San Diego Business Journal

Although the North American Free Trade Agreement has been very successful at increasing trade between Mexico and the United States, the next challenge is to bring that success to the level of small- and medium-sized businesses on both sides of the border.

So said Vicente Fox Quesada, president of Mexico, when he spoke May 30 to an audience of San Diego business leaders by satellite. Fox's presentation came during "Inside the 21st Century," a trade show co-sponsored by the San Diego Business Journal.

Thanks to NAFTA, as well as new leadership in both the United States and Mexico, both nations have a solid ground for developing regional cooperation and the creation of the North American economic community, Fox said.

"Mexicans have noticed that the North American Free Trade Agreement, and our network of free trade agreements throughout the world, have been a key factor in the remarkable increase of trade, investment flows and agreements throughout the world, have been a key factor in the remarkable increase of trade, investment flows and job creation," he said. "Since NAFTA began, U.S. and Mexico trade has nearly tripled."

Measured in U.S. currency, total trade between the nations in 2000 ballooned to about $263 billion. Mexico has consolidated its position as America's second-largest trading partner, absorbing about 14 percent of total U.S. exports, Fox said.

This has been particularly beneficial for California, as Mexico is the No. 1 purchaser of California exports. Exports from the Golden State to Mexico increased from $6.5 billion in 1993 to $19 billion last year, he said.

Mexico has also profited. In the same time period, its exports increased from $42 billion to more than $147 billion, while attracting a total of $85 billion in foreign direct investment , approximately $12 billion per year, Fox said.

But more needs to be done.

"The challenge now is to incorporate more small and medium-sized businesses to bring down NAFTA to regions, to states, to cities," he said. "We need to expand to more regions, more industrial sectors, and impart to a modern economy the same export activities emphasizing progress of the less-developed regions in Mexico," he said.

That means the two nations must move beyond being friends and neighbors. They must become an active community participating as a market to meet the challenges and opportunities NAFTA brings to the table, Fox said.

It also means that the three NAFTA economies , Canada, the United States and Mexico , should work to promote regional competitive leverage and "cultural advantages," he said. "Now we must be full partners in this common destiny that we have for North America."

Fox remained confident that with the increased trade and increased foreign investment the United States and Mexico could become stronger partners then ever before.