Cotton for Cars

Ever since the U.S. announced in February that it would begin selling surplus cotton on the world market. Mexico's leftist Economy Minister Gilberto Loyo, onetime professor of economics and a longtime ringleader of the anti-U.S. faction in the Cabinet, has been scratching around for a good, sharp reprisal. He feared that if the U.S. went through with its plan to double exports (to 5,000,000 bales), the floor would fall from under the Mexican crop, which last year earned about $190 million, almost a third of the country's foreign credits. Last week, in a series of decrees, Loyo announced his countermeasures.

Beginning Nov. 1, the Mexican assembly plants of foreign auto firms will have to use Mexican cotton to pay for car and truck parts imported from their parent companies. To do business, the companies will have to make deals with a broker to try to sell Mexican cotton abroad. The companies then can import an equivalent value in car parts. Hard hit will be the U.S. Big Three--General Motors, Ford and Chrysler. If they manage to continue importing parts at the current rate (an estimated $60 million a year), the Big Three will have to market 30% of the country's export crop. Unless the government lets companies raise car prices, said one industry spokesman, profits will be wiped out.

Minister Loyo also extended his tough rules to a list of other imports, including assembled cars, chemicals, synthetic fibers, business machines. He made clear that his final goal is to eliminate his surplus problem once and for all by tying the entire export crop tightly to imports.

This file is automatically generated by a robot program, so reader's discretion is required.