BORDER CHALLENGES

Fox, New U.S. President Must Raise The Stakes.

Months before the United States and Mexico inaugurate new presidents,
Vicente Fox, who won Mexico's July 2 presidential election, is raising
issues that leaders on both sides of the border have been reluctant to
tackle head-on, but that cannot be ignored if the two countries are to deal
effectively with cross-border problems.

Narcotics trafficking and immigration are obvious subjects for discussion
when Fox comes to the United States next week to meet with President
Clinton and the two major party candidates to succeed him, Al Gore and
George W. Bush. But Fox has something more ambitious in mind, and has been
talking about it for months: He wants to transform the North American Free
Trade Agreement, comprising Mexico, the United States and Canada, into
something akin to the European Union, which has evolved from a six-nation
customs union into a 15-member bloc within which goods, services, capital
and labor move virtually unhindered.

Objections to Fox's most ambitious idea have been registered north of the
border, and in today's context they make sense. Given the huge gap in
living standards, unfettered legal movement would be impracticable in the
foreseeable future. Indeed, this country goes to great lengths to bar the
illegal entry of Mexicans seeking work in this country, so far with limited
success. But if there is ever to be a real North American common market in
all senses of the term, all barriers must be lowered.

When NAFTA was negotiated in the early 1990s, the parties deliberately
omitted immigration because it was deemed a deal-breaker given the extreme
sensitivity over the issue. (Narcotics, on which U.S. and Mexican
authorities have worked together for years, with limited success, also have
been treated separately.) But now, a booming U.S. economy has created a
U.S. labor shortage for both skilled and menial workers. In the first case,
Congress has expanded quotas for high-tech workers; but in the second, most
workers come here illegally, a situation that breeds gross exploitation.

One possible interim solution is expansion of "guest-worker" programs for
farmworkers, but that has been rejected here because of the bad experience
of an earlier experiment and because of objections by U.S. labor unions,
which fear downward pressure on U.S. wages.

Avoiding that would require improvements -- in wages and working conditions
- -- that seem unlikely to get through Congress anytime soon.

In the meantime, other, broader steps need to be taken. Mexico badly needs
development capital for job-creating industry. One possible source is
direct foreign aid, but that's also a hard sell in Congress and may still
be even if Democrats regain control. A more promising avenue could be
expansion of an existing NAFTA development bank and the creation of new
institutions to stimulate new business creation in Mexico. Fox's promised
crackdown on corruption, if it succeeds, would be immeasurably helpful,
especially against drug kingpins.

Such ideas have been around for years, but Mexico's largely closed,
one-party system built on patronage prevented any serious breakthrough
until very recently. Now, Fox shows every sign of being ready to move
forthrightly beyond rhetoric. His boldness deserves a comparable response
from both U.S. presidential candidates, one of whom would do well to put
relations with Mexico very high on his agenda starting Jan. 20.