QUERETARO, Mexico, Dec. 5 (UPI) -- The quotation in the paragraph below is an extract from one of those open letters that one sees frequently in newspapers. It was published in the Mexican press on Wednesday. It is addressed to Mexican President Vicente Fox and to his economy, finance and agriculture ministers, and the national Congress.
The reader might like to guess who is writing it, and with what purpose. The answers are perhaps surprising.
The letter reads: "You have the responsibility to protect the jobs of all Mexicans. We do not accept that to benefit some, we must sacrifice our jobs and the welfare of those who depend on us ... we want you to give us back the chance to keep our jobs."
Who is writing? The authors are a panoply of trade unions of the oil, fats, soap, insecticides and fertilizer industries, among many others.
Against what are they protesting? The terror of globalization, the imports from the mighty United States that are causing them to lose their jobs?
Here is the surprise. They are protesting not against imports but against a block on them: the imposition of "an unfair tariff" on a sweetener -- high-fructose corn syrup -- that is imported mostly from the United States. Imports of the product are being discouraged to protect the ailing Mexican sugar industry.
The tariff "is putting our jobs in danger," they write. The union men are protesting not against free trade and globalization but against protectionism. How has that come about?
Free trade causes jobs to be lost. It also causes jobs to be gained. Goods enter a country more cheaply and can be used as inputs into other products that are then produced more cheaply and competitively. It is in this way that free trade can win jobs and converts.
And that is why there is an intense debate in Mexico now about the proposed further reduction in agricultural tariffs on Jan. 1, within the North American Free Trade Agreement that links Mexico with the United States and Canada.
The NAFTA came into effect at the beginning of 1994. At the beginning of 2003 another stage in the programmed reduction of tariffs within the trade area comes into effect.
Mexico's within-NAFTA import tariffs on grains such as wheat, barley and rice and on apples and potatoes, among other things, which are already no more than 2 percent, will be cut to zero. The tariff reduction is small.
But Mexican farmers have been protesting vigorously about their lot under NAFTA for a long time. For them, the next cut is just the latest one in a series of painful and intolerable cuts.
The government hasn't been deaf to their cries. In recent months it has introduced what it calls "blindaje," armor-plating for some agricultural sectors. The armor-plating consists of anti-dumping measures or price supports or subsidies, such as the one imposed on high-fructose corn syrup, a tariff imposed to protect the ailing Mexican sugar industry.
On Nov. 18, Fox's agriculture secretary, Javier Usabiaga, announced plans for supports on grains and oilseed that would apply for five years.
"If with earnings from the market together with Mexican government subsidies (through the Procampo program), the producer doesn't earn the guaranteed wage, the government will take responsibility for making up the difference through additional support," Usabiaga said.
Fox himself has sought to justify the protection by pointing to the protection enjoyed by farmers in the United States (and Europe and Japan) in the form especially of agricultural subsidies. The new farm bill introduced in the United States in April approved subsidies amounting to some $180 billion over the next 10 years. Mexico's own subsidies are tiny by comparison.
In addition, in bilateral discussions with the U.S. government from Nov. 25-26, Fox and his ministers asserted that the harm Mexican agriculture would suffer from increased U.S. imports would increase Mexico's exports -- of illegal emigrants to the United States.
The U.S. government appears not to have been much moved by this persuasion. U.S. Undersecretary for Agriculture, J.B. Penn, criticized Mexico's introduction of price supports and hinted that the United States might retaliate with protectionist measures.
What is all this leading to? It is part of the tension present in the Mexican-U.S. relationship, tension that seems to arise more than anything from Fox's disappointment over the failure to reach some sort of agreement on Mexican migration to the United States -- the topic Inside Mexico looked at last week.
Mexico might try to renegotiate some aspects of the NAFTA; there are many calls within Mexico for the government to do so. But the NAFTA itself is largely safe and is advancing. Overall, it has benefited Mexico enormously, creating investment and jobs and exports, and helping to explain much of the improvement in the Mexican economy since the crisis it suffered in the mid-1990s.
Most Mexican politicians recognize this. It is about going further in opening up the economy, permitting foreign or even just private investment in oil and electricity, for example, that they argue.
Some of the blame for the current bilateral tension does lie with the United States. Its farm subsidies are unfair and a big irritant. But Fox's problems with his farmers stem more than anything from problems on his side of the border: the historical problems of the ultra-poor Mexican countryside.
Half the country's farmland is owned under the communal system of the ejido, a product of the Mexican revolution of the early part of the 20th century. Most farming plots are tiny and hugely inefficient.
Uncertainty over land ownership prevents development of the countryside. Investments in land and equipment do not go ahead.
Then there are all the other obstacles that stand in Mexico's way: the high cost of gasoline and diesel from the state-run monopoly Pemex; the high cost of electricity from the state-run monopoly, the CFE; poor infrastructure; lack of skills and training.
It is this array of obstacles that ensures that Mexico remains underdeveloped and poor.
Provoked perhaps by the U.S. farm subsidies, and with 2003 mid-term elections in mind, Fox has probably done too much to support his vociferous farmers -- even if their lot is not an easy one.
But the good news in the current debate should not be ignored. It is not one-sided. Though aspects of the NAFTA are attacked, few in Mexico oppose the NAFTA as a whole.
The national mentality has shifted grudgingly away from the nationalism and protectionism that has denied Mexicans the opportunity to advance themselves. There is still a long way to go. But the Mexican countryside won't always be poor.
Inside Mexico is a weekly column in which our international economics correspondent reflects on the county he lives in part of the time. Comments to: [email protected].
