The coming economic crunch will likely be horrendous for millions of Mexicans and ought to inspire a progressive mobilization in the United States. This is an opportunity to change the politics in both countries: for the United States to forge a more sensible relationship with Mexico and for Mexico to devise an alternative format for development, far more equitable and forward-looking than the present system allows. Mexico, with honest help from the United States and Canada, could become the model for how human-scale globalization ought to work.

Achieving more meaningful economic and social integration obviously involves huge, complex issues, from Mexican immigration and US development aid to the relationships between currencies, legal systems and environmental standards. But the most difficult issue, one that cannot be evaded, is wages. No one should pretend that US-Mexican wage tensions can be entirely reconciled--of course not--but what is required is a wage-floor trade agreement that, as labor likes to say, "brings the bottom up, instead of pulling the top down." Mexico could only accept this arrangement if it had a genuine preferential status with the United States and Canada--including both significant trade privileges and investor guarantees of long-term commitments as well as serious aid for education, health and infrastructure. Think of this "North American union" as a first step toward someday imposing an international "living wage" standard on the production of traded goods, enforced by penalty tariffs on countries and companies that decline to participate. Producers would have a choice: Pay decent wages to their workers or pay penalty tariffs on their exports, the money to be recycled into development aid.

Obviously, the world is not ready for this (neither are Mexican and American politics), but the road to global reform has to start with a few like-minded nations willing to experiment with new terms because they see mutual self-interest in the bargain. A healthier, self-sustaining Mexico would be a lot better for the United States than a cheap-labor export zone that makes a few people very rich but survives on the backs of desperate immigrants and drug smugglers. US consumers might have to pay marginally higher prices on some items, but US commerce would gain a far more promising market for its exports, and that would help to reduce US trade deficits. Mexico would regain a measure of self-determination, the ability to chart its own course free of the neoliberal straitjacket.

The relationship would borrow a lot from the European Union's economic integration of rich and poor nations ranging from wealthy Germany to low-wage Portugal and Spain. The European Union delivers substantial aid conditioned on democratic standards and labor rights, implicitly encouraging rising wages in the poorer countries. The poorer countries enjoy the considerable trade advantages extended exclusively to EU members. A North American union, in addition to North/South development aid, would require concrete legal obligations: If US taxpayers are asked to invest in Mexico's future, US commerce cannot be allowed to enjoy NAFTA benefits, then pick up and leave whenever it sees fit.

The wage-enforcement system might not be as difficult to implement as it sounds. As things stand now, every component and input into goods produced in the three North American countries must be carefully measured to determine whether the goods qualify for NAFTA's trading preferences. Wage standards could simply be grafted onto those calculations. If the three countries formed a customs union similar to Europe's and adopted a common trade policy, this mechanism could also protect against free riders from outside--including China. None of this halts the "race to the bottom," not immediately at least, but it creates a reverse dynamic in global trade, a model that demonstrates there is a more promising path.

The usual multinational actors will naturally be opposed--their profits, after all, ride on roving exploitation--but developing countries, once they see the possibilities, might begin to change their views. Most of them well understand the high risks in export-led growth dominated by foreign capital, but it's the only game available. They understandably fear labor and environmental rights as threatening to their futures, and securing those values in international agreements is extremely unlikely until poorer nations can see that practical alternatives exist--a way to get off the treadmill. In the meantime, those countries are observing, once again, that what corporate globalization gives to the poor, it may also take away.

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