Heskett Column - What Lies Beyond NAFTA? Summing Up

More Questions Than Answers

One of the defining issues in the 1992 U.S. presidential election, NAFTA, has fallen off the radar in the current campaign. This suggests either that many in the U.S. have lost interest in it or, more likely, the subset who visit the HBS Working Knowledge site are generally comfortable with the results that NAFTA has produced. But it seems not to have receded in interest among at least one group of readers of this column. The column "What Lies Beyond NAFTA?," with a focus on future responses to issues concerning migration between Mexico and the U.S., elicited comments largely from Mexican readers—not surprising in view of the central role that Vicente Fox, the president-elect of Mexico, is expected to play in upcoming discussions of NAFTA 2.0.

There was little argument among respondents about the positive impact of NAFTA on both U.S. and Mexican consumers and economies. The conclusion is that it has created jobs on both sides of the border while sharpening the ability of Mexican companies to compete. The Mexican business community is learning to cope not only with foreign competitors, but also with rising labor costs caused by more competition for the skills of the Mexican labor force. In the words of Alejandro Jaime, "American society needs Mexico and vice versa."

Nor was there any argument that illegal immigration into the U.S. from Mexico is a dehumanizing process for both countries. As Diego Martinez put it, "Illegal immigration is a terrible thing. Not only does it create a new social class of underground activity in the U.S., but it also creates millions of broken homes ... in Mexico." He concludes that legalizing the free flow of labor into the U.S. "could be equivalent to the abolition of slavery in the nineteenth century."

And respondents seemed largely in agreement that Vicente Fox is well equipped to help foster a serious discussion of ways of dealing with the labor migration that will take place one way or another between the two countries. In addition, Xavier Ponce de Leon expressed the hope that something might be done to foster the creation of wealth (and jobs) in Mexico through the removal of structural barriers that inhibit entrepreneurial behavior.

However, before action might be taken to correct the problems created by illegal immigration, respondents would first gather some facts. According to Martinez, "There is probably some research done on the inflationary impact of regularizing illegal residents in the U.S." Roberto J. M. Rodriguez asks, "What is the U.S. economic labor demand that could be satisfied by Mexican workers? What is the Mexican labor (pool) available to satisfy the U.S. demand?" Devdip Ganguli asks, "... will neighboring countries be justified in considering it their right that the privileges be extended to them as well?" It's hard to argue with his conclusion that "In the end, we have more questions than answers." What do you think?