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IB10047: Mexico-U.S. Relations: Issues for the 106th Congress

K. Larry Storrs

Foreign Affairs, Defense, and Trade Division
April 24, 2000



The United States and Mexico have a special relationship under the North American Free Trade Agreement (NAFTA), which removes trade and investment barriers between the countries. The relationship has been strengthened by presidential visits, including President Clinton's February 1999 trip to Mexico and President Zedillo's upcoming May 23 trip to Washington, and by regular contacts between cabinet-level officials. Major issues of concern to Congress are trade, immigration, drug trafficking, and political rights.

Trade. NAFTA institutions have been functioning, trade between the countries has doubled since 1994, and allegations of violations of labor and environmental laws have been considered. While the Administration argues that NAFTA has had modest positive impacts on all three member countries, public and congressional criticism of NAFTA was a factor in postponement and defeat of fast track legislation in 1997 and 1998, and in the failure of the WTO Ministerial in Seattle in late 1999. Recent trade disputes with Mexico have involved trucking, corn sweeteners, beef, oil, telecommunications, tuna, and steel.

Immigration. Following major immigration reforms in 1996, Congress has acted to enlarge the Border Patrol and to strengthen immigration controls. Despite Mexican complaints about these efforts, Presidents Clinton and Zedillo issued a "Joint Statement on Migration," in May 1997, and the two countries issued a Binational Study on Migration in November 1997. Since the mid-1990s, the countries have been consulting regularly on border safety and consular issues.

Drug Trafficking. Despite congressional criticisms, President Clinton certified on March 1, 2000, that Mexico was fully cooperating with the United States in drug control efforts. The statement of explanation mentioned bilaterally negotiated performance measures of effectiveness (PMEs) to judge the binational anti-drug strategy, enhanced maritime cooperation, and improvements in interdiction and eradication efforts. However, it also said that Mexico's achievements were undermined by chronic institutional weaknesses, particularly drug-related corruption and violence. No congressional resolutions of disapproval were introduced in either house during the 30-day review period.

Political and Human Rights. Mexico held nationwide elections under new electoral reforms in July 1997, producing a more pluralistic legislature and an opposition party Mayor of the Mexico City Federal District. Following the December 22, 1997 killing of 45 peasants in the village of Acteal in the state of Chiapas, some arrests were made and new key ministers offered to restart peace talks with the Zapatista rebels. Despite high hopes, a meeting of EZLN leaders with the congressional mediation commission in November 1998 ended without any settlements. In August 1999, there were brief clashes between military and pro-Zapatista groups. Recent political attention has focused on the selection of candidates for the July 2000 presidential elections, with the governing PRI selecting its candidate in a nationwide primary on November 7, 1999, while the major opposition parties designated candidates after efforts to present a single coalition candidate reached an impasse in September 1999.


On March 30, 2000, Samuel del Villar, Attorney General for the PRD-controlled Mexico City Federal District government charged Oscar Espinoza, the current federal Minister of Tourism and a former appointed Mayor of Mexico City (1994-1997) and former finance secretary during President Zedillo's presidential campaign, with misuse of $42 million of the city's funds when he was Mayor. While federal officials defended Espinoza, the Chamber of Deputies was considering the lifting of his immunity so that he could be prosecuted. On April 3, 2000, Samuel del Villar came under attack when a key witness in the case of the drug-related killing of television personality "Paco" Stanley in Mexico City last June claimed that he was pressured to give false incriminating evidence.

On April 12, 2000, the head of Mexico's federal anti-drug agency announced that it had been determined that three anti-drug agents found dead between Tijuana and Mexicali had been murdered while probing the activities of the Arellano Felix cartel. On April 16, 2000, former U.S. Customs Service agent William Gately said on "60 Minutes" that his superiors failed to act on evidence implicating Mexican Defense Minister Cervantes in money laundering activities, prompting renewed rebuttals by Mexican and U.S. officials. On April 21, 2000, the Mexican Defense Ministry announced the seizure of over 12 metric tons of marijuana in the northern border state of Sonora, the second biggest seizure of the drug since 1995. On April 23, 2000, the Mexican press reported the release for lack of evidence of the two men arrested following the excavation in November to January of suspected grave sites for drug-related killings in Ciudad Juarez. Over the Easter weekend, Mexican presidential candidates were preparing for the television debate on April 25th.


U.S.-Mexico Relationship

Major Bilateral Linkages

Mexico surpassed Japan in 1998 to became the United States' second most important trading partner following Canada. It is also one of the leading countries in Latin America in terms of U.S. investment, with total investment of about $27 billion. In addition, cooperation with Mexico is vital in dealing with illegal immigration, the flow of illicit drugs to the United States, and a host of border issues.

The United States is Mexico's most important customer by far, receiving about 88% of Mexico's exports -- including petroleum, automobiles, auto parts, and winter vegetables -- and providing about 74% of Mexico's imports. The United States is the source of over 60% of foreign investment in Mexico, and the primary source of important tourism earnings.

Until the early 1980s, Mexico had a closed and statist economy and its independent foreign policy was often at odds with the United States. Beginning under President Miguel de la Madrid (1982-1988) and continuing more dramatically under President Carlos Salinas de Gortari (1988-1994), Mexico adopted a series of free market policies. It opened its economy to trade and investment, and cooperation with the United States increased on drug control, border issues, and trade matters. Completion of the North American Free Trade Agreement (NAFTA), which eliminated trade and investment barriers among the United States, Mexico, and Canada, was the clearest indication of the growing integration and cooperation between the countries.

Zedillo Administration

Ernesto Zedillo of the long-ruling Institutional Revolutionary Party (PRI) was inaugurated as President on December 1, 1994, pledging to continue the free market policies of his predecessor, to strengthen democracy, and to end the threat of violence in the far southeastern state of Chiapas.

Zedillo was elected with 50% of the valid vote in the August 21, 1994 elections, and had comfortable majorities in both legislative chambers. Diego Fernandez de Cevallos of the conservative National Action Party (PAN) came in second with 27% of the vote, and Cuauhtemoc Cardenas of the center-left Party of the Democratic Revolution (PRD) came in third with 17% of the 1994 vote. In the watershed midterm legislative election of July 6, 1997, the PRI lost its majority in the Chamber and its two-thirds majority in the Senate. Following that election, the PRI has 77 senators in the 128 member Senate, the PAN has 33 and the PRD has 16, while the Labor Party (PT) and the Green Ecological Party (PVEM) each have 1 member. The PRI has 239 seats in the 500-seat Chamber of Deputies, the PRD has 125, the PAN has 121, the PVEM has 8 seats and the PT has 7. In 1997, the opposition parties remained united to insist upon opposition control of some of the major committees in the Chamber of Deputies, and they succeeded in increasing social and local government funding in the budget debate. In 1998, the opposition parties insisted on an audit of the bank protection agency responsible for rescuing the banks in the financial crisis, but the PAN sided with the PRI in creating an entirely new bank protection agency. In 1999, opposition parties again won increases in social and local government funding in the budget debate, but largely failed in efforts to explore irregularities in the loans covered by the bank protection agency.

The major issues facing Zedillo are the economic situation, the probes of assassinations in 1993-1994, the continuing uncertainties in Chiapas, concerns about crime in urban areas, and the July 2000 presidential and legislative elections.

Economic Situation. Mexico's economic crisis began in late December 1994, when the currency, stock, and bond markets fell more than 40%, and Mexico was forced to allow the peso to float freely. The government announced austerity budgets and obtained backup financing from international sources, especially the United States and the International Monetary Fund, including a package of up to $20 billion in financial support from the United States. The economy declined 6.2% in 1995, with concomitant unemployment and firm failures, but Mexico maintained the austere policies, remained current on debt obligations, and eventually gained access to ordinary lines of credit. In early August 1996, the government prepaid $7 billion to the United States under the financial support program, and in January 1997, Mexico repaid 3 years early its remaining outstanding debt of $3.5 billion, thereby paying off the full amount of $13.5 billion provided by the United States.

By early 2000, Mexico had experienced four years of economic recovery, with GDP growth averaging about 5% per year (5.1% in 1996, 7% in 1997, 4.8% in 1998, and 3.7% in 1999), but the government admitted that it would take some time to restore pre-crisis living standards. In 1998, the government cut the budget several times and announced lower growth estimates in the face of falling oil prices and the effects of the Asian crisis. Non-OPEC member Mexico also joined forces with Saudi Arabia and Venezuela in announcing that it would cut oil production to stem the rapid decline in petroleum prices. In late 1998, after debating the bank rescue program and alleged irregularities, the Mexican Congress established an audit of the previous rescue agency (FOBAPROA) and established a new agency (Institute for the Protection of Bank Savings-IPAB) under congressional scrutiny. In the first half of 1999, Mexico had positive rates of exports and investment and met established fiscal targets with world oil prices rising. In a new effort to expand privatization of government entities, President Zedillo submitted proposals to Congress in February 1999 to open the electricity industry to privatization. In late June 1999, Mexico arranged international financing, including a $4.2 billion line of credit from the International Monetary Fund, to safeguard the country against any currency crisis in the period leading up to the July 2000 elections. In 1999 and into 2000, opposition parties were claiming that an independent audit of the bank protection fund showed that some banks had made illegal contributions to the PRI, and they were demanding the release of additional information. In October 1999, Mexico experienced torrential rains, flooding, and mudslides in the southeastern Gulf states, with more than 476 deaths and more than 500,000 people affected. In early 2000, Mexican officials estimated economic growth in 1999 at 3.7%, with inflation of 12.3%, and they predicted growth in 2000 of 4.5%, with inflation under 10%. On March 24, 2000, President Zedillo signed in Portugal a comprehensive free trade agreement with the European Union that will enter into force on July 1, 2000. On April 1, 2000, as previously announced, Mexico increased oil exports by 150,000 barrels per day to lower the cost of gasoline, in keeping with the recent decision in Vienna of OPEC Ministers.

Assassination and Corruption Probes. In an effort to deal with corruption and unsolved assassination cases, President Zedillo appointed Antonio Lozano of the opposition PAN as Attorney General and ordered him to reopen the investigations of the May 1993 killing of Cardinal Posadas, the March 1994 assassination of PRI presidential candidate Donaldo Colosio, and the September 1994 murder of PRI official Jose Francisco Ruiz Massieu. Attorney General Lozano appointed special prosecutors in the cases and dismissed over 1,250 federal law enforcement officials in anti-corruption shakeups. In early December 1996, President Zedillo removed Lozano as Attorney General, reportedly for inadequate action on drug trafficking and assassination probes, and named as his replacement Jorge Madrazo Cuellar, a political independent who previously headed the government's Human Rights Commission. General Jesus Gutierrez Rebollo was also named to head the National Drug Control Institute, but he was removed in mid-February 1997, and charged with accepting bribes from drug lord Amado Carillo Fuentes. Lawyer Mariano Herran Salvatti was then named to head a completely new anti-drug agency called the Office of the Special Prosecutor for Attention to Crimes Against Health (FEADS).

With regard to the May 1993 killing of Cardinal Posadas, the Attorney General's office announced in September 1995, that it was ending the active investigation of the case, with available evidence pointing to the original hypothesis that he was mistakenly killed by rival drug gangs. In May 1999, on the sixth anniversary of the killing, the Catholic Church expressed doubts about the official version, and blamed former Attorney General Jorge Carpizo for losing some of the videos of the shooting.

Regarding the March 1994 assassination of PRI presidential candidate Donaldo Colosio, one gunman, Mario Aburto, was convicted and sent to jail in 1994. Special prosecutor Chapa said in early 1995 that a second gunman, Othon Cortes Vasquez, was involved, even though two previous special prosecutors had concluded that only one gunman was responsible. In early August 1996, the judge found Othon Cortes Vasquez not guilty. The Attorney General appealed the decision, but the appellate judge confirmed the decision in early November 1996. Special prosecutor Gonzalez Perez said at the time that the investigation was continuing. On the sixth anniversary of the killing, numerous politicians called for resolution of the case.

In connection with the September 1994 killing of PRI official Ruiz Massieu, Raul Salinas, the former President's brother, was arrested for involvement in this case in late February 1995, after the discovery of a corpse, subsequently found to have been planted, at his ranch. Raul Salinas is also being held for illicit enrichment from drug traffickers or influence-peddling and money laundering, although the money laundering charges were dismissed by an appeals court in May 1998. In November 1995, his wife was arrested when she attempted to withdraw funds from a Swiss bank account under another name. Since then, news accounts have suggested the discovery of up to $300 million in these accounts. Some wealthy Mexicans, many linked to privatization investments during the Salinas period, have said they contributed funds for investment purposes. Some of these have been arrested and charged with illicit enrichment. In late October 1998, Swiss authorities concluded that Raul Salinas obtained the funds from Mexican and Colombian cartels, and they seized $114 million in Swiss banks, prompting Mexican authorities to renew their investigations in those areas. Final arguments were heard in early December 1998 in the murder case against Salinas, and in January 1999, the judge found Raul Salinas guilty of murder and sentenced him to 50 years in prison. In mid-July 1999, a Mexican appeals court cut the sentence in half, and a Swiss court ruled that the Swiss national government lacked the authority to seize Salinas' assets.

Former Deputy Attorney General Mario Ruiz Massieu, who had headed the investigation of his brother's assassination, was arrested in Newark, New Jersey, in early March 1995, for failure to declare his currency holdings to Custom's officials, and Mexican officials sought his extradition on grounds that he covered up Raul Salinas' involvement in the crime. In January 1996, a U.S. judge for the fourth time refused to extradite Mario Ruiz Massieu, finding the evidence against him lacking. In mid-March 1997, a jury in Houston, Texas, found that $7.9 million of $9 million in his U.S. bank accounts was from drug traffickers and subject to seizure by the U.S. government. After an appeals court in June 1999 reversed a lower court's stay of U.S. efforts to deport him in May 1997, Ruiz Massieu appealed for political asylum. In late August 1999, a grand jury in Houston, Texas, indicted Ruiz Massieu on narcotics and money-laundering charges. On September 15, 1999, on the eve of his trial, Ruiz Massieu apparently took his own life with an overdose of anti-depression pills, leaving behind various notes critical of the Zedillo government.

Guerrillas in Chiapas and Guerrero. President Zedillo has promised to peacefully end the dispute with Zapatista National Liberation Front (EZLN) guerrillas in Chiapas that remains unresolved since the short-lived fighting and cease-fire in early January 1994. Despite some early efforts at accommodation, the Zapatista military mobilization in mid-December 1994 was one of the factors that led to the run on the peso and the financial crisis. On February 9, 1995, President Zedillo ordered the arrest of Zapatista leaders in Chiapas, but on February 14, he called off the offensive and later proposed to the Mexican Congress a Law for Dialogue, Conciliation and Dignified Peace. Congress modified and approved the law in early March 1995, and in early April the Zapatistas agreed to begin peace talks with an agreed agenda.

Representatives of both sides met in San Andres Larrainzar, in the state of Chiapas, throughout 1995 and reached an agreement on indigenous rights in January 1996 which was signed in February 1996. After on again, off again talks over new issues during 1996, in mid-January 1997, the Zapatistas rejected what they claim are changes by the government to the government-Zapatista agreement on indigenous rights, although they were making plans be become a political rather than a military movement. In early September 1997, thousands of Zapatista followers and sympathizers made a five-day march to Mexico City to demand respect for the agreement on indigenous rights, and they created the Zapatista Front political movement. In the fall of 1997, President Zedillo called upon the Zapatistas to reenter peace talks, but human rights groups were denouncing government attacks against Bishop Samuel Ruiz Garcia in Chiapas. The December 22, 1997 killing of 45 indigenous peasants in Acteal, Chiapas, prompted criticism of government officials and calls for vigorous measures to achieve peace, with the result that new people were named to head the Government Ministry, to be the Negotiator for Chiapas, and to be Governor of the state of Chiapas.

In 1998, President Zedillo visited Chiapas many times and called for a renewal of peace talks, and in March 1998, he submitted proposed legislation to promote indigenous rights in Chiapas, but the guerrillas rejected the initiative, and the legislature is divided on the issue. Numerous human rights observers visited Chiapas throughout the year, and some foreigners were expelled for engaging in political activities. In June 1998, the situation deteriorated when the mediation commission dissolved after Bishop Ruiz resigned, claiming that the government was not interested in dialogue, and eight people were killed in a clash between Zapatista and government forces in El Bosque. In July 1998, the government offered a new proposal that would involve the legalization of municipalities in Zapatista strongholds, but the Zapatistas called for a nation-wide plebiscite on the indigenous rights legislation. In mid-October 1998, the Zapatistas indicated a willingness to reinitiate peace talks with the congressional peace commission (Cocopa), but the meetings in late November 1998 failed to produce any agreements.

In August 1999, there were several clashes in Amador Hernandez between the military and Zapatista supporters who were seeking to block construction of a road into Zapatista strongholds, and various groups denounced the military and called for renewed negotiations. On September 7, 1999, President Zedillo launched a new initiative relating to the conflict, and in October and November government spokesmen called for reinitiation of the dialogue. In December 1999, President Zedillo visited Chiapas twice and urged resolution by dialogue..

Another guerrilla group, known as the Popular Revolutionary Army (EPR), appeared in the state of Guerrero on June 28, 1996, at the commemoration of the killing of 17 peasants in Aguas Blancas. After calling for the overthrow of the government, the group disappeared. The Mexican army searched for the group and arrested some suspects, but some commentators doubted the seriousness of the group. EPR spokesmen alleged in early August 1996 that they had opened a new front in the Sierra Madre Oriental mountains. EPR guerrillas launched coordinated attacks in three states (Guerrero, Oaxaca, Mexico) on August 28, but then disappeared again, prompting President Zedillo to characterize the group as a terrorist organization. The EPR made similar attacks in the three states in late October 1996, although it declared month-long cease-fires in the states of Guerrero and Mexico while elections were being held. At least 22 EPR members were arrested in Oaxaca in early November 1996. In early March 1997, the EPR warned that it would be unwise for the government to attack any of the guerrilla groups. In late May 1997, several persons were killed in anti-guerrilla skirmishes in Guerrero. In early June 1998, 11 EPR members were killed in a confrontation with the military, although some critics charged that it was a massacre. Government Minister Labastida announced in late July 1998 that the EPR was seriously weakened, but isolated attacks took place in the next few days. In March 1999, EPR elements denounced the election in Guerrero of the PRI candidate. Mexican authorities further weakened the organization when they captured the head of an EPR offshoot (the EPRI) in October 1999, but EPR elements attacked army troops in Guerrero in February 2000.

Public Security Concerns. Particularly since the economic crisis of 1994-1995, Mexico has experienced a serious problem with carjackings, robberies, and other crimes in Mexico City and other urban areas, and Mexicans have indicated in a number of polls that this issue is a major cause of concern. In the face of popular distrust of Mexico's police forces, in 1997 President Zedillo placed military officers in major public security and law enforcement positions in Mexico City, but the military was withdrawn from these positions in December 1997. In his State of the Nation address in September 1997, President Zedillo called for a National Crusade Against Crime, with better laws to fight crime, better law enforcement agencies, and better training and coordination. As one part of this program, Zedillo has established the National System of Public Safety to coordinate the efforts of the different actors, including the Ministries of Government, Defense, Navy, Communications, the 31 state governors, and the Mayor of Mexico City. Another part of the effort is the creation of the new Preventive Federal Police (PFP) force, from three previous police forces, with new screening and training procedures. In 1999, the Minister of Government pledged that state and federal governments will devote $900 million in resources for the training and screening of 55,000 new public safety officers, and for the creation of a National Communication System.

Presidential and Legislative Elections in July 2000. In 1999, the parties picked candidates for the July 2000 presidential and legislative elections in a new context. President Zedillo indicated before and after his election in 1994 that in an effort to advance democracy in Mexico he intended to remain somewhat apart from the party and to forego the traditional presidential prerogative to name the PRI's presidential candidate for the next election, a procedure that had been tantamount to naming the future president in the past. Particularly since the mid-1990s, the opposition parties have scored numerous victories in mayoral, gubernatorial, and legislative races, including the PRD's election of Cuauhtemoc Cardenas as Mayor of the Mexico City Federal District, and the opposition's election of a majority in the Chamber of Deputies in the July 1997 elections. With the July 2000 elections approaching, the PRI announced in mid-May 1999 that it would select its party's candidate by a direct and open primary on November 7, 1999, while the PAN and the PRD engaged in discussions about the possibility of a coalition presidential candidate for the opposition, despite major ideological differences. In late August 1999, the opposition parties agreed to ask a group of notable citizens to help determine a method for selecting a joint opposition candidate. In late September 1999, the PAN rejected the suggestion of the group of notables that the candidate be selected by two methods, a limited primary election and public opinion polling, and the notion of a common opposition candidate reached an impasse. During the month, Mexico City Mayor Cuauhtemoc Cardenas was designated as the presidential candidate for the PRD, and Guanajuato Governor Vicente Fox was designated as the presidential candidate for the PAN. On November 7, 1999, former Government Minister Francisco Labastida won the PRI primary decisively, winning 273 of 300 voting districts. By the end of March 2000, pollsters were suggesting a fairly close race between Francisco Labastida of the PRI and Vicente Fox of the Alliance for Change (PAN and PVEM), with Cuauhtemoc Cardenas of the Alliance for Mexico (PRD, PT, CD, PSN, PAS) lagging behind significantly. Candidates are preparing for a television debate on April 25th.

Bilateral Issues for Congress

Trade Issues

Trade between Mexico and the United States has grown dramatically in recent years, encouraged by the adoption of the North American Free Trade Agreement (NAFTA) between Mexico, the United States, and Canada. Total U.S. trade with Mexico has increased from $100 billion in 1994 (exports of $50.8 billion; imports of $49.5 billion) to $197 billion in 1999 (exports of $86.9 billion; imports of $109.7 billion). However, the U.S. trade balance with Mexico has shifted from a surplus of $1.3 billion in 1994 to a generally growing deficit of $22.8 billion in 1999, in part because of the late 1994 devaluation of the peso which made Mexican products cheaper. This change in the trade balance has caused some Members of Congress to question the benefits of NAFTA. Despite the deficit, Mexico is one of the fastest growing export markets for the United States in recent years, and it became the second largest U.S. export market after Canada in 1998.

The NAFTA agreement was negotiated in 1991 and 1992; side agreements on labor and environmental matters were completed in 1993; the agreements were approved by the respective legislatures in late 1993; and the agreements went into force on Jan. 1, 1994. Under the agreements, trade and investment restrictions are being eliminated over a 15 year period, with most restrictions eliminated in the early years of the agreement. At the Miami Summit of the Americas, in December 1994, the NAFTA partners announced that they would begin negotiations with Chile on accession to NAFTA, and the hemispheric presidents pledged to create a Free Trade Area of the Americas (FTAA) by the year 2005. Final negotiations on Chile's accession to NAFTA and on the FTAA await congressional approval of fast track negotiating authority. On July 11, 1997, the Administration released a required report on the first 3 years of operations under NAFTA that argued that NAFTA had had a modest positive impact on U.S. jobs and income, and had facilitated Mexico's economic recovery following the peso crisis of 1994-1995.

In mid-November 1997, congressional opposition to granting the President fast track authority for negotiating new free trade agreements, often interpreted as a referendum on NAFTA, forced the Administration to postpone action on this legislation. Hemispheric leaders agreed in mid-April 1998 at the Santiago Summit of the Americas to launch negotiations to establish a Free Trade Area of the Americas (FTAA) despite the Clinton Administration's lack of fast track authority. When the House leadership, without Administration support, pressed for fast track legislation under the Reciprocal Trade Agreement Authorities Act (H.R. 2621) on September 25, 1998, it was defeated 243-180. Administration witnesses testified in 1999, after 5 years of NAFTA experience, that NAFTA had been successful in increasing U.S. exports to Mexico, particularly heavily protected areas such as agricultural products, and in creating jobs and strengthening the economy. The failure in December 1999 of WTO ministers meeting in Seattle to agree upon an agenda for future multilateral trade liberalization, following criticism by labor, environmental, and agricultural groups, has raised doubts about the prospects in the near future for fast track authority and trade liberalization efforts.

Functioning of NAFTA Institutions. Since 1994, the NAFTA institutions mandated by the agreements have been functioning. The tripartite Commission on Environmental Cooperation (CEC) was established in Montreal, Canada; and the Commission for Labor Cooperation (CLC) was established in Dallas, Texas. In addition, the bilateral Border Environment Cooperation Commission (BECC), located in Ciudad Juarez, Mexico; and the North American Development Bank (NADBank), headquartered in San Antonio, Texas, were created to promote and finance border environment projects along the U.S.-Mexico border.

These NAFTA institutions have operated to encourage cooperation on trade, environmental and labor issues, and to consider non- governmental petitions under the labor and environmental side agreements. Under the labor side agreement, 21 petitions have been submitted alleging non-compliance by one of the NAFTA countries with existing labor legislation, and 12 of these have been against Mexico: five submissions were advanced to the next stage of ministerial consultations, although negotiations are ongoing in two cases; two submissions were essentially dropped on grounds that the workers who were fired in Mexico accepted severance pay; two submissions were withdrawn, in one case when Mexico recognized a union just before a scheduled hearing; one submission was rejected on procedural grounds, although a study on reconciliation of the right to strike and national interests was initiated; and one submission is pending.

In one of the cases advanced to ministerial consultation, involving the dismissal of workers for union organizing activities at a SONY electronics plant in Nuevo Laredo, Mexico, the labor ministers agreed to a plan of action including meetings with the affected workers, public seminars, and studies of union registration procedures. In the case of alleged discrimination against pregnant Mexican workers in border assembly (maquiladora) plants, ministerial consultations led to an implementation agreement and a conference on the rights of working women. With regard to the union association and health and safety issues in the Han Young maquiladora plant in Tijuana and the Itapsa maquiladora plant in the state of Mexico, ministerial consultations were held and negotiations are continuing. In a case against the United States, involving the closure of a Sprint subsidiary in San Francisco, shortly before a union representation election, the labor ministers agreed to a public forum on the issues, and an exchange of information and a hearing to determine whether the closing was for anti-unionization or for financial reasons. Under the trilateral CLC the countries are cooperating in many areas, especially occupational safety, and rights of working women and children.

Under the environmental side agreement, 26 petitions have been submitted alleging non-compliance with environmental legislation, but only 9 of these have involved Mexico: in the major case involving the environmental impact of the construction of a cruise boat port in Cozumel, Mexico, the Council requested a response from the Mexican government and after evaluation directed the CEC Secretariat to prepare a full factual record on the case to highlight deficiencies; in two cases involving pollution of the Magdalena River and Lake Chapala the Council is reviewing the response from the Mexican government; in three recent cases the Council has requested responses from the Mexican government; in another case the complaint is still being reviewed; and another case was rejected on grounds that it did not allege a violation of environmental law. The CEC is cooperating on many environmental projects, including the North American Bird Conservation Initiative to protect birds and conserve bird habitats, the Upper San Pedro River Initiative to protect this Sonora-Arizona eco-system that is an important corridor for millions of migratory birds, and the Sound Management of Chemicals Project to dramatically reduce the use of PCBs, DDT, chlordane, mercury, and other pollutants.

Recent Trade Disputes. The major disputes involve trucking access to border areas in both countries, opening the Mexican telecommunications sector to international long distance competition, allegations of dumping or misuse of sanitary standards, and violations by Mexico of intellectual property rights. In early April 2000, USTR Barshefsky threatened to file a complaint with the WTO if progress is not made in reducing Telmex's continuing dominant position in the telecommunications industry. The Mexican government has criticized U.S. postponement on safety grounds of implementation of NAFTA provisions that would give Mexican trucks access to U.S. highways, and Mexico is seeking settlement through NAFTA dispute settlement procedures, while the United States has criticized Mexico's failure to grant national treatment for express mail delivery services in Mexico. In late 1999, Congress passed and the President signed into law (P.L. 106-159) the Motor Carrier Safety Improvement Act of 1999, which establishes a new agency to promote and regulate carrier safety; provides greater resources for inspection of foreign carriers; and establishes penalties and disqualifications for non-complying foreign carriers.

With regard to imports of high fructose corn syrup (HFCS) sweeteners from the United States, Mexico has alleged that the United States has engaged in dumping practices and has imposed anti-dumping duties, while the United States has invoked WTO and NAFTA dispute resolution mechanisms, claiming that the Mexican government has colluded with the Mexican sugar and sweetener industries to restrict HFCS imports from the United States. In February 2000, the WTO upheld the U.S. claim, and Mexico decided not to appeal the ruling. With regard to dumping allegations, both countries have alleged dumping of beef and cattle; Mexico has alleged U.S. dumping of apples, cotton, and sorghum; and the United States has alleged Mexican dumping of tomatoes and steel, although many of these complaints have been resolved to some extent.

The United States has also claimed that Mexican sanitary standards have posed barriers to U.S. exports, and that Mexico's lax enforcement has permitted widespread piracy of recording and software products. Mexico has objected to U.S. sanctions against third countries with investments in Cuba under the Cuban Liberty and Democratic Solidarity Act of 1996 , commonly called the Helms-Burton legislation. In mid-August 1999, the United States rejected an anti-dumping complaint against Mexico and other major oil producers brought by a group of small U.S. producers called Save Domestic Oil, and Mexico implemented the planned phase-out of a 4% tariff on imported natural gas. While the United States lifted the embargo on Mexican tuna in April 2000, after procedures were worked out to avoid harm to dolphins, a federal judge in San Francisco blocked the Administration's plan to loosen the standards of a 1990 law for a dolphin-safe label, saying that the standards of the law had not been met.

Immigration Issues

Nature of the Immigration Problem. Estimates reported in the press of the number of Mexicans living illegally in the United States range from 1.1 million to 2.7 million. An April 1994 Immigration and Naturalization Service (INS) study estimated that there were about 1.3 million unauthorized Mexicans residing in the United States, accounting for 39% of the total estimated illegal alien population. Mexico regularly expresses concern about alleged abuses suffered by Mexican workers in the United States, and takes the view that the migrants are "undocumented workers," not illegal immigrants, making the point that since the U.S. market attracts and provides employment for the migrants, it bears some responsibility. Mexico benefits from illegal migration in at least two ways: (1) it is a "safety valve" that dissipates the political discontent that could arise from higher unemployment in Mexico; and (2) it is a source of remittances by workers in the United States to families in Mexico, ranging, according to widely varying estimates, from $1 billion to $10 billion.

The main U.S. mechanism for controlling illegal immigration in the past was the Immigration Reform and Control Act of 1986 (P.L. 99-603), which was passed by Congress in late 1986. Main provisions of the Act include civil and criminal penalties for U.S. employers who knowingly hire undocumented workers; increased border control and enforcement measures; antidiscrimination safeguards; provision for amnesty or legalization for illegal aliens who resided continuously in the United States before 1982; and a special legalization for farm workers previously employed on American farms.

In the face of mounting criticism of illegal aliens, especially that they deprive American citizens of jobs, and that they are a growing burden on the educational, health, and welfare resources of certain states, recent Administrations have sought to control illegal immigration to protect U.S. borders and to preserve the program of legal immigration. Suits by the most affected states (California, Florida, Texas, and Arizona) against the federal government, and the passage in California in late 1994 of Proposition 187, which sought to deny health and educational benefits to illegal aliens, stimulated additional state and federal legislative proposals. Mexican authorities strongly criticized passage of Proposition 187, even though it was blocked by court action, and other restrictive immigration legislation as racist and discriminatory.

Administration and Congressional Initiatives to Curb Immigration. The Clinton Administration has announced initiatives each year to curb illegal immigration. These initiatives have sought (1) to prevent illegal entry into the United States with additional Border Patrol agents and INS inspectors, using improved technology and procedures; (2) to remove and deport illegal and criminal aliens expeditiously; (3) to enhance enforcement of employer sanctions and labor and wage standards, including the testing of pilot programs to develop computerized verification systems to determine a person's eligibility for employment, as recommended by the Commission on Immigration Reform, headed by the late Congresswoman Barbara Jordan. The Border Patrol has been increased substantially, and a strategy to deter illegal entry has been employed, known as "prevention through deterrence," modeled upon two border initiatives, Operation Hold the Line in the El Paso area and Operation Gatekeeper in the San Diego area.

Congress passed two major immigration reform measures in 1996 to control illegal immigration and to limit the eligibility of aliens for federal programs. One was the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, Division C of the Omnibus Consolidated Appropriations Act for FY1997 (H.R. 3610/P.L. 104-208) . The other was the 1996 welfare law entitled the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (H.R. 3734/P.L. 104-193). The first measure seeks to control illegal immigration by adding 1,000 Border Patrol agents per year for the next 5 years (FY1997-FY2001), along with additional personnel, equipment, and procedures, to improve border and interior enforcement, verification of employment eligibility, and control of alien smuggling and document fraud. Both measures seek to reduce the attractiveness of immigration by restricting the eligibility of aliens for federal programs. (For more information, see CRS Report 95-881, Immigration Legislation in the 104th Congress, by Joyce Vialet, et al.)

Congress has also increased funding for the Border Patrol through the regular Commerce, Justice, State, and Judiciary Appropriations Acts, nearly tripling the Border Patrol's budget from $1.5 billion in FY1993 to nearly $4.1 billion in FY1999. (For more details, see CRS Report RS20183, Immigration and Naturalization Service's FY2000 Budget.) With various groups, including the AFL-CIO in February 2000, calling for amnesty for illegal immigrants in the United States and a more lenient immigration policy, in 2000 Congress is considering measures to increase the number of temporary H-1B professional or H-2A agricultural workers and to restructure the INS by separating the enforcement and service functions. (For more information, see CRS Issue Brief IB10044, Immigration Legislation and Issues in the 106th Congress.)

With regard to bilateral cooperation, during President Zedillo's visit to Washington in October 1995, the two Presidents announced a pilot project in the San Diego area under which habitual illegal border crossers would be returned to their home towns in the interior of Mexico, rather than to the border. In May 1996 and May 1997, during the Binational Commission meetings, the countries agreed to strengthen the protections for aliens, to formalize consultations through the Border Liaison Mechanisms, and to undertake joint studies of the migration phenomenon. Since August 1997 when the United States launched a buildup of the Border Patrol along the Texas-New Mexico border under Operation Rio Grande, Mexico has complained that the initiative is contrary to the spirit of the joint migration efforts. In November 1997, the countries issued a Binational Study on Migration that found that unauthorized migration carries costs for both countries and makes migrants vulnerable to exploitation. In 1998-2000, the countries have pursued a Border Safety Campaign to reduce violence on the border through public information campaigns, search and rescue programs, and cooperation between U.S. and Mexican officials at the border.

Drug Trafficking Issues

Nature of the Problem. Mexico is a major source of production of heroin and marijuana for the U.S. market and has become the major transit point in the flow of cocaine from South America. According to the State Department, it was the source of about 20-30% of the heroin, up to 70% of the foreign grown marijuana, and the transit point for 55-60% of the cocaine shipped to the United States. While U.S.-Mexico efforts in this area have been marked by distrust at various times, particularly because of the killing of U.S. Drug Enforcement Administration (DEA) agents in the mid-1980s and the kidnaping of Mexican officials in 1990, relations have been improving in recent years. In response to U.S. criticisms of widespread corruption, Mexican officials point to the numerous Mexican policemen and soldiers killed in confrontations with narcotics traffickers as evidence of their commitment to controlling the problem. They also criticize U.S. officials for failing to do more to control the demand for drugs in the United States, noting that the problem is one of supply and demand.

Presidential Certifications and Congressional Reactions. In general, the Clinton Administration's drug control policy in the domestic area stresses drug treatment and prevention, and in the international area it has devoted more attention to eradication and source country institution building, particularly law enforcement and judicial institutions. Under recent pressure from Congress, through mechanisms like the Western Hemisphere Drug Elimination Act and the Supplemental FY1998 Appropriations Act, which were included in the Omnibus Consolidated and Emergency Supplemental Appropriation Act of 1998 (H.R. 4328/P.L. 105-277), additional funding was provided to strengthen the Border Patrol and other international interdiction efforts, including $90 million in Southwest Border enhancements. Moreover, in other actions to encourage greater counter-narcotics efforts in Mexico, in 1997, 1998, and 1999, congressional resolutions to disapprove President Clinton's certification of Mexico as fully cooperative in drug control efforts were introduced in both houses but never fully enacted. (For details, see CRS Report 98-174 (pdf), Mexican Drug Certification Issues: U.S. Congressional Action, 1986-2000.)

The Administration's 2000 policy, essentially a continuation of the 1999 five-year policy plan, was announced in April 2000 by President Clinton and General Barry McCaffrey, head of the Office of National Drug Control Policy. It calls for a strengthened anti-drug program, including continuation of the publicity campaign targeting children, and measures to enhance interdiction along the southwest border and to strengthen source countries capabilities.

President Clinton certified on March 1, 2000, as he has in previous years, that Mexico was a fully cooperative country in efforts to control drug trafficking as required by the Foreign Assistance Act of 1961, as amended. He cited the broad array of cooperation between the countries, the unprecedented agreement on performance measures of effectiveness to gauge the success of the joint anti-drug strategy, enhanced maritime cooperation, significant increases in seizures and eradication of illicit drugs, and the extradition of two Mexican national drug fugitives to the United States. "Although there were some successes in drug law enforcement cooperation with the U.S.," the State Department's International Narcotics Control Strategy Report on 1999, accompanying the certification, noted that "the year saw limited development in building corruption-resistant law enforcement institutions, including specialized 'vetted units.'" (For additional information on Mexico's efforts, see CRS Report RL30475, Mexico's Counter-Narcotics Efforts Under Zedillo, December 1994 to March 2000.)

In anticipation of the Administration's certification of Mexico, the Chairmen of the House International Relations Committee and the Senate Foreign Relations Committee wrote to Secretary of State Albright to urge non-certification. Some Members of Congress were critical of Mexico's counter-narcotics performance in two hearings about the time of the President's certification: the hearing on February 29, 2000, by the Subcommittee on Criminal Justice, Drug Policy and Human Resources of the House Committee on Governmental Reform; and the hearing on March 21, 2000, by the Senate Caucus on International Narcotics Control. However, no resolutions of disapproval were introduced in either house to overturn the President's certification during the 30-day congressional review period. (For details on this and previous years' actions, see CRS Report 98-174 (pdf), Mexican Drug Certification Issues: U.S. Congressional Action, 1986-2000.)

Political and Human Rights Issues

Concerns over Elections and Political Rights. Over the years, major attention has focused on the fairness of elections in Mexico since the Institutional Revolutionary Party or PRI has controlled all presidential and nearly all gubernatorial posts since the 1930s, and has had solid control of the two chambers of the Mexican Congress as well. Following the controversial July 1988 presidential election, President Salinas proposed and the Congress enacted three electoral reforms. In subsequent years, opposition governors were elected in several states, and nationwide mid-term legislative elections in August 1991 were considered to be generally fair. Presidential and legislative elections were held under peaceful conditions on August 21, 1994, with Ernesto Zedillo of the long ruling PRI winning the presidency with 50.18% of the valid votes. In subsequent local elections, the opposition PAN won governorships in many states, particularly in the period following the early 1995 period of financial crisis and austerity. In elections in November 1996 the PRI won the largest number of municipalities in the important state of Mexico, but lost several major cities to opposition parties. In elections in the state of Morelos in mid-March 1997, the PRI lost the majority in the state legislature, and lost control of the capital city of Cuernavaca, but won the largest number of municipalities. In mid-October 1997 elections, the PRI won all mayoralties and a majority in the state legislature in Tabasco amid charges of electoral irregularities, but the opposition parties won most of the major cities in Veracruz.

In late July 1996, the parties agreed, after on and off negotiations, on major electoral reforms for the July 1997 legislative and local elections. These included the direct election of the mayor of the Mexico City Federal District, access to the media, and controls on campaign spending. The required constitutional reforms were unanimously approved by the Congress in late July and early August 1996, but in mid-November 1996, the PRI majority modified the legislation to make running in coalitions more difficult and to provide $250 million of public funding for elections, with about half of this amount going to the PRI based on electoral returns in the last election.

On July 6, 1997, Mexico held nationwide midterm legislative elections along with gubernatorial contests in 6 states and the first direct election of the Mayor of the Mexico City Federal District. Although the Zedillo-supported PRI captured 39% of the valid votes to remain the single largest party, it lost its long-held majority in the Chamber of Deputies, it lost the two-thirds majority in the Senate, it lost two of the six governorships, and it lost the all-important race for Mayor of Mexico City. This prompted observers to suggest that the system was becoming more pluralistic and that passage of legislation would require more negotiation among the parties. The PAN won 27% of the vote and two governorships, reinforcing its image of strength in urban and northern areas. The PRD won 26% of the vote, and performed particularly well in central Mexico, including victory by two time Presidential candidate Cuauhtemoc Cardenas in the race for mayor of the Mexico City Federal District.

Opposition parties in the Chamber stayed together to press for modifications in President Zedillo's budget, but the PAN eventually voted with the PRI after it obtained increased support for local government. Cuauhtemoc Cardenas was installed as Mayor on December 5, 1997.

The gubernatorial elections on July 5, 1998, were generally considered fair by all parties, with the PRI retaining control in Durango, regaining control from the PAN in Chihuahua, and losing control to the PRD in Zacatecas. In gubernatorial elections on August 2, 1998, the PRI won in Veracruz and Oaxaca, but the PAN won in Aguascalientes. In gubernatorial elections on October 25, 1998, the PRI was declared the winner in Tamaulipas, but opposition parties complained of irregularities. In gubernatorial elections on November 8, 1998, the PRI won in Puebla and Sinaloa, although the PRD won in Tlaxcala. In February 1999 elections, the PRI won gubernatorial elections in Hidalgo and Quintana Roo. In early July 1999, in elections viewed as a preview of the coming presidential elections, the PRI won the governorship in a disputed election in populous Mexico state against a divided opposition, but a PAN-PRD coalition won the governorship in the small state of Nayarit.

In late September 1999, the PRI won the governorship in Coahuila against an opposition coalition, but in early September 1999, the PRI lost the race for mayor in Acapulco to an opposition coalition in the state of Guerrero. During late 1999, the parties picked candidates for the July 2000 presidential election. The PRI announced in mid-May 1999 that it would select the candidate of the party by a direct and open primary in November 1999, and former Government Minister Francisco Labastida was elected decisively over three other candidates in the November 7, 1999 nationwide primary. Efforts by the PAN and the PRD to agree on a common candidate for the opposition came to an impasse in late September 1999, and Vicente Fox was designated as the presidential candidate for the PAN, and Cuauhtemoc Cardenas was designated as the presidential candidate for the PRD.

Allegations of Human Rights Abuses. Charges of human rights abuse in Mexico, cited by human rights groups and the State Department's annual reports, include allegations of torture and harassment by law enforcement and narcotics control agents; threats against journalists, academics, and human rights monitors; and killings or "disappearances" of prominent critics and opposition politicians. Other abuses include prison deficiencies, discrimination against women and indigenous peoples, and extensive child labor in the informal sector.

President Zedillo has taken a number of steps to deal with these abuses, including continuing support for the National Human Rights Commission. He named Antonio Lozano of the opposition PAN as Attorney General in 1994 and ordered him to carry out a major reform of the judicial and law enforcement system to eliminate corruption and human rights abuse. Judicial reform was approved in December 1994, increasing the independence and autonomy of the Supreme Court and of the Attorney General's Office. After trying several approaches on Chiapas, including an attempt to arrest Zapatista leaders, President Zedillo sought a negotiated settlement of the conflict but it has remained stalled, despite agreement on indigenous issues in 1996. In July 1996, the Inter-American Commission on Human Rights visited Mexico for the first time, at the invitation of the Mexican government, and issued a report in September 1998, that indicated awareness of the difficulties, given the struggles against insurgencies and drug trafficking, and the various advances, but noted continuing failure to prosecute those guilty of human rights abuses.

Major attention has focused on the Dec. 22, 1997 killing of 45 indigenous peasants in the village of Acteal in the state of Chiapas by armed men said to be linked to the PRI. President Zedillo quickly asked federal authorities to take over the case, vowed to prosecute those responsible, and appointed a new Minister of Government and a new peace negotiator for Chiapas. In subsequent action, the Governor of Chiapas resigned and federal authorities arrested more than 40 people, including the mayor of nearby Chenalho. Mexican and international human rights groups alleged that para-military groups linked to the PRI were responsible, and they called for independent investigations, for removal of the military from the region, and for renewed efforts to negotiate peace in Chiapas. Although some critics have charged that U.S. military assistance to Mexico may be involved, the Attorney General's Office concluded that the military was not involved and that revenge for a previous killing was the most likely cause for the incident. In July and September 1999, a Mexican court sentenced 44 members of an armed group to 35-year sentences for their involvement in the Acteal massacres, U.N. Special Reporter on extrajudicial killings Asthma Jahangir has made critical comments about continuing impunity after her investigations of the cases.


P.L. 106-65/S. 1059 (Warner)
Department of Defense Authorization for FY2000. Introduced and reported (S.Rept. 106-50) by the Senate Committee on Armed Services on May 17, 1999, and approved by the Senate on May 27, 1999, with no provision dealing with Mexico. The House version (H.R. 1401) was introduced on April 14, 1999 by Mr. Spence and was reported by the Committee on Armed Services (H.Rept. 106-162) on May 24, 1999. During floor consideration, on June 10, 1999, the House approved 242-181 the Traficant amendment, similar to a measure in previous House versions of the DoD authorization (H.R. 1119 in 1997, H.R. 3616 in 1998), that would authorize the assignment, if requested by the Attorney General or the Secretary of the Treasury, of DoD personnel to assist INS or Customs in border control activities. The amendment provides that local officials would be notified of any such assignment, and that the personnel would be trained and be accompanied by civilian law enforcement officials. Proponents argue that the measure is necessary to stem the flow of drugs and weapons across the border, while critics say that the President has inherent powers to act in an emergency, and that the National Guard is already involved in defending the border. H.R. 1401 passed the House, amended, on June 10, 1999. S. 1059 passed the House on June 14, 1999, after inserting the text of H.R. 1401 after the enacting clause. The conference report (H.Rept. 106-301), filed Aug. 5, 1999, calls in Section 1027 for the Department of Defense to plan for and prepare a report on the benefits and risks of using the military in the designated circumstances, and the number of military personnel already performing such assistance. The conference report passed the House and Senate on Sept. 15 and Sept. 22, 1999, respectively. Signed into law on Oct. 5, 1999.

P.L. 106-120\H.R. 1555
Intelligence Authorization Act for FY2000. Introduced by Mr. Goss on April 26, 1999, and approved by the House on May 13, 1999. During Senate floor debate on July 20, 1999, the Senate approved an amendment by Senator Coverdell to strengthen the President's authority under the International Emergency Economic Powers Act (IEEPA) to block assets in the United States of designated international drug traffickers. The Senate approved the bill on July 21, 1999. In related action, the House passed H.R. 3164, the Foreign Narcotics Kingpin Designation Act, by a vote of 385-26 under suspension of rules on Nov. 2, 1999. The conference report on H.R. 1555 (H.Rept. 105-457) was filed on Nov. 5, 1999, with Title VIII essentially containing the text of H.R. 3164, with the addition of a Judicial Review Commission to examine judicial review and due process issues raised in the previous debate. The House passed the conference report on H.R. 1555 by voice vote on Nov. 9, 1999, and the Senate passed it by voice vote on Nov. 19, 1999. Signed into law on Dec. 3, 1999.


CRS Issue Briefs

CRS Issue Brief IB88093. Drug Control: International Policy and Options, by Raphael Perl.

CRS Issue Brief IB10044. Immigration Legislation and Issues in the 106th Congress, by Andorra Bruno, Coordinator.

CRS Reports

CRS Report RS20127. Drug Certification of Mexico in 1999: Arguments For and Against

Congressional Resolutions of Disapproval, by K. Larry Storrs.

CRS Report RS20183. Immigration and Naturalization Service's FY2000 Budget, by William J. Krouse.

CRS Report 98-174 (pdf). Mexican Drug Certification Issues: U.S. Congressional Action, 1986-2000, by K. Larry Storrs.

CRS Report RL30080 (pdf). Mexico and Narcotics Certification: Consequences of Decertification, by K. Larry Storrs.

CRS Report 97-282. Mexico: Chronology of Major Events, 1993-1997, by K. Larry Storrs and Patricia Nugent.

CRS Report 97-361. Mexico's Anti-Drug Efforts: Effects of Past U.S. Pressures and Sanctions, by K. Larry Storrs.

CRS Report RL30098. Mexico's Counter-Narcotics Efforts Under Zedillo, December 1994 to March 1999, by K. Larry Storrs.

CRS Report RL30475. Mexico's Counter-Narcotics Efforts Under Zedillo, December 1994 to March 2000, by K. Larry Storrs.

CRS Report 97-291 (pdf). NAFTA: Related Environmental Issues and Initiatives, by Mary E. Tiemann.

CRS Report RS20229 (pdf). NAFTA: Economic Effects on the United States After Five Years, by Arlene Wilson.

CRS Report 98-782 (pdf). NAFTA: Estimated U.S. Job "Gains" and "Losses" by State Over 5€ Years, by Mary Jane Bolle.

CRS Report 97-811 (pdf). NAFTA, Mexican Trade Policy, and U.S.-Mexico Trade: A Longer Term Perspective, by J.F. Hornbeck.

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