The U.S.-Mexico Partnership Comes of Age

By Thomas J. Donohue

President Bush should have no troubling offering a warm and friendly toast when he hosts Mexican President Vicente Fox at the first state dinner of his administration next week. However, the two leaders will find the agenda for this working visit fraught with both challenge and opportunity.

Mexico has plainly reached a tipping point, where dozens of small changes are together transforming the country from an economic backwater to a modern, competitive industrial power. A virtuous cycle of trade and investment is unleashing the entrepreneurial spirit of the Mexican people.

Highlighting this change was Fox's election 14 months ago. A decade of electoral reform and democratic activism overcame a terrible history of fraud at the polls and allowed Mexico to join what President Bush calls a hemispheric familia of democratic nations.

Driving Mexico's transformation has been the North American Free Trade Agreement. NAFTA has been a foreign policy masterpiece, tripling U.S. trade with Mexico since 1994 (to nearly $250 billion last year). Last year, the Mexican economy grew by nearly seven percent, making it one of the best performing large economies in the world, and several international rating agencies have upgraded Mexican debt to investment grade.

One glaring exception to this successful partnership is the ongoing trucking dispute. Beginning in 1995, the Clinton Administration refused to abide by America's commitment under NAFTA to permit cross-border trucking.

The difficulties that stem from this barrier to trade should not be underestimated. Current rules maintain a cumbersome, environmentally damaging, and costly system that represents a brake on further growth in trade. With trucks transporting over 80 percent of the value of our trade with Mexico, this dispute threatens widespread damage to both the U.S. and Mexican economies if Congress fails to allow cross-border trucking.

It is worth repeating that, under NAFTA, every truck entering the United States is required to meet each and every U.S. safety requirement. In fact, the Bush Administration is seeking to require Mexican motor carriers applying for U.S. permits to provide far more detailed information regarding their ability to meet U.S. safety requirements than their American or Canadian counterparts.

As with transportation, new thinking on immigration could benefit both our nations. In the United States, economic growth, a declining birth rate, and the onset of retirement by the baby boomers threatens to generate a "perfect storm" for American business. Left unchecked, worker shortages will cripple businesses—especially small ones—and stall economic growth.

The Bureau of Labor Statistics reports that in the next seven years, the United States will have six million more jobs than people in the workforce, and industries across the country consistently report worker shortages as a major impediment to growth. President Fox faces the opposite problem. Mexico has an enormous pool of workers which far exceeds available jobs. At the risk of stating the obvious, there is a convergence of the labor markets of these two countries.

Let us hope that Presidents Bush and Fox recognize the potential gains for both our nations that could be tapped by creating a workable and fair, temporary labor program and providing for earned adjustment, under various criteria, for undocumented workers now living in the United States.

Interestingly, policymakers in Washington could learn a thing or two from their colleagues in Mexico City. Consider Mexico's privately managed system of individual retirement accounts that will provide decent pensions to millions of retirees. And trade skeptics in Congress should take a hard look at the tremendous benefits Mexico has received through free trade—it has signed free trade agreements with 32 countries—before this fall's vote on Trade Promotion Authority.

The U.S. and Mexico have worked hard to build the foundation for a strong, lasting and mutually beneficial partnership. Presidents Bush and Fox should seize the opportunity to strengthen this special relationship when they meet this week. If both countries remain committed to the flow of goods, people and ideas across the Rio Grande, the U.S.-Mexico partnership can do nothing but succeed.

Thomas J. Donohue is President and CEO of the U.S. Chamber of Commerce.