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Not Business As Usual

Mexico's president-elect has bold new visions.

Former Coca-Cola Co. executive Vicente Fox Quesada doesn't become Mexico's president until Dec. 1. And his visions of a free flow of workers between the U.S. and Mexico, and of a European-style North American common market, are a decade and more away from reality -- if they are ever realized. But if only for the freshness, boldness, and energy of his visions, Mexico's president-elect deserves serious attention, U.S. manufacturing executives believe. "His natural mind-set is more business than politics," observes James R. Jones, who has known Fox for several years and is a former U.S. ambassador to Mexico. "He sees the needs of Mexico, and he also has a vision of where the world is going," says Jones, now counsel in the Washington office of Manatt, Phelps & Phillips LLP, a Los Angeles-based law firm. Jones adds that both in stature and problem-solving zeal, 6-ft-4-in. Fox reminds him of President Lyndon Johnson, whom Jones served as a White House staff assistant from 1965 to 1969. Fox, says Jones, has "realistically" looked at the possibility of a North American common market and "he recognizes that Canada, the U.S., and Mexico have complementary aspects to commerce and to production of goods and services." But, Jones adds, Fox knows that for the countries to really work together Mexico has to be brought closer to economic parity with its two northern neighbors. And that's why "in all of these pronouncements, he's trying to look out 10 years or 25 years." Significantly, Jones believes the U.S. and Mexico will have a de facto common currency -- the U.S. dollar -- "in the not-too-distant future." He cites a recent poll in which about 80% of Mexicans said their country should have a dollarized economy. "The fact that Mexicans are dealing more and more in dollars now and think they should have the stability of a dollarized economy is a major step forward. And Fox, while he says he is not offering a monetary union, certainly recognizes the way things are going." In Fox "we have a break with the past -- someone who is looking for ways to stimulate the further integra-tion of North America and . . . talking about Mexico being part of a greater Western Hemisphere vision looking south," says Franklin J. Vargo, vice president for international economic affairs at the National Assn. of Manufacturers, Washington. "American executives should pay attention to what he is saying. We certainly will be. We think he is a man we can work with." To stimulate growth and jobs, the president-elect is committed to doubling the foreign direct investment (FDI) flowing into Mexico, now about US$12 billion a year. But to be able to deliver on that promise, Fox probably will have to take the politically tough step of opening up parts of Mexico's state-owned energy, telecommunications, water, and mineral enterprises to outside capital. And attorney Eduardo Gallstegui, a partner at Holland & Knight-Gallstegui y Lozano SC, Mexico City, "won't be surprised" if Fox also reforms FDI regulations, allowing U.S. and other foreign firms to own larger shares of Mexican companies. However, Alexandria, Va.-based Paul A. Laudicina, vice president and managing director of A.T. Kearney Inc.'s Global Business Policy Council, suggests executives -- at least for now -- should not focus on the politically, economically, and emotionally charged issues of open borders and a North American common market. "The specifics of the Fox message now are less important than the broad brush strokes and orientation that he is presenting," insists Laudicina. For example, "the discussion of a North American common market is perhaps a metaphor for what do we need to do as the parties to a North American Free Trade Agreement (NAFTA) to smooth out the rough edges and disparities [among] our economies to see they are harmonized more."

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