Free Trade Would Aid Both Texas and Mexico, Experts Say

TEXAS is profiting from the opening Mexican economy, and experts say the Lone Star State could benefit even more from a United States-Mexico free trade agreement. But many caution the extent to which an agreement would benefit Texas depends on how the agreement would handle issues of infrastructure development, labor, and the environment.

``If these issues aren't resolved, then Texas taxpayers will end up paying for them,'' says one policymaker.

The state government's response to an agreement will determine the benefits to the state, says Chandler Stolp, an economist at the Lyndon B. Johnson (LBJ) School of Public Affairs. The difference between ``a passive, do-nothing scenario'' on the state's part and aggressively preparing for the demands of an agreement is billions of dollars and thousands of jobs, she adds.

Recently Texas Gov. Ann Richards (D) met with governors from the Mexican border states and affirmed her commitment to the region's development. ``The burden of ensuring success will rest primarily on those of us along the border,'' she said, referring to free-trade agreements.

Mexico is Texas' largest trading partner, and over the past few years net exports have grown. With its 1,250-mile border and six ports of entry to Mexico, Texas is a natural way station between Mexico and Northeastern US manufacturers.

Under an agreement, Texas would see a boom in such trade-related industries as shipping and communications, says Elsie Echeverri-Carroll of the Bureau for Business Research at the University of Texas. But problems on the border and the lack of infrastructure are ``constraints'' on further growth, she says.

On the Texas side of the Rio Grande, thousands of people live in third-world conditions in colonias, unincorporated areas without paved roads, running water, or sewage facilities.

Dumping and runoff of waste has polluted the river, often the only source of drinking water and irrigation. Unemployment is higher and education spending is lower than elsewhere in Texas.

In 1989, Texas voters approved $100 million in bonds for water and waste-water developments along the border. Twelve Texas projects are in the planning stages, as is a joint Mexico-US sewage treatment plant in Nuevo Laredo, Mexico.

Joint development of free-trade policies addressing the border's social and infrastructure needs would create ``a more advantageous situation than the US with its own policy and Mexico with its own policy,'' says Ms. Echiverri-Carroll.

Although some initial job displacement would occur, Texas would benefit in the long term from across-the-board increases in exports, says Sidney Weintraub, also of the LBJ school.

Depending on the terms of the agreement, fresh fruit and vegetable workers could be adversely affected, Dr. Weintraub says, adding that Texas should seize the opportunity to focus on higher-wage job training for displaced workers. ``We don't want to protect low-wage jobs. We should ... invest in technological [retraining], if we want to remain a high-income country.''

Low-wage jobs are already moving to other countries where labor is cheaper, says Mr. Stolp. But if the choice is between Mexico and Singapore, it's much better for the United States to encourage job growth in Mexico. ``For every $1 boost to the Mexican economy, 15 cents goes into the United States,'' he says.

But it remains to be seen if Texas will develop needed strategies. The state is now in the midst of a protracted school funding-reform battle and faces a nearly $5 billion budget deficit.