SOUTHERN JOURNAL OF AGRICULTURAL ECONOMICS
JULY 1992
THE U.S.-MEXICO FREE TRADE AGREEMENT: THE
MEXICAN PERSPECTIVE: DISCUSSION
C. Parr Rosson, Ш, and Amy Angel
ɪhe prospects for North American Free Trade have
received much attention in popular, as well as pro-
fessional, circles inrecentmonths. This invited paper
session is one such instance. Segarra’s paper pro-
vides an excellent overview of what an agreement
may mean for Mexican agriculture and makes some
strong assertions about economic and political out-
comes in the United States and Mexico. This discus-
sion focuses on what Segarra does not address, rather
than attempting to counter or support what is con-
tained in his paper. While most comments are di-
rected toward Mexico, several important
implications for the United States are discussed as
well.
A fundamental question posed in this session was,
why is Mexico now concerned about NAFTA and
why the urgency? It is important to remember that
NAFTA came about at the urging of Mexico and not
the United States. Segarra attributes at least part of
the answer to the decline of the Mexican economy
during the early 1980s when oil prices declined,
inflation increased to triple digit levels, and real
incomes declined to place many people in poverty.
In addition, one could also list the pressing need that
Mexican President Salinas may feel to institutional-
ize his radical and sweeping economic and social
reforms which have improved economic conditions
significantly in recent years. The next Mexican
president may not be as supportive of free trade, so
it important to Salinas that an agreement be finalized
before his tenure ends. Further reason could be found
in the perception that NAFTA partners may have that
economic integration will bind them together to
confront a growing European trade bloc and an
emerging Pacific Rim bloc. However, the problem
for Mexico is much more pressing, socially, politi-
cally, and economically, than any of these arguments
would suggest.
Mexico faces a demographic dilemma, precari-
ously balanced between becoming a forceful eco-
nomic power or continuing as a struggling
developing nation. Mexico has a young, rapidly
growing, but relatively poor population. With 90
million people in 1990 and growing at a rate of 2.2
percent per year, Mexico will have over 133 million
people by the year 2010. Currently, 61 percent of the
population is under the age of 25. Unemployment
ranges from 15 to 18 percent nationwide, but is
nearer 25 percent in the major urban centers of the
country. While it may be argued that no one of these
statistics alone poses a significant threat, taken to-
gether they represent a formidable obstacle to the
development of a strong economy and political sta-
bility in the future. Coupled with this is Mexico’s
relatively low per capita income of $ 2,200 and the
fact that 40 percent of the nation’s wealth is concen-
trated among the upper ten percent of the population.
Without broad-based income growth and redistribu-
tion and improved economic development, Mexico
can expect not only continued economic stagnation,
but also significant social and political upheaval by
the end of this century. This demographic dilemma
underlies the pressing economic reality faced by the
current Mexican administration.
Segarra discusses the role of the “ejido” land
tenure system and the problems resulting from so-
cialized agricultural production and the lagging pro-
ductivity of agriculture. However, the problem faced
by the Government of Mexico is how to reform land
tenure to increase productivity and maintain the in-
tegrity of the “ejido” system at the same time. To
fully liberalize the import of food and agricultural
products which compete with the “ejidatarios” could
potentially displace over 800,000 of the 3.7 million
subsistence farmers (Hinojosa and Robinson). Any
major changes to displace farmers will certainly run
counter to past policies which sought to stem the tide
of rural-to-urban migration. This problem is further
exacerbated by the fact that incomes of rural resi-
dents have historically remained low when com-
pared to their urban counterparts. In 1990, it was
estimated that rural incomes were only about ten
percent of the urban level. While certainly this re-
flects the plight of the subsistence farmer, it poses a
difficult situation for land reform.
Related to this issue is how to deal effectively
with the “duality” of the Mexican agricultural econ-
omy, i.e., the disparity between the large, export
C. Parr Rosson ΠI, is an associate Professor and Extension Economist, and Amy Angel is a Graduate Research Assistant in the
Department of Agricultural Economics, Texas A&M University.
Copyright 1992, Southern Agricultural Economics Association.
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