time since the country’s revolution in the early 1900s.
First came 1994’s North American Free Trade Agreement, which formally tied Mexico’s economy to the U.S. and Canada. Then came the Zapatista uprising, the 1995 peso crisis and Mexico’s ensuing economic meltdown. Now you can add dramatic political change to the list.
To be sure, the July 2 election of opposition party candidate Vicente Fox as Mexico’s next president is an orchestrated change. Mexico’s long-ruling Institutional Revolutionary Party, known by its Spanish acronym PRI, has been slowly loosening its 71-year hold on power, in part under pressure from the U.S. But that doesn’t diminish the significance of Mexico’s big change.
After years of corrupt, lazy leadership under PRI, Fox, a businessman, promises to usher in a new era of pragmatic politics focused on generating investment and improving life for many Mexicans.
In a controversial proposal for some, Fox wants a pact with the U.S. that would let workers cross the border freely,a move that shows his grasp of economic and political realities.
At the same time, Fox also wants to direct more aid to the countryside, public education and to pay more attention to the poor who might otherwise seek opportunity north of the border.
In Baja California and other states, Fox’s National Action Party has earned marks for mostly clean, effective government. Fox, himself a former governor of Guanajuato, vows to curb the corruption that’s spiraled in Mexico along with the drug trade.
But Fox, who takes office Dec. 1, faces other big problems as well, including emigration, drug violence and regional conflicts. He’ll also have to work with opposition parties and a bureaucracy that’s never known anything but PRI governments.
Still, Fox is lucky to be taking over in good times. In the past few years, Mexico’s downturn has given way to heady growth,the economy is expanding at an annual rate of 8%, unemployment is at a 15-year low, and inflation, at less than 10%, is relatively tame.
His challenge: more of the same.
For Orange County, Mexico’s growth is key. The country is second only to Japan as a market for local exports,and it’s growing fast.
Back in 1993, OC exports to Mexico totaled $590 million, according to the U.S. Commerce Department. By 1998, the latest yearly figure available, OC shipments to Mexico were $1.4 billion, a 131% change for the five-year period. In the first quarter of this year, statewide exports to Mexico were up 36% to $4.2 billion, with electronics and other high-tech goods accounting for half.
OC’s trade with Mexico is set to grow even more. Much of what local companies send to Mexico now are high-tech components used in plants along the border that crank out many of the televisions, consumer electronics and computer gear that’s sold in the U.S. The plants, run mostly by Asian manufacturers, used to rely on components from Japan, South Korea, Taiwan and China.
But now they are turning more to OC, Silicon Valley and other spots north of the border. Starting next year, products shipped from Mexico’s border plants will have to be 50% or more made of components from Mexico, the U.S. or Canada to qualify for benefits under NAFTA. The shift already is benefiting OC exporters.
Mexico’s political shift also should be good news for OC companies such as Allergan Inc. and Beckman Coulter Inc., which sell to consumers and other businesses within Mexico. Fox, a former Coca Cola Co. executive who helped the company over take rival Pepsi in Mexico, is the country’s first president in recent history who’s not a former soldier, lawyer or career bureaucrat.
