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Mexico Opening Up to More U.S. Goods

February 7, 1988

MEXICO CITY (AP) _ Mexico has made great strides in recent years to open up its economy to more foreign goods, but it is not yet ready to join a free trade zone with the United States and Canada.

President Miguel de la Madrid dismissed President Reagan’s call for a sweeping free trade area. He said Mexico, the poorest of the three countries, wasn’t economically prepared for such a move.

″It is not possible to think of the formation of a common market resembling Canada’s because the differences of our development do not permit it,″ de la Madrid recently told a meeting of exporters and importers.

The United States and Canada agreed last year to eliminate all tariffs and most other trade barriers between the two neighbors by 1999.

″We’re determined to expand this concept, South as well as North,″ Reagan said in his State of the Union message in January. ″Next month I will be traveling to Mexico where trade matters will be of foremost concern.″

The two presidents will meet Feb. 13 in the Pacific coastal resort of Mazatlan.

Trade-opening moves began in Mexico in July 1985 as part de la Madrid’s efforts to revive the sickly economy and reduce its heavy dependence on oil exports for foreign earnings.

Since then, Mexico has sharply scaled back its import licensing system and slashed the maximum tariff from 40 percent to 20 percent. It also joined the General Agreement on Tariffs and Trade, an international trading arrangement to which more than 90 nations belong.

The changes also were designed to control the nation’s inflation rate, which hit a record 159.2 percent last year. Outside competition, officials reason, will force local manufacturers to turn out better, cheaper products.

″Mexico has to be an open economy if we want to develop our economy to continue growth and to give more employment to Mexicans,″ said Luis Bravo Aguilera, the Commerce Department’s undersecretary of foreign trade.

″Mexico is leading the way in terms of what other Latin American countries are doing,″ said Guy F. Erb, a Washington consultant on investment and trade in Mexico.

Imported goods, once considered a serious threat to heavily protected domestic industries, now have become a symbol of the government’s ambitious program.

The United States is Mexico’s largest trading partner; Mexico’s trade with its northern neighbor ranks fourth after Canada, Japan and West Germany.

U.S. exports to Mexico were $13.3 billion in the first 11 months of 1987, compared to $11.4 billion in the same period of 1986, according to U.S. Commerce Department figures.

U.S. imports from Mexico reached $18.8 billion in the first 11 months of last year, up from $16.2 billion for the same period of 1986.

Mexican consumers are increasingly tempted at their local supermarkets and department stores by a host of imported consumer goods impossible to find just a year ago.

Korean TVs were quickly snapped up during a recent sale at a major supermarket chain. U.S.-made toys for preschoolers were a hit during the Christmas season. And connoisseurs can now find a wider variety of Italian and French wines than ever before.

The imports are expensive, often several times the U.S. price, putting them out of reach for all but one-tenth of Mexico’s 80 million.

″I don’t understand who is buying imported products because prices are so high,″ said Guillermo Ramos Uriarte, executive director of the United States- Mexico Chamber of Commerce. ″The truth is they haven’t sold.″

But sales clerks at Liverpool, a department store catering to middle- and upper-income consumers, report brisk sales of some foreign goods. Their customers, both foreigners and Mexicans, feel the imports are better made.

″We don’t have any complaints about them,″ said Alejandro Miranda, who sells imported sprinklers and lawn mowers in the store’s garden section.

The trade-opening moves have not been without criticism.

Labor unions repeatedly warn of widespread bankruptcies of firms unable to compete with foreign competition.

A group of industrialists recently complained that the government should revise its policies to protect vulnerable industries, such as petrochemicals, iron and steel, and electronics.

Others argue the government’s recent sharp devaluation of the peso currency has made imports too costly, although it has made Mexican exports cheaper in the world market.

Bravo Aguilera believes the Mexican private sector just needs time to adjust.

″The Mexican private sector is ... just beginning to learn to live in an open economy,″ he said. ″It’s the first stage.″

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