In Texas, where optimists once forecast $100-a-barrel oil, bankers and economists are talking big about the effects of the proposed free-trade pact with Mexico.
Shrugging off last week's delaying ruling by a federal judge that forces the U.S. government to study the environmental impact of the proposed North American Free Trade Agreement, Texans remain gung ho about the pact, which would join the United States, Canada, and Mexico into the world's largest trading bloc.
Texas, they say, is already reaping the benefits of the economic reforms Mexico put in place in the wake of its debilitating debt crisis of the early 1980s. They reject speculation that Nafta, as the trade pact is known, would cause U.S. jobs to be exported south of the border.
"The fact is that free trade is already here," said Robert S. McClane, president of Cullen/Frost Bankers Inc., a San Antonio-based company with $3.2 billion of assets. "The broader trend we expect to see is the development of new jobs in this area."
Robert W. Gilmer, a senior economist with the Federal Reserve Bank of Dallas, said Texas and the Southwest in general are at the epicenter of a U.S.-Mexico trade flow that hit a record $65 billion in fiscal 1991, the last year for which statistics have been compiled. "Overall, there are more jobs that will be created in the U.S. than will be lost," he said.
Some Texas economists project a 50% growth in trade-related employment, to 304,000 jobs by the year 2000. Much of that would come from manufacturing plants that expand or relocate to areas near points of entry at the Mexican border. Mr. Gilmer also expects benefits for those in financial services, from accountants to bankers.
"I think Nafta is really going to be a services revolution," he said, but cautioned he has no hard data for his projection.
Banks expect to capitalize on Nafta by moving directly into Mexico or simply by bulking up their business lending - and eventually their retail presence - near the Mexican border.
John Welch, a senior economist and Latin American expert at the Dallas Fed, said Chemical Banking Corp's Texas Commerce Bank subsidiary and NationsBank Texas are planning to branch into Mexico. Even banks as far away as Bank of Boston, a big Latin American lender, are ready to pounce once Nafta kicks in. Smaller banks, however, are deterred by Mexico's requiring a relatively large capitalization for alien banks.
Among Texas banks, Mr. Welch said, "you'll mostly see an expansion of existing lines of business."
Foreign bank companies that already have oil-related offices in Houston would take advantage of trade financing opportunities, too. That, in turn could help Houston regain some of the luster it lost when global energy markets collapsed in 1986.
"Houston has really lost its niche in the bond industry because of the decline of oil and gas industries," said Mr. Gilmer, the Dallas Fed economist. "Trade finance could provide the banks with a niche to fill."