|"Talks will be slow."
Minister Ernest Derbez
Statistics at the WTO
Mexico, a founding member of the WTO, is the only country that has
yet to conclude a trade agreement with China. Without an agreement, China will be excluded from entering the organization. If such a scenario occurs, the trade
agreements with the USA and European Union will not go into effect as they assume admittance to the WTO in 2001. And China, by many measures
already the world's second largest economy, will operate outside the great global trading block with an unknown impact on world economic cycles.
The administration of former Mexican President Ernesto Zedillo long stalled over
approving China's entry into the WTO. It appears that policy has not changed under Mexico's new
President Vincente Fox. His new economic czar, Ernest Derbez, admitted to reporters in December 2000 that Mexico could block China's bid. More recently,
however, Mexico City newspaper El Universal reported that Derbez said Mexico would
not block China from the WTO. Derbez said that by the end of March Mexico will
have an agreement with China. However, prior to that date, the Mexican government
will send the WTO "a series of very concrete documents regarding the position
Mexico has taken on the situation in the organization." Derbez has also said that one reason
for the slow talks is to ensure China is making "internal changes" to comply with WTO rules
What's at issue? Publicly, the issue
is fear of dumping by China, that is a surge in cheap imports after China enters WTO. To protect its own fragile economy, Mexico currently imposes heavy anti-dumping tariffs on
Chinese imports. And Mexico is probably making the case to the WTO that those tariffs remain in place.
But the real issue is the fear that China will eclipse Mexico in the race for export markets,
foreign direct investment, and economic growth in the years ahead. Both countries are trade powerhouses according to WTO data, although China is well ahead
of Mexico, even more so if Hong Kong numbers are included. Both countries are among the top three recipients of foreign direct investment,
although China is the perennial front runner. And both China and Mexico continue to experience
strong economic growth. Chinese GDP surged 8.2% in 2000 while the Mexican economy
grew by 7% (growth figures are from their respective governments).
But statistical similarities aside, the comparison is uneven. China is an international
trade titan and "Chinitos" (Mexican slang for Chinese) take advantage of Mexico's maquiladora
export processing zones and build factories that export to the USA. Mexico has for some time followed an Asian style
export-led development strategy but remains overly dependent (if not entirely dependent) on the
USA for its exports, foreign investment, even currency stability.
Stalling or even blocking China's WTO entry could only be in Mexico's long term benefit. The new
Mexican government wants to press President Bush about the creation of a
"hemisphere wide trade block" which he mentioned as a foreign policy initiative during his
presidential campaign. Mexican President Fox will discuss the proposal, which he calls "NAFTA Plus", with George W. Bush when they meet in February. This may be an early test of
the direction of USA foreign policy under President Bush. Condoleeza Rice, Bush's National Security Advisor, said at the Republican
National Convention that Mexico would be the "corner stone" of Bush administration foreign policy.
As it stands, the current round of talks between China and the WTO have collapsed over
disagreements over farm subsidies. The next meeting is scheduled for late February or early March--the same timeframe given by Ernest Derbez for Mexico's bilateral
trade agreement. WTO Deputy Director-General Paul-Henri Ravier has instructed delegates to speak to their governments before the next meeting.
"It is clear that governments at the highest level have to be involved," he said.
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