News-Sentinel.com

Thursday, 03/18/1999

NAFTA

NAFTA, I-69 extension will tie Fort Wayne area closer to Mexico

The North American Free Trade Agreement and the proposed extension of Interstate 69, dubbed the NAFTA highway, are supposed to melt away borders and stimulate the economies of the United States, Canada and Mexico.

If completed, the I-69 corridor would stretch from south Texas, to Port Huron, Mich., providing a transportation strip linking major industrial and production areas in the United States, Mexico and Canada.

Some claim this will be a highway paved with gold, bringing jobs to poor areas in this nation and Mexico, sparking trade and bringing prosperity. Opponents see only fool's gold, paving over of farmland and draining jobs from Indiana and the Midwest to the less-developed economy of Mexico.

In "The NAFTA Highway: Bridging Borders", reporters and photographers examine the impact of NAFTA and the proposal to extend I-69.

Proposed NAFTA highway will connect borders

By LYNNE McKENNA FRAZIER of The News-Sentinel



News-Sentinel photo by C. Somodevilla
Spanning the gap A footbridge spans the highway between the border towns of Reynosa and Matamoros, Mexico, and connects the two sides of the Reynosa Industrial Park. A Zenith plant is in the background.

Within 25 years or so, if all goes according to plan, Interstate 69 will stretch from the U.S.-Canadian border to the U.S.-Mexican border.

The planned highway actually duplicates a well-established route that travels along a number of highways.

"There's an already existing corridor of trade that diagonally bisects the eastern United States," says Michael Blum, a consultant in McAllen, Texas. "It goes through eight states, but it doesn't exist (as a road)."

Thanks to the efforts of Blum and similar lobbyists in Indiana, Texas and six other states, I-69 is planned to become that road, already nicknamed the NAFTA highway.

Optimists predict the NAFTA highway will carry a steady flow of people and goods from Mexico City to Toronto and all points in between. Borders will melt away, and the economies of the United States, Canada and Mexico will prosper.

That brave new world was portrayed during debate before the North American Free Trade Agreement treaty took effect five years ago. But a darker side of the proposed treaty also was portrayed during that debate, one of manufacturing jobs fleeing to Mexico, increased drug trade, a flood of illegal immigrants and compromised environmental standards.

The arguments both pro and con about NAFTA were overblown, says David Neipert, assistant professor of the Department of Management, Marketing and International Business at the University of Texas-Pan American.

"Most of what has happened are things that would have happened without NAFTA," he said.

Economists argue that NAFTA just ratified what already is happening throughout the world — the freer movement of goods, services, capital and, with those, jobs.

"This is a long-term transition" as lower-skilled jobs move to lower-paid nations, said Lawrence Davidson, who heads the Global Business Information Network at Indiana University. "We have to adjust to that."

If that is the shape of the world's future, much of that can be glimpsed along the busy Texas-Mexico border.

Although border residents say trade was booming before the treaty was enacted, it has skyrocketed since, with $58 billion annually crossing in trade.

According to a July 1998 report by the Texas Comptroller of Public Accounts, a U.S. presidential study of the three-year effects of NAFTA shows that U.S. exports to its NAFTA partners supported about 2.3 million U.S. jobs in 1996, an increase of 311,000 jobs since 1993, the year before NAFTA went into effect.

"But another study of the same period by the William C. Velasquez Institute states NAFTA resulted in a net loss of 92,000 jobs to the U.S. economy," the Texas comptroller's report stated.

Moreover, 60 percent of increased trade from Mexico to the United States reflected U.S. companies moving goods from one side of the border to the other.

Common markets

Whatever one's assessment, highways that will link with I-69 are being built frantically in the United States and Mexico to keep up with the NAFTA surge.

Economic development proponents are touting the market that lies both north and south of the Rio Grande as one market, not two.

Mexico is now Texas' largest trading partner, and it's Indiana's fourth-largest.

"Others try to view us as two cities in two nations separated by a bridge," Nancy Boultinghouse, marketing director for the McAllen Economic Development Corp., said of the ties between McAllen, Texas, and Reynosa, Mexico. "We rather would consider ourselves as one country tied together by a river."

"Our market doesn't stop at the river," said Bill Summers, president and chief executive officer of the Rio Grande Valley Partnership. "There's not a wall there, there's a river."

The valley is booming, with population nearly doubling in the past 20 years to nearly 1 million residents on the Texas side and 2 million in Mexico from Matamoros to Reynosa.

But the nature of the boom raises questions. The Texas side is adjusting from an economy reliant on agriculture and low-skill manufacturing to one of higher skilled manufacturing operations and services.

Mexican cities are struggling to cope with immigrants from the nation's interior who come to the border in search of a better life.

There are people such as Francisco and Maria Gabriela Torres, who came from Veracruz to Matamoros, where both worked in maquiladoras — factories owned by foreign-based companies that line the border between the United States and Mexico.

Their home is crude by American standards, made of wooden pallets, although they have been building an addition out of concrete blocks. There is no sewage system in the area, just a water line with spouts.

But inside the house is a refrigerator. TV antennas sprout from the roofs of the shantytowns that make up the southeast side of Matamoros. The more established areas are modernized with paved roads, although most still have only deeply rutted paths running between the shacks in areas to which 1,000 new residents may migrate within a year.

Rich vs. poor

When the United States and Canada sealed a free-trade agreement five years before NAFTA, there was little debate. Mexico was a different matter.

Although Mexico does relatively well by world standards, ranking in the top 20 nations in natural resources and other economic measures, it compares poorly sitting next door to the wealthiest nation in the world, said Gilberto de Los Santos, professor at the Department of Management, Marketing and International Business at the University of Texas-Pan Am.

"Along the U.S.-Mexico border, you have the developing world meeting the industrialized world," said John Sargent, with the Department of Management, Marketing and International Business at Texas-Pan Am. "We kind of bleed into each other."

The ties are often of blood, literally. It is common for families in the Rio Grande Valley to straddle the border, crossing back and forth regularly. While border agents keep an eye out for drug smugglers, would-be illegal immigrants and contraband, they wave through a steady stream of cvehicles with Texas and Mexican plates.

That free flow of traffic is how NAFTA is supposed to work, but it isn't always the case. While passenger traffic usually moves quickly, truck traffic often is backed up for hours as inspectors check for safety violations or illegal cargo.

The slow pace of inspections demonstrates why NAFTA hasn't quite fulfilled its promise, said Arnold Pedraza, business marketing manager at the Office of Center Operation and Community Services at Texas-Pan Am. "We haven't really developed NAFTA as much as we should have," he said.

Infrastructure argument

The border between Brownsville and McAllen is the largest metro area in the United States without an interstate. It's obvious why economic development officials plugged away to get the highway routed in their direction.

"Free trade is great," said Ramesh Srinivasan, who works on economic development issues in the valley at Texas-Pan Am, "but our region still does not have an interstate."

The importance of an interstate has brought fierce lobbying from small towns in Louisiana, Mississippi and Arkansas that lie along the planned I-69 corridor. They, too, see the interstate as tying them into a world that promises a better economic future.

The proposed NAFTA highway has not come without a fight. In southwest Indiana, opponents claim the NAFTA highway threatens an established Amish community's livelihood.

But for others in Indiana, the extension is the long-promised expressway from Indianapolis to the southwest corner of the state, for the first time tying Fort Wayne to Evansville. The ties eventually will extend from the farm fields and factories of northeast Indiana to the flat, arid plains and spreading industrial areas of the Texas-Mexico border.