The Necessity of North American Free Trade

WILLIAM DONALD SCHAEFER

September 21, 1993|By WILLIAM DONALD SCHAEFER

Annapolis. -- An important part of every governor's job is to listen when the voters have something to say. And one thing I have heard a lot lately is that we should focus on problems right here at home and forget about building relationships with other countries or developing our capacity to compete internationally.

We no longer have that choice. We live in a world that has changed dramatically over the last few decades. Technology, communications, transportation have brought all nations physically closer. Money, people and products cross international borders much more freely than in the past.

Whether we are ready for all this change or not, it is clear that we are caught up in circumstances that reach far beyond the borders of Maryland or the United States.

That is why the North American Free Trade Agreement is not just a good idea, but an absolute necessity. Mexico has changed. The United States has changed. The world has changed. The Mexican market is too large to ignore, and an economically strong Mexico is an asset for America.

While merchandise exports from Maryland to Mexico remain relatively small in dollar value, they have increased by 248 percent since 1987. This was almost twice the growth rate of Maryland's exports to the rest of the world (130 percent).

There are many companies -- large and small -- that are indirectly affected by what goes on in Mexico, or unexpectedly touched by the changes that are happening there.

Take, for example, Visual Concepts Plus, Inc., a small company on Maryland's Eastern Shore that makes retail store fixtures. This company was recently contacted by a firm in California that wanted display fixtures for a Mexican customer. Visual Concepts Plus got the business, an order for $4,200, and is now looking for more customers in Mexico -- as well as in Panama, the Virgin Islands and Canada.

This is not a large, sophisticated international company. It is a family-owned business -- only two years old -- with 24 employees. The North American Free Trade Agreement will help this company grow because the people who run it have recognized the importance of the international market place and are pursuing growth through export activities.

On our recent trade mission to Mexico, I saw first-hand how Maryland's larger industrial companies such as Black & Decker, McCormick & Company, Martin Marietta Corporation and the Ryland Group have already tapped into the potential of markets in Mexico.

An agreement to encourage trade between Mexico, Canada and the United States makes sense because it recognizes what is going on today and what we can expect in the future.

Will this agreement create jobs in Maryland? The answer is yes. Will this agreement be good for the Maryland economically?

Again, the answer is yes. The agreement will stimulate economic activity between the three nations. It will broaden the market for goods and services produced in Maryland. That means more jobs. Most of Maryland's current exports to Mexico are in industries that are strong in Maryland and that traditionally provide good high-paying manufacturing jobs -- transportation equipment, scientific instruments, chemicals and electronics equipment. As demand for these products increases, so will the jobs in Maryland.

The Port of Baltimore also stands to benefit through passage of the agreement. As a result of the existing free-trade agreement with Canada, the port is serving as an entry point for goods destined to Canada and handles an increasing amount of Canadian exports to world-wide markets.

Mexico and Canada have been our neighbors and good trading partners for many years. To avoid confusion and inefficiency as our trade with these neighboring countries continues to increase, we should have some agreement that lays out reasonble ground rules for doing business.

We are not going to resolve overnight all the issues forced on us when we come up against large-scale change as proposed in the North American Free Trade Agreement. There are bound to be questions of regulation, equity and procedure that only experience can fully resolve. In recognition of that, the agreement is to be phased-in over a period of 10 to 15 years. That makes sense.

It is also important to look closely at the environmental and employment standards in each of the countries involved so that economic gain is not secured at the expense of human or social progress. This has been addressed in the agreement, and environmentalists have responded positively. Companies providing environmental technologies and services also stand to benefit. We have hundreds of these companies right here in Maryland which could see increased business.

Governments (and governors) are often faulted for not taking the long-range view. The North American Free Trade Agreement does take the long-range view. We look to a future full of international challenge and opportunity. What we see in the free-trade agreement is a long and sometimes difficult road, but in the end, the most certain path to new economic growth, more jobs and a better way of life.

William Donald Schaefer is governor of Maryland.

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