Former Mexican president laments absence of free trade leadership
Former Mexican President Vicente Fox entered politics because he felt that big changes were needed in Mexico and Latin America.
Fox, out of office for nearly two years, now believes that the most critical need facing both North and Latin America is a lack of political leadership on the issue of free trade and globalization. It is a role he believes has been vacated by the United States.
'We miss the leader,' Fox said May 29. 'The leader has to come back with great moving ideas, like President John F. Kennedy's Alliance for Progress.'
Leadership is critical, Fox said, 'not only to access markets but to build markets, and not only to build markets but to open markets.'
As an example of the criticality of leadership, Fox pointed to the inaction that has occurred on free trade discussions since the Sept. 11, 2001 terrorist attacks in the United States.
'Over the last five years, very little has happened because it came to be a second, third or fourth priority to security. Sept. 11 came to stand across all the plans we were working on in immigration, integration, and in advancing with the North American Free Trade Agreement,' Fox said. 'It is my understanding that we as human beings–as citizens–should have more capacity than attending one issue at a time.'
Fox made his comments to more than 1,000 business leaders attending the AMR Research Supply Chain Executive Conference in Scottsdale, Ariz.
In addition to calling for a return of American leadership to the free trade issue, Fox also said that recent moves in the United States are troubling.
'I am a little surprised that this great leading nation of the United States is steering away and coming back to protectionism,' he said.
Fox finds these moves by the United States more surprising in light of the fact that the U.S./Mexico trading sphere is larger than all of Latin America combined and the $300 billion in Mexican exports to the United States last year represent more than the combined U.S. imports from Italy, Germany, France and the United Kingdom. The 66 million Mexican consumers, which represent the seventh largest consumer market in the world, bought more than $200 billion in goods from the United States last year, Fox said.
'This highlights that NAFTA is a success,' Fox said. 'Free trade is something that investment needs, that corporations need, and that nations need.'
Mexico, he said, is teeming with 'good, efficient, quality labor' and the nearness of the nation to the United States allows for Mexican manufacturing to maintain low inventories and achieve high turnarounds.
'Most of the maquiladoras plants (along the U.S. border) can cycle their products from raw materials to completed products that are back in the U.S. in less than 24 hours,' Fox said. 'And now Mexico is facilitating and exploring what is already happening: bringing raw material from Asia from the Pacific ports of Mexico; crossing them to a manufacturing plant or maquiladora in the territory; and then shipping the goods back to the U.S., the greatest market in the world.'
Fox said the future of the North American economic partnerships relies on moving forward from where we are today.
'We must expand vertically by a new vision of NAFTA to further integrate our partnership with the U.S. and Canada,' he said. 'We must further integrate with the next step of having a customs union. It is important to standardize and to homogenize duties in the whole of the NAFTA territory. From there we must continue to move forward on integrating to keep gaining on competitiveness.'
Countering the criticisms that NAFTA has cost jobs to Americans, Fox said that Mexico is not the danger. 'What can be better for the U.S. than to have a wealthy nation as a neighbor?'
The potential threat to all three NAFTA members, Fox noted, is the outsourcing of manufacturing from North America.
'The bottom line, in the end, is that the three of us, the U.S., Canada and Mexico, are losing jobs to China,' said Fox, pointing out that an expanded and comprehensive NAFTA agreement that kept manufacturing in the trading bloc would have the greatest economic benefit to each individual member.
Fox admitted that his country's experience in the past century is leading it to seek out globalization with tremendous passion.
'It is unfortunate that Latin America lost most of the 20th Century,' to these political conditions where dictators and corrupt governments made doing business near impossible, Fox said. 'The growth of our economies, the increase in income was extremely slow — a desperate situation for our citizens.'
After seeing the rest of the world beginning to advance quickly in an economic sense, Latin America finally took action, Fox said. 'We got rid of the dictators and we embraced democracy all throughout Latin America, but this was not until the 1980s or the 1990s.'
Fox pointed to the efforts of leaders like visionary Monterrey businessman Don Eugenio Garza Sada, who passed away last week. 'He was always fighting hard for change in the government, for open markets, for competitiveness, for productivity,' he said.
And despite the success that moves to globalization have offered to Mexico, Fox admitted that the economic reforms following this move to democracy and a market economy were painful, especially for the poorest of citizens. 'But we went through with them and now we know that democracy works,' Fox said. 'That the market economy works. That globalization and openess works.'
Since these reforms, Mexico has recorded five years of 6 percent growth and per capita incomes, according to Fox, are starting to increase.
'Finally we have the formula to defeat poverty,' he said. He noted that over the past decade the number of Latin American families in poverty has decreased 10 percent, from 45 percent to 35 percent.
'It's not much, but it is a path that we know we have to follow because we know that it works,' said Fox.
Despite these successes, Fox said globalization is not totally accepted by all countries. Mexico, he said, has been a leader in trying to change this perception.
'Mexico is the most open country in the world, because it has 42 trade agreements with 42 different economies, allowing the movement of goods to those economies with no duties, no barriers, no obstacles,” he said. Those 42 economies, he added, account for 75 percent of the world gross product.
However, other forces in Latin America do not share Fox's views.
Fox blasted what he called 'the excess of populism and demagoguery' in places like Bolivia, Ecuador and Venezuela for creating worrying trends in Latin America. 'We had our own taste of populism in Mexico,' Fox said, pointing to the early 1970s administration of President Luis Echeverr'a. 'The government overspent, it provided the fish without teaching anyone to fish and 35 years after we are still paying the price of a populist administration.'
Fox said that with such a torturous history so readily available to Latin Americans, it is surprising that such movements can flourish. 'If we have the experience (of these regimes), we must avoid going back to the same mistake we had in the past.'
Despite these worrisome trends, Fox said he sees a bright future in the 21st Century for Latin America, because globalization does not easily permit protectionism or authoritarian governments to dominate or succeed.
'What we need the most in Latin America is leadership and institutions that generate those leaders,” Fox said.
To facilitate this, Fox opened the Vicente Fox Center for Studies near his ranch in Guanajuato, Mexico, which seeks to be, as he described it, 'a center of leadership through education, through think-tank activities, through public policy creation that has to do with open markets, so that Latin American and Mexico can recover the time lost during the 20th Century.' ' Keith Higginbotham