Holding NAFTA investment hostage Mexican kidnapping: Crime may deter needed foreign investment.

August 22, 1996

THE KIDNAPPERS who held Mamoru Konno captive nine days in Tijuana until his company paid $2 million in ransom did more than organized labor or Pat Buchanan or Ross Perot to discourage investment in Mexico.

Mr. Konno is the head of a U.S. subsidiary of a giant Japanese corporation, Sanyo Electric, with an office in San Diego and a television assembly plant across the border making sets for the U.S. and other markets. He lives in a suburb of San Diego near the border.

That way, the Japanese executives could live a U.S. life while paying Mexican wages. That's the system, in place even before the North American Free Trade Agreement (NAFTA) and greatly expanded by it. It has brought untold billions of dollars in investments in North American industry, stimulating economic growth where most needed in Mexico, relieving immigration pressure on the U.S. and making North American products and labor (U.S. as well as Mexican) cost-competitive with East Asian and Brazilian competitors.

But the seizure of Mr. Konno by a gang of presumably Mexican criminals as he left an employee baseball game (a sport popular in the U.S., Japan and Mexico), threw a damper on the entire border. His safe return after the payment of the huge ransom does not relieve the gloom, which undercuts the visit to Mexico of Japan's Prime Minister Ryutaro Hashimoto at the start of a trip intended to stimulate Japanese trade and investment in Latin America.

Violent crime is a major disincentive to business. Companies do not send valued employees into personal danger if they have alternatives. This has deterred much investment from Russia and from central Mexico. Law and order are prerequisites anywhere for business growth.

The kidnapping brought the scare of a type of crime not previously associated with border economic activity. It is essential that American law agencies ensure it does not cross the border. An even greater imperative is for Mexican authorities to stamp it out. Japanese companies do enormous research before investment. If they crank millions for ransom and risk to their most valued employees into their calculations, they will not invest further, and some gains of NAFTA for both the Mexican and American economies would be canceled out.

Pub Date: 8/22/96

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