Time to Change

“You have been sitting there too long for any good you have been doing,” Oliver Cromwell, the British Republican who defeated the throne, told the nobility. The same could be said for many businessmen and their respective chambers who cannot see further than their particular and immediate interest, even if that is entirely legitimate.  The rationale of our public servants and legislators must be the opposite: throw open spaces to the citizenry and the consumers.

The country finds itself in the throes of a complex bind in economic matters.  If we wish to view the glass as half empty, all sorts of problems, difficulties, and wrongs can be found that impede the optimal functioning of things.  However, there is also an alternative vision: if we are disposed to seeing the opportunities and possibilities, all we have to do it start making them possible.

With the excuse that things are not perfect, one part of the industrial sector has specialized in placing obstacles along the path of trade liberalization. This is an impossible way to proceed. If we desire the predictability of a Swiss timepiece, we will have to accept Switzerland’s rules of the game and its discipline. As long as we are not Switzerland, we will have to change things little by little, and be willing to pay the necessary price.


The issue of the day is trade negotiations with other countries. There are negotiations to deepen existing trade arrangements with  Colombia, of free trade with Peru and, still in the fledgling stage, ambitious treaties with Brazil and Korea. Many ask, some insistently, what the reason is for negotiating additional treaties if the internal problems are not resolved first. Those who think this way have an exceedingly valid point, but one that is not justifiable. Were we to have to wait until everything were resolved, the dream of the just would slip away before we can start moving towards development. Trade liberalization is a necessary means.


Unfortunately, the debate over commercial liberalization and free trade negotiations has been very poorly focused. From the beginning of liberalization in the mid-eighties, permanent confusion has reigned concerning the objectives to pursue and the role and function that corresponds to the economic agents and to the government, respectively. It is absolutely logical and legitimate for businesses to defend their interest and for them to pressure the authorities and legislators for their positions to be heard. But the function of the government is not to watch over these interests, but rather, those of the collective, that is, those of consumers and citizens in general. Even then, it is evident that in recent negotiations with Colombia, the modified treaty with which awaits Senate ratification, the interests and concerns of producers were incorporated.

Trade liberalization, which started in 1985 with the elimination of import permits and their substitution by duties, and in the free trade treaties that followed, it represented a fundamental sea change in the logic of economic development. Until the eighties, the entire emphasis had centered on protection, promotion, and subsidy of the producers. This scheme functioned well between the end of the thirties and the middle of the seventies, but ended in stagnation. Liberalization came about for a very simple reason: because domestic investment was no longer sufficient to generate high rates of economic growth and benefits in terms of the wealth and employment deriving from these.

The rationale of trade opening revolves around the consumer, whether a person or an enterprise. The objective is to force the productive plant to become competitive, to raise productivity levels, and to offer the consumer the best quality and market price, all by means of the competition that imports represent. Of course, the swing in strategy implied affectation of many businesses, but, for example, today the percentage of their income that Mexican families devote to clothing or shoes is a fraction of what it represented thirty years ago, and the quality is much better. That is, Mexican families have improved their level of living thanks to trade liberalization. What is better: millions of families with lower costs or a privileged company that enjoys the monopoly of high prices for these same families? Liberalization has transformed the lives of millions of Mexicans and has allowed the middle class of the country to grow. This should be the objective over which our Senators keep watch.


It doesn’t take a genius to argue that the opening has been unequal, that it has not included all of the sectors, that services continue to be expensive and inefficient, and that some producers have suffered because of competition. The truth, simple and straightforward, is that we have not dared to pursue the logic of the liberalization and deregulation to other indispensable ambits, such as the bureaucratic, the political, the monopolies, and that of privileges. But these are arguments for even more opening, not for preserving the ludicrous circumstances that characterize us.

The alternative for the future is very simple: we delve deeper and advance for the sake of achieving competitive producers and satisfied consumers, or we withdraw into our shell as we have to date and pretend that things will resolve themselves. If we enter into the logic of protecting a little thing here and there, we will end up with a collapsed economy. We must continue forward or we will go backward.

If one observes import and export patterns, the concentration that we have with the U.S. is evident, which leads many to conclude that we should not persevere liberalization. There are two reasons for thinking differently: first, each treaty that is signed implies greater benefits for the consumer, more competitive producers, and what economists refer to as “disciplines,” that is, well defined, trustworthy and predictable rules of the game for all, which are key for development in the long term.


The other reason for thinking distinctly is that the concentration of commerce, although explainable in geographic terms, entertains no logic. The concentration exists essentially because we the rules of origin that characterize the North American Free Trade Agreement (NAFTA), which make us highly competitive in that region, take away competitiveness outside of it. The solution to this does not lie in closing other doors, but instead, in attracting the production of inputs for competing successfully with all. That is, it is urgent for us to develop a world-class supplier industry. More treaties and greater liberalization are necessary conditions for this to develop.


There are solutions to the problems of the country, but only if we are willing to take the necessary steps. In matters of trade liberalization, it is imperative to privilege the interest of the consumer because the alternative is to remain stagnated. As simple as that.