Trade titan.

Mexico is in a key position to help its neighbors understand and develop trade accords, given its standing as a member of the North American Free Trade Agreement (NAFTA), the trade pact between Canada, the United States and Mexico. The groundbreaking trade deal completes its first decade this month. LATIN TILDE Reporter Benedicte Constans talks with Mexican Economy Secretary Fernando Canales about Mexico's perspective a decade later and free trade if or the region past, present and future.

How has free trade affected Mexican business owners?

NAFTA spurred [Mexican industry] to exploit the comparative advantages Mexico has with the United States and Canada and to create economies of scale. For example, the Mexican electronics industry has ... become one of the main exporters in Mexico. In 2002, this sector represented 36% of the total exports of our country, worth US$56 billion annually and 350,000 jobs created, and representing 24% of the manufacturing employment created since NAFTA took effect. Currently, Mexico represents 19% of U.S. imports in that sector. Another sector that has entered the international market is automobiles, which exports $31 billion a year, 20% of total exports, and that has created 200,000 jobs since NAFTA. Fifteen percent of U.S. imports in this sector originate in our country.

Aren't farmers the losers?

in terms of Mexican agriculture, there are enormous challenges compared to other regions of the world, since the rural sector is the largest concentration of poor. These challenges, I must emphasize, were not created by NAFTA in 1994 but decades before, resulting from a lack of vision in the sector. In that sense, NAFTA and opening the economy have become useful tools for eliminating structural deficiencies that worked against farmers and to promote increased competitiveness by means of technology transfer and increased exports. Since NAFTA took effect, [farm] exports have grown 145% to more than $7.7 billion in 2002. During the first half of 2003, food exports have grown 10% compared to the same period in 2002, to $5.3 billion. This shows that NAFTA continues to offer opportunities in the sector, and that far from thinking about its cancellation or renegotiation we should deepen our commercial relationships with the United States and Canada.

What do you think of U.S. resolutions that agricultural subsidies be negotiated through free-trade accords like NAFTA?

As you know, agricultural subsidies are an across-the-board subject that affects not only the countries that participate in both bilateral and regional forums like NAFTA, the FTAA [Free Trade Area of the Americas] or others, but also all member countries of the WTO [World Trade Organization]. Therefore, Mexico's position is that this subject be dealt with in the framework of the agricultural negotiations of the World Trade Organization itself. The European Community and Japan spend heavily to support and subsidize exports and do not conform to CAFTA (U.S.-Central American Free Trade Agreement), NAFTA or the FTAA, so no regulations that come from these forums extend to these countries. That's why Mexico has repeatedly maintained that the WTO is the only forum where it is possible to discuss and to regulate all the members of the WTO in the matter of export subsidies and domestic supports.

What advice would you give to Central Americans on trade with the United States?

To prepare themselves and to visualize starting now the challenge of establishing an action program to take advantage of CAFTA when it takes effect. CAFTA will mean sure access to the U.S. market, potentially an enormous source of demand for goods and services of Central America's producers and exporters. Once the accord is completed, the challenge will be to consolidate the currently successful export capacity of Central America.