FORMER CHIEF TRADE NEGOTIATOR, MEXICO
2000 INNOVATIVE LEADER OF THE YEAR
On one wall of Herminio Blanco’s office in San José Insurgentes in Mexico City, there’s an enlarged copy of the front page of the Washington Post from November 18, 1993. The daily newspaper headlines that edition with the news that the United States Congress has approved the North American Free Trade Agreement. This was an enormous personal triumph for the Mexican economist, but it also marked an important milestone for Latin America.
Like other leaders interviewed for this edition, Blanco thinks the opening of international trade was the most important decision made by the countries of the region over the past 20 years. “I have no doubt it’s a trend that has turned us into a more stable region,” he said. “For Mexico, it has been very important.”
The North American Free Trade Agreement (Nafta) was a pioneering pact that, as Blanco said, showed the way for others in the hemisphere. “If you look at a graph of preferential agreements, you will find that the number of them explodes after Nafta,” he said. “It woke up almost all the regions of the world, mainly Latin America and Asia. It showed them the importance of negotiating with them. We opened ourselves to the United States, and so overcame the fears of opening up that everyone had.” Mercosur was strengthened with the Ouro Preto Treaty in 1994, in large part due to the success of Nafta, Blanco believes.
The Nafta talks weren’t easy. In particular, energy issues were very sensitive. The opening of the Mexican energy industry to private investment and security of supply to the U.S. were two issues that complicated the negotiations, he said. Between the United States and Canada, there had been a clause that obligated Canada to reduce its energy exports to the United States only by the same amount that internal consumption decreased. “They were very hard decisions,” he added.
Each country made a list of “non-negotiables.” “We Mexicans had five ‘no’s,” he said. The opening up of energy and corn imports were two of them. These issues in particular were chosen because they made it easier for Nafta to be accepted in Mexico. “(We estimated) that they were needed so that the parties and the country could accept the start of negotiations,” Blanco explained.
“Corn was one of the fundamental negotiating issues. Keeping it closed helped to open things up for the others.” At the time, many groups thought that opening corn to competition was wrong because it was the poorest Mexicans who produced it. The negotiators were able to show that local production was insufficient to cover internal consumption, and that therefore an opening could help poor consumers by having access to a larger supply. “That’s why we chose a system of reducing protection gradually over 15 years.”
The success of the negotiations was impressive, but the sectors excluded totally or in part, especially transportation services, telecommunications and energy, became an obstacle to a larger success, said Blanco. He thinks Mexico would have grown more rapidly, and would have employed more low-income people, if it had opened the economy more right from the start. For proof, he said, look no farther than the huge development in Mexico’s north.
“My life was this. I was working day and night, because I had one of the greatest responsibilities with this historic initiative of the country,” he recalled. He believes that his appointment as negotiator was opposed by several important politicians. They argued against his lack of experience negotiating trade agreements. But in reality, very few people in the world had negotiating experience for the ‘new generation’ of trade agreements. In the end, his personality and academic training enabled him to complete the task. He closed pacts with 10 Latin American countries, Europe, and Israel, and launched the negotiations with Japan.
His work in trade negotiations continued after he served as secretary of trade and industry for Mexico. He helped Central American nations achieve trade pacts among themselves and with the United States, and did consulting work with governments and all kinds of entities. Then, in 2013, he was a candidate for director general of the World Trade Organization. In the opinion of many, it’s just a question of time for him to make it. At the end of the day, the architect of Nafta has years to reap what he has sown.
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