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elcomputo

Dec 27, 2003, 12:14 PM

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NAFTA

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For those of you who subscribe to the New York Times online, I highly recommend that you look at today's story on what effect NAFTA has had on the US, Mexico, and Canada. It's pretty thorough and well-balanced reporting.



Rolly


Dec 27, 2003, 12:39 PM

Post #2 of 24 (3507 views)

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Re: [elcomputo] NAFTA

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http://www.nytimes.com/...americas/27NAFT.html

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Rolly Pirate


raferguson


Dec 27, 2003, 3:43 PM

Post #3 of 24 (3487 views)

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Re: [elcomputo] NAFTA

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It was an interesting article. One thing that I don't think that the article mentioned was that manufacturing jobs are decreasing worldwide, even in China! So not all the job losses in manufacturing are the result of moving work to other countries.

Certainly immigration from Mexico to the US has not been reduced.

It is always hard to play "what if", what if there had not been a free trade pact with Mexico? What would have been different? Mexico had a very serious economic crisis in 1994, which is hard to blame on NAFTA, since it happened right after the change of presidents, which historically is frequently linked with economic crisis in Mexico. Mexico still has other serious structural problems, ranging from a poorly educated workforce, a large percentage of the population on the farm, corrupt government, a large government bureaucracy, armed rebels, crime, etc. The current situation, in which the legislature is split between three warring political parties, is not conducive to progress or any real change. Government revenues in Mexico are very low, a low percentage of GDP (Gross Domestic Product). I hate to advocate higher taxes, but Mexico may need them. Some people talk about Mexico as having squandered it's opportunities, with oil, tourism, and a free trade pact with the richest neighbor in the world, they have done very little with it. Many Asian countries have done much better with fewer advantages. With the conspicuous exception of Chile, few Latin American countries have been economic success stories recently.

One thing that I am pretty sure of is that countries that try to cut themselves off from the world do very poorly, if you have no trade, then the economy is generally very bad. However, not all countries with free trade do well. To some extent, just as in any competition, competition between countries means winners and losers. But no trade is a recipe for economic stagnation, and often war and terrorism.


http://www.fergusonsculpture.com


elcomputo

Dec 27, 2003, 10:49 PM

Post #4 of 24 (3462 views)

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Re: [raferguson] NAFTA

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I think you're correct on just about all points. But as an economist friend once told me, a fellow who's retired from the World Bank, there's really no such thing as free trade. Somewhere along the line, whether it's a government subsidy to one of its industries or some kind of protective tariff or whatever, any attempt at balance gets thrown off somewhere along the line.

I think the chief problem with NAFTA, aside from the lack of mechanisms that would have buffered the resulting shocks to workers, was the failure to take into account (1) the wide variances in the costs of labor from one country to another and (2) the way the cost of oil stays low despite the fact that the world is producing no new sources of the stuff; the result of this is cheap transportation of goods. Those are the reasons we're seeing production racing from one country to the next. It's cheaper to build stuff in China, even given the distance the goods have to be shipped.

In the long term, the cost of labor does balance out, as we have seen. No longer does Japan have an advantage in manufacturing automobiles, as it did in 1970, because its labor costs rose along with their output. And even though transport is still cheap from Japan, there are greater economies in now in assembling their cars not only in cheap labor countries like Korea and Mexico, but even the US, where labor does not cost as much as it used to (because our workforce has long been in the process of being beggared by management) and the cost of transport is zilch.

But during the 25-year boom period for Japanese production, laid-off auto workers in Michigan went on permanent relief, and cities like Flint became ghost towns. Jobs may someday return to Michigan, but a lot of those laid-off auto workers have had a miserable forced retirement and some died poor. It's like Mr. Keynes said: Maybe this all works out in the long term, but in the long term, we're dead.

The same thing is now happening to workers in industries other than the automotive business because of NAFTA and other shocks to our economy. One such "other shock" was the dot.com bubble, which provided temporary relief to the long-term trend of disappearing jobs until the bubble burst. And my job was one that disappeared when the bubble burst -- along with my home and my auto and my savings. You're correct in saying that production is going down all over the world; that has been the trend for more than just the past couple of decades. The dot.com thing was just a fluke.

I also recall from my course in money and banking that Mr. Keynes also said free trade works because each nation develops a particular advantage in the production of certain goods. (Is the US specialty the manufacture of weapons?) However, Mr. Keynes came up with his theories at a time when an economy was either agrarian or it was industrial. Nowadays, it's either agrarian, pre-industrial, industrial, or post-industrial, a sea change which probably hobbles a lot of his theories. We seem to be witnessing the demise of one such theory -- that huge federal spending for prosecuting wars will bring us quickly out of recessions or depressions. It worked for Reagan, but it hasn't been working too well for George.

But you've touched on a key point for all of this -- the biggest consuming society in the world, the US, appears to be sated. The world is overproducing because Americans just aren't buying the way we used to. It's too bad somebody can't figure out how to get control of the situation to shift that production over and away from fulfilled private needs to responding to unfulfilled public needs, such as universal medical care, inadequate Social Security, and collapsing infrastructure.

As far as Mexico goes, you're correct there, too. NAFTA didn't put Mexico into the bind it has been in for decades. NAFTA simply didn't produce the lasting miracle the country had been promised and was hoping for. But I don't believe higher taxes are really necessary to correct the situation. Taxes, particularly the IVA (I think that's what the sales tax is called here, right?), are already pretty high for most of the populace, given that half of all able-bodied males are unemployed, wages have been stagnant for a long time, and the cost of living keeps going up.

What I think this country needs is, first, a lot more patriotism on the part of its super-rich, who need to be investing more of their wealth into supporting the county that provided them that wealth in the first place. They need to use their capital and their clout to build up Mexico's workforce and infrastructure rather than continuing to build onto their own palaces. Lacking that, the federal government needs to get more serious about setting up realistic tax structures (the property tax structure in this country is a joke) and enforcing the collection of income taxes that are due.

However, everyone knows that neither of those things are going to happen. Corruption is just too pervasive and institutionalized to expect those kinds of reforms tomorrow. Until a nation with a lousy GDP, like Mexico, stomps out at least most of its corruption, it isn't going to accomplish much of anything. Corruption produces despair, and despair spells death to incentive. Yes, the standoff between the parties in the federal government does not bode well for stomping out corruption. But remember, Mexico had what amounted to its first free election in its history in 2000. It will take a little more time before the populace figures out how to make that freedom work and gives a dominant reform party the mandate to get control of government.

I could add that Mexico needs to get a handle on its overpopulation problem, but I think that would be a natural outcome if more good jobs were created, more people were put to work, and more students got the opportunity to pursue a college education. Improved job prospects and standards of living have led to drops in population growth in countries like Ireland and India. They can have the same effect for Mexico. And all of that would make for more effective free trade agreements, too.

Sorry if I've bent your ear. I have difficulty stopping once I get going. Thanks for your response.


PeggyS

Dec 28, 2003, 12:56 AM

Post #5 of 24 (3459 views)

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Re: [elcomputo] NAFTA

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You have given us all a great deal to think about, and thank you for that. One place to start is with the education of the children here in Mexico. The Chapala-Ajijic community found that for secondary education, students had to go to Guadalajara, over an hour each way, and so it became a concern for the people here to establish a high school right in the area, a first for the "free" education system. Fund raiser after fund raiser - what it came down to was a certain amount of money would pay for a classroom, somewhat more for a wing of the school - and if you were just retired from a U.S. company, you were asked if that company would donate whatever materiel they manufactured. The computer lab was breathtaking, better than anything I had seen in the states, and more up-to-date, and all donated by a company in the U.S. that someone had worked for.
Many of the recently retired Canadians gave parties and worked hard to acquaint everyone with the project and its possible consequences.
Which are: not only the high school became an accomplishment, but another secondary school as well, a technical high school next door!
Of course there are many scholarships provided by the caring community to the schools which charge a tuition, but these were not really an option for the regular student who graduated here in town from the eighth grade - and that was IT for a poor family, there was no place else nearby to continue an education.
Well, now there is, and I think it is wonderful.


elcomputo

Dec 28, 2003, 2:27 PM

Post #6 of 24 (3421 views)

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Re: [PeggyS] NAFTA

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Yes, I think it's wonderful, too. I know there are a lot of kids who are also well-qualified to go on to university, and tuition at the UNAM is quite cheap. However, the kids cannot go because, for one thing, there are simply so many of them wanting to get in and only so many spaces available. But beyond that, though they may be able to afford the cheap tuition or get scholarships to pay it, there is no way they can pay the expenses of living away from home.

And then there is the other thing: what do they do when they graduate? There simply are too few skilled jobs available for them.

There is tremendous need for research and development in Mexico. And there are Mexicans who are smart enough and willing enough to take on nearly any challenges presented given they have the education and the jobs directed at meeting the challenges. Housing alone presents a major area for change. There is probably not a residence in the entire country that could stand up to even a minor earthquake. Better designs are needed. More and better water treatment plants are needed, along with the technicians to operate them.

It's just a question of producing the seed capital and incentives to do this, as the Chapala group did with the high school project you describe. But had that project been left to government, even with sufficient seed capital made available, it probably would have quickly bogged down in bureaucratic delays and many rounds of rake-offs by the corrupt politicians and functionaries.

Mexico's biggest challenge is eliminating graft and corruption. Does anyone have any idea how it can do that?


RonMader


Jan 5, 2004, 7:42 PM

Post #7 of 24 (3337 views)

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Re: [elcomputo] NAFTA

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The New York Times reports that reviewing NAFTA at 10, the "growing pains are clear." This feature is well researched and written. Many thanks for bringing the story to our attention.

My personal take -- I've never understood what NAFTA actually accomplished. Mexico's joining GATT seemed to open the doors for trade. NAFTA's labor and environmental side accords are of dubious benefit.

For consumers, it's hard to see what "free trade" has brought to Mexico. Item. Automobiles continue to be costly in Mexico, leading to a black market in vehicles imported but not registered from the U.S.

There is no doubt that the US, Canada and Mexico have so much to gain from each other. The fact that I (a Gringo!) living in Mexico is friends with David McLaughlin (Canadian!) living in Mexico (Mexico!), shows the symbiosis at play.
Ron Mader
Planeta.com
http://www.planeta.com


(This post was edited by RonMader on Jan 5, 2004, 7:46 PM)


elcomputo

Jan 5, 2004, 8:10 PM

Post #8 of 24 (3328 views)

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Re: [RonMader] NAFTA

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"NAFTA's labor and environmental side accords are of dubious benefit."

I would say they are of LESS than dubious benefit. Jobs were taken from the USA and Canada and brought to Mexico, where workers could be paid less. This was bad for Canadian and American production-line workers already working for low pay. (Then, of course, any benefits obtained by the Mexican workers disappeared when the jobs were shipped to Asia.)

This makes economic sense from the standpoint of bringing down costs of production. But it makes no sense when you consider that laid-off workers have little buying power. Who is going to buy these products in the long run?

Environmentally, NAFTA has actually promoted ecologic disasters. Borders were opened to the easy transfer of toxic waste, for example. I recall a report on Bill Moyers' TV show where the people of a small Mexican village rose up in opposition to a toxic landfill being created near them. In this case, the government actually listened and stopped the American company from bringing in the waste. But under NAFTA, the American company had the right -- which it used -- to sue the government for restraining trade. The company won. That put a big damper on resisting the importation of toxic waste.


Moisheh

Jan 6, 2004, 5:44 AM

Post #9 of 24 (3301 views)

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Re: [elcomputo] NAFTA

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"This was bad for Canadian and American production-line workers already working for low pay" . Since when is an auto worker a low paying job? Compared to what? Higher than: office clerk, long distance truck driver, janitor, most school teachers, retail sales clerk, auto mechanic and more. Are you aware of the ridiculous benefits associated with this job. It is precisely the HIGH pay that has driven the industry to move out of Canada and the USA.


RickM


Jan 6, 2004, 9:53 AM

Post #10 of 24 (3274 views)

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Re: [elcomputo] NAFTA

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Nafta has always seemed a joke to me. I thought that it would mean the average person could take goods across the line and sell them. Heck they won't even let you take them if you don't intend to sell them.



It is a good old boys network - (prospective members need not apply)



One thought - if Mexico were smart enough to take advantage of the economics then:

1 Traffic would clog virtually every Mexican city.

2 Most of us would be looking at another message board for dreaming, retiring, etc


alex .

Jan 6, 2004, 11:02 AM

Post #11 of 24 (3258 views)

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Re: [RickM] Oh, I dunno 'bout that

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We bring artesania across nearly every week to resell. One can be his own importer, without using the services of an agent. If the total value is less than $2000 then the importation is done "in place"so doesn't have to go thru bonded storage first, if you have the manifest filled out properly. I don't know about you, but I can't physically fit $2000 worth of flower pots, water fountains, and velvet Elvis paintings in my truck!
Of course, we are not importing alcohol, tobacco, or pharmaceuticals which are "on the list" of items with limits.
Alex


RickM


Jan 6, 2004, 11:21 AM

Post #12 of 24 (3252 views)

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Re: [alex .] Oh, I dunno 'bout that

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Alex -

thanks for the info - that is the first positive testimonial I have heard

Rick


mjr234

Jan 6, 2004, 6:26 PM

Post #13 of 24 (3215 views)

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Re: [RickM] Oh, I dunno 'bout that

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Perhaps the UN report [assuming it has credibility] on Human Resources Development, rating things like - literacy, health, wealth distribution - aka poverty, education, etc. would be a fair place to determine if all trade deals and associated structural arrangements have benefited the average Jack and Jill and/or Juanita and Juan? It provides a start both in terms of standards to aspire to, or to argue against. Michael in Ottawa


TomG

Jan 11, 2004, 9:53 PM

Post #14 of 24 (3140 views)

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Re: [elcomputo] NAFTA

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Two very good posts in a row. These kinds of posts are not easily thrown together - thanks for the careful effort.


elcomputo

Jan 11, 2004, 10:03 PM

Post #15 of 24 (3138 views)

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Re: [alex .] Oh, I dunno 'bout that

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I'm curious. I assume you are bringing the art stuff from Mexico to the US. True? What do you bring coming the other way, if anything? Which direction presents more difficulties, if any?

And, just out of curiosity, how far north do you have to cart your goods before you can make a decent profit on them? And how far south in Mexico do you have to go to get the kind of products that will sell? Do you do all this on a tourist visa?


elcomputo

Jan 11, 2004, 10:26 PM

Post #16 of 24 (3133 views)

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Re: [Moisheh] NAFTA

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Automobile assembly is one of the few production line jobs that DO pay a decent wage, thanks to the UAW union. Throughout the 1950's and 1960's, these workers drew decent wages while producing cars that were solid and dependable -- and affordable. Even the importation of cheaper VW Beetles did not significantly affect sales of American cars.

But in the late 1960's, accountants took over from engineers in the management of those companies, and quality fell way off. Then the oil crises of 1973 and 1977 (?) created a demand for smaller, more fuel-efficient cars from overseas, and the ones from Japan had the added benefit of being cheaper. That's when everything changed.

American autoworkers in Michigan and Canadian autoworkers may still be making decent hourly wages, but I'll wager there are a lot fewer of them and a lot more robots in those union factories. And a lot of auto production line jobs have moved to non-union, right-to-work states where the wages ain't so great. But the autos keep getting more expensive, don't they?

But look at other kinds of production lines. The meat industry is a great example. Meatcutting is hard, dangerous work for practically minimum wage. Meat packers provide jobs that are so bad and so badly paid that only immigrant labor (chiefly from Mexico) will take them. I would say that kind of work is a lot more prevalent than the old union jobs of the auto industry. Or look at the fast food service industry. I would call McDonald's a production line operation, and what do they pay? Pretty damned little. Yep. They sell you a cheap burger. But at the expense of a young mother trying to support herself and her child on $6 or $7 an hour. If she's lucky, she may get a few paltry benefits. Or she could be working for Walmart at that same rate, but employed only part time (despite constant overtime that has her working more than 40 hours a week) so that they do not have to provide her ANY benefits.

Seems to me we had it lot better back in the 50's and 60's when union wages were high, before real income began shrinking. That shrinkage began in 1972 and has reversed itself only once for a brief period during the 1990's. And it seems to me Mexico would be making a lot more progress if it were to bring up wages (instead of freezing them while bringing up prices) to give people a little more decent standard of living rather than making the fat cats fatter while further beggaring the poor -- a model our American politicos, alas, appear to be emulating.


elcomputo

Jan 11, 2004, 10:41 PM

Post #17 of 24 (3136 views)

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Re: [mjr234] Oh, I dunno 'bout that

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Not a bad idea, but I don't know how effective it would be. The Bush administration has done its best to ignore the UN and make it about as effective and significant as the League of Nations. Any such report would have little effect on the economically dominant member of NAFTA. Secondly, the American press has become so lazy and so pandering to the lowest common denominator among readers, viewers, and listeners that no more than a couple of the media would bother reporting on ANY report coming out of the UN.


alex .

Jan 13, 2004, 11:41 AM

Post #18 of 24 (3062 views)

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Re: [elcomputo] this way/that way

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We get stuff in Tecate, Rosarito, & Tijuana. Same stuff that tourists buy. We save them the trip, thats all. We have many repeat customers that are decorating their home with artesania and do not want to spend the 30 bucks on fuel, wait 2 hours crossing the border, eat on the road, etc just to save 10 bucks on the cost of a flower pot. We go anyway so its not much bother for us. My wife , like most, loves to shop. Now she has a good reason to. I am the importer of record for the merchandise FROM Mexico, we are presently setting up my wife to be the exporter TO Mexico. No visa is required for stays in Baja California less than 72 hours. We have to be careful about the goods that we buy in Los Angeles to export as the Mexican Aduana charges duty based on the country of origin of the merchandise. So cheap made-in-China stuff gets expensive at 42% duty. Its something to do , keeps her busy, though I have to constantly remind her that I ALREADY HAVE A JOB!
Alex


elcomputo

Jan 13, 2004, 2:52 PM

Post #19 of 24 (3038 views)

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Re: [alex .] this way/that way

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Alex,

One of the things that surprised me about Mexico since coming here about a year ago was the sheer volume of crap made in China that is carried in stores throughout Mexico. It sure puts the global economy in perspective when a poor country imports stuff from a country where wages are even lower.

Even with this cheap coming in, Mexican nationals (whether in the USA legally or illegally) appear to be the biggest customers of the varous "99-cent stores" throughout the Southwest, particularly in the border areas. Another phenomenon are the huge and numerous second-hand clothing stores just across the border on the American side. I saw at least a dozen of these warehouses outside McAllen, but I'm sure they're all over the border area.

Is the entire state of Baja treated as frontera? As far as I know, in all other Mexican border states, the frontera begins about 30 miles below the borders. But the border is so long and the Aduana posts so few, it has to be very porous for things coming south.

Martin


elcomputo

Jan 13, 2004, 5:19 PM

Post #20 of 24 (3019 views)

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Re: [elcomputo] NAFTA

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In today's NY Times Online (Tues., Jan. 13), there is an op-ed article by a Mexican journalist giving some personal observations on NAFTA and relations between the USA and Mexico. Short and interesting: Where Roma Soap Meets Dove

By ROSSANA FUENTES-BERAIN


http://www.nytimes.com/.../opinion/13BERA.html


(This post was edited by jennifer rose on Jan 13, 2004, 5:57 PM)


mrchuck


Jan 14, 2004, 1:24 PM

Post #21 of 24 (2982 views)

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Re: [elcomputo] this way/that way

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Yes, the entire Baja penisula( State of Baja Norte and State of Baja California Sur) is a "frontera State, and their license plates say this.

Saludos, mc


bournemouth

Jan 14, 2004, 1:42 PM

Post #22 of 24 (2978 views)

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Re: [mrchuck] this way/that way

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I'm going to disagree on this point. Having been passed on our return north after the holidays by what seemed to be the entire population of Baja California - some plates say "Frontera" and some only say the state. I recognize that as far as driving is concerned, the states of Baja California are regarded as frontier and do not require car import permits, but not all their plates are "Frontera" plates so for the residents, there is a difference. Alex can probably give us more information on this one - where are you Alex?


alex .

Jan 15, 2004, 10:39 AM

Post #23 of 24 (2924 views)

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Re: [bournemouth] placas nacionales

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Its my understanding that when you buy a new vehicle from a Mexican car dealer you get the Placas Nacionales, the white ones with green letters, that allow unfettered transit throught the United Mexican States. When one imports a vehicle he gets the Placas Fronterizas, the yellow ones, which come with restrictions. Let me double check on the correctness of that statement and get some more details.
Alex


alex .

Jan 20, 2004, 10:18 AM

Post #24 of 24 (2847 views)

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Re: [alex .] update on license plates

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According to Sr. Juan Rubio, asesor, of Si Auto Servicios de Importación, Av.Aquiles Serdán No.11584, Col.Libertad, Tijuana:

The yellow frontera plates are restricted to travel within a 70 mile zone of the border. One can get the non- resricted nacional plates for pickup trucks 1994 and older, and for cars 1997 and older.

I forgot to ask about vans, SUVs , 4wds, and sports cars. Historically there have been restrictions on their inportation.

Yes, there are newer versions of the Baja California license plates that have a picture in the background. There is a bighorn sheep on the left, a whale's tail sticking out of the sea in the middle, and a cactus on the right. Ya gotta look close to make it all out though.

Alex
 
 
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