Between Nafta And A Hard Place: How Mexico Will Test The Next President

Texas Governor George W. Bush and Vice-President Al Gore are both self-proclaimed free-traders who strongly support the 1994 North American Free Trade Agreement. But when a NAFTA dispute panel issues a report shortly after the Nov. 7 election, it is likely to complicate relations between incoming Mexican President Vicente Fox and the fledgling Administration of either President Bush or President Gore just as the new U.S. chief executive is trying to showcase his leadership skills on the world stage.

The NAFTA panel is expected to rule that the U.S. has violated a central promise of the trade treaty: that trucks from each nation would be able to deliver goods across the border as long as they meet one another's safety regulations. President Clinton refused in December, 1995, to open up border states to Mexican trucks. And last January, he denied Mexican trucks access to all 50 states, despite a NAFTA deadline requiring him to do so. Citing safety concerns, Clinton has limited Mexican 18-wheelers to a narrow commercial zone along the border.

"SNOWBALL'S CHANCE." The real reason for the backtracking was political, many observers say. Just days before then-Transportation Secretary Federico Pena was to announce the border opening, the White House reversed the decision as a favor to the Teamsters union, which opposes letting low-paid Mexican truck drivers enter the U.S. "The U.S. has been wrong from day one on this issue, and there's not a snowball's chance in hell that it will win this case," says Sidney Weintraub, an expert in Latin American trade issues at the Center for Strategic & International Studies, a centrist Washington think tank. "This has nothing to do with safety and everything to do with the Teamsters and the election," says James R. Giermanski, who studied the issue as a professor at Texas A&M University in Laredo.

If Gore becomes President, he'll be in a ticklish situation. Should he mend fences by cutting a deal with Mexico--and sending a pro-trade signal to business--he would alienate Hill Democratic leaders and the AFL-CIO allies who helped him get elected. Especially miffed would be Teamsters President James P. Hoffa, whose union endorsed the Veep in September. That could set the stage for labor opposition to other Gore trade initiatives, including legislation that would allow him a free hand in negotiating future trade treaties.

A President Bush, on the other hand, would likely reverse Clinton and open the border to Mexican trucks. But he could find his options limited by other trade disputes. Bush, who says he knows Fox well, would also need to address U.S. protectionist measures on tuna, avocados, and sugar. "Fox has made it very clear that he wants a more open relationship with the U.S., but you also hear that the U.S. has too many barriers to trade," says Riordan Roett, director of the Western Hemisphere Program at the School of Advanced International Studies in Washington.

Bush would also feel heat from telecom players like AT&T and MCI WorldCom Inc. At their urging, the U.S. has been trying to get Mexico to crack down on the alleged monopolistic practices of Telefonos de Mexico. Washington has already taken the case to the World Trade Organization but hopes to negotiate a resolution after Fox, who favors liberalizing Mexico's $14 billion telecom market, takes office.

Whoever wins the White House will have to confront such thorny trade issues with Mexico. And that will provide an early test of the new President's ability to manage relations with America's second-biggest trading partner.

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