U.S., and Canada--a situation that plenty of Americans could object to. Clinton's successor could well just bat down any such proposal, however alluring as a free-market proposition. A State Dept. official says the Administration welcomes Fox's "innovative thinking" and hopes that it will lead to positive changes in relations. But his most radical proposals are unlikely to be on the front burner in Washington soon.

OPPORTUNITY. Still, Fox figures that pushing a common market is worth the effort. He sees his defeat of the Institutional Revolutionary Party (PRI) after 71 years as a key opportunity to rebuild the Mexican-American relationship. For too many years, bilateral relations have centered on conflicts over drug trafficking, illegal immigration, and corruption. Although ties have improved since NAFTA took effect in 1994, Fox hopes for a quantum shift. "We've always looked at short-term solutions, and we've never sat down and thought about where we [the U.S. and Mexico] want to be in the long term," he says.

The President-elect envisions transforming NAFTA into a North American common market comparable to the European Union but without the huge bureaucracy. That could eventually mean dollarization of Mexico's economy. It would also lead to even greater integration of the two economies' business and industry. Instead of just encouraging the flow of products, services, and capital, Fox thinks NAFTA should have the long-term objective of bringing Mexican incomes and living standards closer to those in the U.S. and Canada. That could prove expensive. Raul Hinojosa, a NAFTA specialist at the University of California at Los Angeles, estimates that it would take subsidies or investments of $240 billion over 10 years for labor training and other programs to reduce the wage differential between the U.S. and Mexico from 8 to 1 to 5 to 1--a level at which immigration pressures would ease.

Fox calls his idea of a common market "a long-term project" that could happen gradually over 20 to 40 years. As an initial step, Mexico hopes to persuade the U.S. to expand its temporary-worker program so that 300,000 or more Mexicans a year can be employed legally in industries suffering labor shortages. In addition, an advisory panel of 20 prominent Mexican and American academics, labor leaders, executives, and former diplomats is working on proposals on immigration that will be presented to the new Mexican and U.S. Presidents.

The booming U.S. economy is just one reason Fox thinks now's the time to talk about a North American common market. He also has to deliver to poorer Mexicans who backed him in ousting the PRI. If Fox has his way, by the end of his term in 2006, Mexico's economy and society will be far more intertwined with its neighbors to the north. Fox's vision may sound improbable. But then, so was his election to the Presidency.

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