This conclusion was reached by comparing this most recent devaluation with events following Mexico's 1982 debt crisis.

• Pre-NAFTA, U.S. merchandise exports to Mexico tumbled from $18 billion in 1981 to $9 billion in 1983, following the debt crisis.

• In 1993 -- the year before NAFTA went into effect -- U.S. merchandise exports to Mexico were $41.6 billion, rising to $50.8 billion in 1994 and then falling to $46.3 billion in 1995 in muted response to the peso devaluation.

• Whereas U.S. exports to Mexico fell by 50 percent in the 1981-83 period, they actually rose by 11 percent over the 1993-95 period.

• Furthermore, Mexico's imports from Japan and Europe dropped precipitously from 1994 to 1995.

The reason U.S. export interests were shielded was because, with NAFTA in effect, Mexico did not resort to any import restrictions against U.S. goods as it had during the 1982 crisis. Mexico's pre-NAFTA response was to raise tariffs and impose licensing requirements on 100 percent of imports. Now, there is a framework in which to respond to trade troubles. Experts say NAFTA forced Mexico to seek remedies in tightened domestic credit and restricted public-sector spending.

Mexico's economic downturn lasted more than four years following the 1982 crisis; this time, some economic and financial indicators are showing growth after only one year. NAFTA meant an expanded export market for Mexico during the crisis, not isolation.

NAFTA facilitates a range of activities -- production, trade, finance, communications and transportation -- required in economic interchange within a single region, proponents point out. It recognizes the need for freer trade as goods produced anywhere in North America are used as inputs for assembly elsewhere, in U.S. cars and computers or Mexican pharmaceuticals and apparel.

Sources: Sidney Weintraub (Center for Strategic and International Studies), "NAFTA Benefits Flow Back and Forth Across the Rio Grande," Wall Street Journal, May 10, 1996.

NAFTA HAS SPURRED TRADE

• U.S. agricultural exports to Mexico in 1994 totaled $4.5 billion, up 25 percent from 1993 - outpacing the $2.9 billion of food imports from Mexico, which grew 5 percent from 1993.
  
  
• Farm exports to Canada grew a modest 4 percent in 1994, to $5.5 billion, while imports from Canada were $5.2 billion, a 13.2 percent gain over 1993.

In response to domestic political pressures, President Clinton is retreating from his commitment to completing the North American Free Trade Agreement (NAFTA), according to a recent analysis.

Clinton has stalled action on a number of NAFTA-related issues:

• He has reneged on his pledge to include Chile in NAFTA by 1996.

• He has violated key provisions of NAFTA by postponing indefinitely implementing agreements for Mexican trucks to operate in U.S. border states.

• He has yet to negotiate some of the most important provisions, such as currency unification, forgiveness of Mexico's foreign debt, immigration and labor and law enforcement problems.

• He has sidelined the U.S. in the ongoing process of trade liberalization among South American countries that would like to join an expanded free trade zone.

Some trade experts suggest that NAFTA is the best framework for continuing to make trade freer in the Americas. Due to trade liberalization, American exports to other countries in this hemisphere have increased over 50 percent since 1990, growing from $137 billion to nearly $207 billion in 1994 and creating 1.4 million new jobs for U.S. workers.

Source: John Sweeney, "Fulfilling the Promise of NAFTA: A New Strategy for U.S.-Mexican Relations," Backgrounder No. 1070, March 6, 1996, Heritage Foundation, 214 Massachusetts Avenue, NE, Washington, DC 20002, (202) 546-4400.