China- Mexico Express

The North American Free Trade Agreement (NAFTA) was supposed to combine Mexican labor with American capital and technology to improve competition with Asian rivals.

C. Fred Bergsten and Jeffrey Schott, two major proponents of NAFTA, testified to Congress in 1997 that "we wanted to shift imports from other countries to Mexico -- since our imports from Mexico include more U.S. content and because Mexico spends much more of its export earnings on imports from the United States than do, say, the East Asian countries."

Imports from Mexico grew rapidly in the 1990s. But today, it is the massive wave of imports from Asia that is clogging West Coast ports and sending shippers on a search for new routes to bring even more foreign products into the United States.

Container traffic from China is growing at a rate of 15 percent a year. The final terminus of a new transport network is to be Kansas City, Mo. Its SmartPort Web site proclaims: "the idea of receiving containers nonstop from the Far East by way of Mexico ... will become a reality."

The Chinese firm Hutchison Whampoa has partnered with Wal-Mart in a $300 million expansion of the Mexican port of Lazaro Cardenas to handle 2 million containers annually by the end of the decade.

The American Chamber of Commerce in Guangdong, China, has conducted seminars promoting this plan. Punta Colonet, about 150 miles south of Tijuana, also is being eyed for expansion. Kansas City Southern railway has bought the Mexican rail links and the state of Texas is negotiating with a Spanish firm to build a corridor of toll roads from the border heading north.

Media reports refer to these transportation projects as a "NAFTA Highway." But it would be more accurate to call it a new "Silk Road" since its purpose is to bring Chinese rather than Mexican goods into the American heartland.

While American-based manufacturers will continue to suffer under this barrage of rival Chinese imports, Mexican industry will be smashed flat as the economic development goals of NAFTA are abandoned.

More than 600 of the maquiladora assembly plants along the U.S.-Mexican border have relocated to China, leaving their Mexican workers behind. There is little chance for Mexican wages to rise if at $1.50 an hour they can be undercut by Chinese labor at 50 cents an hour.

NAFTA was expected to help lift Mexicans out of poverty and to stem the flow of illegal immigration. Instead, the stagnation of the Mexican economy has been a major factor in the heated debates and demonstrations over creating an expanded guest worker program in the U.S.

Besides the ports and roadway projects through Mexico, plans are under way to double the capacity of the Panama Canal. When the U.S. built the canal a century ago, the aim was to move American goods from the farms and factories of the Midwest to Asian markets. The project was an expression of America's rise to world power.

Today's canal project is tied to China's rise, for the goods are moving from Asia to dominate the American market. The tide is turning in world affairs.

To defend itself, America must rethink the sophistry of "free trade" with China. Instead of spending billions of private and public dollars creating better logistics for Chinese traders, a major effort should be launched to rebuild and expand the production base of North America.

Part of this effort would also be to stem the massive outflow of capital and technology to Beijing, America's ambitious geopolitical rival. The goal should be to drive Chinese goods off the continent rather than into its heartland.

William Hawkins is a senior fellow for national security studies at the U.S. Business and Industry Council in Washington.