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Mexico is China's final WTO membership hurdle
By Dean Calbreath
UNION-TRIBUNE STAFF WRITER
December 7, 2000
Three months after the U.S. Senate voted to help China enter the World Trade Organization, toys, textiles and tequila have been keeping Beijing from getting the final approval that it needs -- from the government of Mexico.
Mexico is the only nation that has not backed China's entry into the 136-member WTO, a global club that aims at reducing tariffs and trade barriers.
Chinese President Jiang Zemin is so anxious about gaining Mexico's approval for WTO membership that he dispatched a high-ranking delegation to President Vicente Fox's inauguration on Friday, stressing the need for bilateral cooperation between the countries.
Until Beijing gains Mexico's approval, its 14-year battle to enter the WTO is stymied, since the organization requires unanimous approval.
Although most observers say Mexico eventually will give a green light, the foot-dragging underscores Mexico's fear that it could be swamped by a deluge of cheap Chinese products.
"We fully support China's accession into the WTO, but we want to make sure that China abides by minimum international obligations regarding trade," says Raul Urteaga, a trade official in the Mexican Embassy in Washington, D.C.
Ortega cites intellectual-property rights and dispute resolution as being among Mexico's chief concerns in the trade talks.
Other sources say the biggest worry is that low-cost goods could flood the market, swamping some of Mexico's homegrown products and threatening its position as an exporter to the United States.
"The bottom line is that Mexico has been doing pretty well lately in some of the same sectors that the Chinese have specialized in, such as toys, textiles and consumer electronics," says Barry Naughton, a China specialist at the University of California San Diego.
"You can certainly understand Mexico's anxiety," he says. "Mexico is in the position of trying to restructure their economy with a lot of labor-intensive industries. If a large number of Chinese imports come in, it could cripple that kind of development."
Mexico wants to retain some of its anti-dumping laws against Chinese exports. Currently, 1,300 Chinese products are subject to anti-dumping regulations, although many restrictions are being phased out during negotiations.
The laws are meant to block foreign countries from pumping artificially cheap goods into the domestic marketplace. China complains that Mexico is asking for more concessions than were granted to either the United States or the European Union.
Cheap-labor fears
There's a certain amount of irony in Mexico's reluctance to immediately bring China into the WTO. When the North American Free Trade Agreement was passed in 1994, U.S. labor unions argued that it would erode manufacturing jobs by sending work to Mexico. Now many Mexicans fear the same thing could happen with China.
China's labor costs are so low that its products can undercut Mexico's, even after accounting for increased transportation and tariff costs. Workers in Chinese factories make as little as 13.5 cents per hour, compared with an average hourly wage of $1.80 in Tijuana's maquiladoras.
"Mexico's looking at China with a real magnifying glass. It knows it could be at a real disadvantage when it's competing with a country with lax labor laws and tax issues," says Juan Fernandez, a former Mexican bank official who heads the international department at Union Bank in San Diego.
Probationary offer
Some of the leading lobbyists against China's entry into the WTO have been Mexican toymakers.
Late last month, Helios Eguiliz, head of the Mexican Toy Industry Association, asked the Mexican Trade and Industry Ministry to subject China's WTO membership to a 15-year probationary period, so it could be ejected if it abuses its free-trade relationship.
Of concern to Eguiliz is that China makes 70 percent of all the world's toys, including Mickey Mouse dolls for Walt Disney Co. This spring, the Hasbro toy company closed its production lines in Tijuana and shifted 1,450 jobs to China. Mattel has operations in Tijuana and China.
Eguiliz noted that after Mexico's 1986 entry into the General Agreement on Tariffs and Trade, or GATT -- a precursor to the WTO -- many Mexican toymakers went belly-up or were forced into mergers because of the increased foreign competition.
Another area of concern is textiles. Last year, Mexico edged China as the chief supplier of textiles to the United States. But the margin between the two is thin. In 1999, Mexico exported $9.1 billion to the United States, compared with China's $8 billion. That gap may tighten if trade barriers are relaxed after China enters the WTO.
Other concerns have been floated as well.
Mexican distillers have been worried that China could produce its own brand of tequila, since it has a climate that could support the agave cactus -- tequila's chief ingredient.
"The word 'tequila' is synonymous with Mexico, or more correctly, with the state of Jalisco where tequila is based," says diplomat Urteaga. "Just like you can only produce bourbon in the United States or cognac in France, we want to ensure that tequila will be produced nowhere else."
Conflicts over trade have been brewing for the past several years. It came to a head in 1998, when Mexico found that Chinese companies had illegally failed to pay tariffs on thousands of products, either by turning in false invoices on the exports or by exporting them through third countries.
Chinese and Mexican diplomats were able to resolve the dispute by agreeing to more closely monitor trade. But the incident left a bad taste among Mexican trade officials, even as they negotiated to bring China into the WTO.
Tense talks
"The Mexicans have some bruised feelings toward the Chinese," says Al Zapanta, who heads the U.S.-Mexico Chamber of Commerce. "Trade Minister Herminio Blanco had not had a very positive relationship with Beijing."
The WTO negotiations reached a fevered pitch last month, in the closing days of President Ernesto Zedillo's administration. In mid-November, as Zedillo and Jiang Zemin attended a summit of the Asia-Pacific Economic Cooperation bloc in Brunei, their foreign-affairs teams huddled in a conference room not far away, trying to hash out their disagreements.
Outgoing Mexican Trade Minister Blanco and Chinese Trade Minister Shi Guangsheng spearheaded the talks, which lasted from the early morning hours until late in the evening. The negotiators later told reporters that the talks were "emotional" and stressful.
The talks ended up falling apart, spelling the end to Zedillo's last major foreign-policy push and putting the issue on hold until Fox settles into office.
Chamber of Commerce executive Zapanta says he thinks relations could be better with the Fox administration, since Fox has been a strong trade proponent. Zapanta says that his organization hopes to set up a three-way talk involving China, Mexico and the United States early next year.
UCSD professor Naughton is a bit more skeptical about Fox's support of China.
"NAFTA gives Mexico advantages over China in the U.S. market, since Mexican products can enter duty-free," he says. "But if China gets into the WTO it will have less of a quota penalty with the United States. And since U.S. trade is such a stimulus for the Mexican economy, this could be an issue where a free-trader like Fox might become a little more protectionist."
© Copyright 2000 Union-Tribune Publishing Co.
Well, you see, Mexico actually elected Vincinte Fox instead of the PRI candidate, thus becoming a "true democracy". The US has fallen behind the 8-ball in this area as one of our dominating national parties, the Democrats, are trying to steal the election through massive fraud, media propaganda, and rigged courts for their candidate Algore.
I'm tired of seeing and hearing our country called a democracy. If we ever allow ourselves to be reduced to that most dispicable form of government we no longer have a country. I don't know what the government propaganda centers (schools) are teaching now but when I was in school democracy was a revolting form of government that should be avoided at all costs.
I understand what you are talking about. When people speak about a democracy, they could be talking about two things:
A Democracy, or lets say "direct democracy", is a form of government where you vote directly for the candidates instead of our representative republic. We all know the problem with that, but it still beats a dictatorship.
A democracy can also be "a democratic form of government" meaning that the citizens actually get to openly vote for their public officials in fair elections. This was once considered a wacky liberal (liberal in the classical sense, as today conservatives & libertarians are actually classic liberals) idea in Europe where royal families ruled.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
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