The North American Free Trade Agreement has just entered its 10th year in force, with debate still over its merits. Many Mexicans believe the treaty has done their nation more harm than good, a position the government rejects.

Mexico President Vicente Fox spoke recently about NAFTA and what it has meant for Mexico . This is a summary of his remarks.

“Assessed in global terms, this treaty has been a great success story. Trade among Canada , the United States , and Mexico has more than doubled since 1993 and this trade now exceeds $620 billion. Both countries export and import.

“It should be stressed that Mexico alone buys more goods and services from the United States than France , Spain , Germany , Italy , and England put together. This trade has been a powerful engine to drive economic growth, to modernize and make more competitive our industries.

“With the treaty, we have been able to establish an atmosphere of long-term certainty and trust for investment, and this has led to growing capital flows that, in Mexico ’s case, exceed foreign direct investment at $100 billion. This investment has enabled more job creation and improved workers’ wages, but has done so in the three countries.

“In Mexico , the export sector has generated more than half of all jobs created since 1994; 50 percent of all employment comes from exports. In Mexico , these export workers are paid 40 percent more than those in other manufacturing companies.

“For the United States more, many more than one million jobs have been created, encouraged precisely by greater trade; and the wages of these United States workers are between 13 percent and 18 percent greater than those in other companies. In Canada , export workers are paid 35 percent more than by other companies serving the domestic market.

“Finally, the free trade treaty has brought direct benefits to the almost 400 million inhabitants of the three countries, who as consumers have been able to enjoy a greater supply of goods and services, greater quality goods, and lower prices.”

Not all good

Fox did say the treaty has caused some pain, but he said the difficulties are short-term and to be expected.

“Of course, the current scale and dynamics of our trade relations have also led to certain difficulties and disputes, and this is natural,” he said.

“Greater trade leads to competition in which certain sectors lose, due to the problem of comparative advantage, but there can also be situations of unfair competition that harm trading partners. To settle these situations in each country we apply special policies to support the sectors affected and we also have recourse to the legislation and rules themselves of the free trade agreement to prevent unfair trade. The treaty itself includes the mechanisms to settle the disputes that arise.

“The United States , Canada , and Mexico have made use of these mechanisms when a sector has been harmed by unfair trade practices, we have opened dispute settlement panels and, where necessary, the affected country has applied the sanctions that are its right: antidumping duty, safeguards, or import limits. We are convinced of the usefulness of these mechanisms and we must not settle our disputes outside them, they do hinder free trade, on the contrary, they strengthen it because they provide clear rules and renew the commitment to fair trade.

“I am sure that those benefited by and the benefits of the free trade agreement can and must grow, that we can find new areas for opportunity that boost and consolidate it.

“Not all sectors benefit equally in our trade. Some sectors in particular, for example the countryside – agriculture — faces greater difficulties. There are production imbalances with the producers of the countries with which we trade and they have been displaced from the domestic market. That is why we have promoted and we will continue to do so, within the World Trade Organization, the elimination of subsidies and artificial advantages that distort international trade.

“We are aware that there is a problem in the Mexican countryside that we Mexicans must resolve and we must resolve it among all of us now that we are in the final stage of tariff elimination. We must do so through a comprehensive public policy that deals differently with our three agricultural segments: the most advanced farms, middle producers, and marginal producers.

“Therefore in Mexico , to strengthen the Free Trade Agreement but also to make our producers competitive, we have already called for a great alliance to make the Mexican countryside more competitive and productive and to raise the standard of living of those rural families who are most marginalized, precisely those who migrate to the United States .

“Further, we are going to continue to fight unfair trade through legal mechanisms and negotiation between our countries.

“Over these last two years we have experienced an international climate of uncertainty that has affected all the world’s economies, leading to recession, instability, unemployment, and in some countries, severe crises. In Mexico , thanks to responsible economic management, we have successfully faced the adverse economic environment. My government has clearly defined its path and we are already recovering growth.

“We have reduced inflation, interest rates —the lowest in decades— and the fiscal deficit to historically low levels. This has given businesses greater certainty and Mexico a place as the ninth largest economy in the world, and the largest in Latin America . Further, it has given Mexico a place as the world’s seventh exporting power.

“ Mexico is today one of the best locations for investment and business. Proof of this is foreign direct investment in our country which last year grew by 11 percent when it fell in practically all other countries in the world. This is evidence of the trust in our economy and certainty of our policies.

“Our solid platform and the good prospects for the Mexican economy have kept foreign investment flowing and it will continue to do so even in these difficult times. This has also allowed us to maintain the highest reserves in the history of our country at over $50 billion when our total foreign debt is only $75 million. This is a quarter of the foreign debt of, for example, Brazil .

We no longer owe a single cent to the International Monetary Fund, and in the first week of this year we covered all our foreign debt commitments for the year. No more debt will fall due for the rest of this year.

“In the current climate we have one of the lowest risk levels as a country among emerging nations or countries. But we know that we have to redouble the effort, that we must not let down our guard, that the challenges are enormous and that we must make progress in structural reforms in our country, to consolidate the way forward and strengthen the economy.

“We are also progressing in the consolidation of our domestic market, paying great attention to investments in energy, that this year will exceed $20 billion, much of it associated with private investment, under the formula we have called public-private investment.

“Further, we are making great investments in infrastructure: more than $10 billion in highways, ports, airports.

“And finally, a major housing investment program, already reaching construction levels of 530,000 dwellings per year, more than double what was being done a couple of years ago.

“Above all, we are working on human development and human capital development. We are making the greatest investment there because we know that is the greatest asset anyone can have in Mexico . The fight against poverty and marginalization has the highest priority, through education and health, guaranteeing that all Mexico ’s young people will be able to reach university through a national scholarship and financing system, so that they can reach that educational level.

“We are paying attention to contingencies in the international political situation, paying attention and participating. Mexico has declared its support for the continuation of international efforts against terrorism and stepping up United Nations Security Council efforts to achieve this objective and defeat that evil affecting mankind: terrorism.

“Further, we are ready to work together with our North American allies in the Free Trade Agreement, to guarantee border security, to guarantee national security throughout the NAFTA territory. We are ready to work in this crucial area.
      “ Mexico offers encouraging conditions for business and remains one of the best locations for investment. Last year alone, we received more than $13 billion in direct investment, the highest in Latin America . We have a long-term vision and solid economic foundations to move forward.”