Ross Perot, That Sound You Hear Is Nafta Making Money

By Bruce W. Nelan

Some Mexicans hate the North American Free Trade Agreement even more than Ross Perot does. One night last January, a mob protesting competition from across the border broke into an American dairy's warehouse in Chihuahua and dumped 5,500 gallons of milk. Six months later in Ciudad Juarez, several men slipped into a storage area owned by the same Texas dairy and set fire to four big trucks.

Fortunately, such anger and fear are rare on either side of the Rio Grande. Not only is Perot's warning about American jobs vanishing south with a "giant sucking sound" not coming true, but thousands of tractor-trailer rigs are rumbling through the border crossings -- carrying beer, heavy machinery, clothing, electronics. Eight months after NAFTA went into effect, trade is up, prices are down for consumers and no massive layoffs have occurred.

Along the trade routes in Texas, small border towns are preparing to shed their sleepy roots, and they are getting in position for the new NAFTA era. Laredo is already a service hub, hosting scores of freight forwarders, customs brokers and other outfits that move cargo from country to country. The tide of commerce that passes through Texas starts much farther north, and so far this year it includes more than 20,000 American-made cars and trucks -- up from fewer than 4,000 last year. From January to June, U.S. exports to Mexico rose 17%, to $24.5 billion, and Mexico's exports to the U.S. went up 21%, to $23.4 billion. Big business south of the border has blossomed as entrepreneurs like Jose Mendoza Fernandez, president of Bufete Industries, the second largest construction firm, find new clients in Canada and the U.S. Planning ahead, Mendoza linked up with U.S. partners six years ago.

But the benefits of freer trade have not been spread evenly in Mexico. Even though total foreign investment is up, little of the money is flowing toward Mexican producers. The worst affected are small businesses priced out of once | protected markets. Competition from low-priced American manufactured goods is also pushing up unemployment in cities in northern Mexico.

NAFTA will not be a real success in Mexico until consumer buying power expands and more businesses can start new ventures in the U.S. Last week's elections should give Mexico's economy a needed boost. The continuity of business-friendly, free-market policies under the P.R.I. will reassure investors who had been hanging back for months. If the money continues to flow, it will boost jobs and prosperity throughout Mexico.

With reporting by Laura Lopez/Mexico City and Richard Woodbury/Laredo