U.S. and Mexico: From NAFTA to NADA?

A recent announcement that Mexican companies may produce components for the U.S. missile defense program is certain to bring a chill to opponents of the North American Free Trade Agreement (NAFTA).

Since the free trade zone in North America took effect in 1994, U.S. companies have busily shifted production lines to Mexico. Mexican industrial wages are as little as one-tenth of those wages paid to U.S. workers. Social and environmental regulations are also less stringent.

These U.S.-based companies saw NAFTA as a great opportunity to cut costs. Initially, the jobs that went south were manual ones. But over the past eight years, Mexico has swiftly climbed the technology ladder — grabbing its share of jobs in that sector as well.

The first companies to test those waters were Asian electronics manufacturers and U.S. auto makers. Now, America’s aerospace giants are following suit.

Of course, this new strategic alliance isn’t a formal military agreement — yet, rather, it’s a strictly monetary arrangement that unnerves anti-NAFTA activists. Their worst fear is what 1992 U.S. presidential candidate H. Ross Perot called the “giant sucking sound” of U.S. jobs going south to Mexico.

Among the companies that already have aerospace operations in Mexico — or plan to relocate there in the near future — include well-known aerospace giants as Boeing, Honeywell, Gulfstream/General Dynamics, GE Aircraft Engines, Teledyne and Rockwell Collins, as the Wall Street Journal reported in late January 2002.

These companies are also major U.S. defense contractors. As they establish manufacturing facilities in Mexico, there is little doubt that, before long, they will outsource some of their billion-dollar Pentagon contracts to that country — possibly including those involving missile defense.

Of course, all of this will make Mexico an even more important strategic neighbor for the United States. Unlike Canada — already joined at the hip to the United States militarily through its membership in North Atlantic Treaty Organization (NATO) — Mexico has no formal defense alliance with its giant neighbor.

Politically, accomplishing such a link might be an even touchier matter for the Mexicans then it would be for the United States. But what cannot be achieved easily in the political sphere sometimes can be sealed just as effectively by virtue of industrial cooperation.

All of this just triggers a big question: Will Mexico’s membership in NAFTA be followed by eventual membership in NATO? Or, will NAFTA rather morph into the North American Defense Alliance — or “NADA” for short? Undoubtedly, NAFTA opponents will view the latter as a big “nothing” in their column.