Abstract

PIP: The free flow of labor and services across national borders will be 1 of the most difficult problems of future negotiations for integration of the markets of the US, Mexico, and Canada. The free flow of products and increasingly of capital have been accepted in general terms, and land and natural resources are entering the globalization process through external investment. In the trilateral free trade treaty between Mexico, the US, and Canada, the US is particularly interested in access to the service markets of Canada and Mexico. Mexico would like freer access to the other markets, and to protect its migrant workers. Canada needs foreign labor for its agricultural production. All 3 countries would potentially benefit from more flexible population movement. Mexico, Canada, and the US have very different structures, population dynamics, and labor markets. Mexico's population growth rate is the highest and its active population is increasing the most rapidly. Mexico must generate 1 million new jobs annually, the US requires 2.1 million, and Canada around 230,000. The 3 countries, with about 360 million inhabitants in 1991, must create 3.4 million new jobs annually. Because of differences in occupational and activity structures, levels of skill, salaries, productivity, and cultures of work in the 3 countries, it is clear that the new jobs correspond to different labor markets, making predictions about average salaries difficult. The 1990 average minimum wage in the US was about 10 times that of Mexico, while the average minimum in the manufacturing sector as about 7 times greater. The degree to which the trilateral treaty can contribute to reducing the differential is an important question. 3 possible scenarios suggest themselves. If current restrictions on mobility of workers are maintained, wage disparities will probably continue unless there is a very great foreign investment in activities throughout Mexico that require significant labor inputs. This would probably have a positive effect on unskilled wages. If Mexico does not open its service market, foreign companies would need to train and advance Mexican workers. A 2nd scenario assumes a general easing of restrictions for high-tech services while restrictions remain for unskilled workers. Unemployment among Mexican professionals and technicians in service industries might increase if they were unable to compete. The final scenario represents the longterm possibility of eliminating all restrictions on labor mobility between the 3 countries, which would result in improving the quality of life and working conditions of a large number of persons. Regardless of the outcome, Mexico faces the task of increasing the productivity of its labor force.