Mexico and its markets

Saturday, 4 December 1999
http://www.azstarnet.com/public/dnews/050-3906.html

Protectionism may make for good domestic politics, but it fouls markets.
Mexico pressed for the North American Free Trade Agreement on the theory that it should compete worldwide for markets. It took President Ernesto Zedillo just 24 hours to realize that the vehicle deposit requirement violated this ideal.
The Mexican government submitted to domestic pressure. Domestic dealers were unhappy with the illegal import of vehicles registered in the United States. The solution was to force owners of foreign-registered vehicles to post a deposit, ranging from $400 to $800, depending on when it was built. The deposit, at first, was only payable in cash. Then the government said it would accept credit cards.
Last October, U.S. and Mexican officials announced an expansion of the border trade area. The Mexican part of the plan, Only Sonora, would increase business and shopping between Tucson and Magdalena, Sonora. The vehicle deposit rule would have thwarted the Only Sonora plan. Sonorans were understandably upset. Protesters lined the road between Nogales and Hermosillo to rail against the deposit.
By trying to protect car dealers, the Mexican government was fouling its tourism industry. Unquestionably, U.S.-registered vehicles find their way to Mexico's interior. The Mexican government says that 10 percent of the cars in Mexico are registered in the United States. It's a serious problem.
The solution lies not in deposits. Rep. Jim Kolbe notes that Mexico should move to create a reliable vehicle registry. He says that the U.S. Customs could cooperate in keeping track of vehicles that do not return to the United States. Moreover, Kolbe suggests that Mexico and the United States move toward free trade in vehicles.
The deposit remedy created a greater malady. One would hope that President Zedillo would make certain that such a regressive proposal never surfaces again.
The editorials in The Arizona Daily Star express the opinion of the paper. That point of view is determined by the editorial board, which is composed of Jane Amari, James Kiser, Steve Auslander, Judy Donovan, Margo Hernandez, Mark Muro, Adele Ross and David Fitzsimmons. Editorials are written by members of the board. The Star maintains a separation between the editorial pages, which include commentary and opinion, and the news pages, which do not.


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