Mexico is the US’s second largest trading partner moving over USD$500 billion in goods and services across its borders
Should the Obama Administration take Mexico for Granted?
Why is the US Congress always occupied with east-west issues such as with Afghanistan, Iraq, Syria, Palestine and Ukraine, while practically ignoring its neighbors south of its borders (i.e. Mexico). To place it into perspective, consider the number of times Secretary of State, John Kerry or even President Barack Obama have met with Mexico’s President Enrique Peña Nieto. …maybe once or twice per year which barely compares to the hundreds of stops made in the Middle East alone.
The term ‘shuttling between capitals’ to negotiate trade deals and peace treaties with the US seems never to apply to Mexico or Central/South America, and yet Mexico is the US’s second largest trading partner moving over USD$500 billion in goods and services across its borders. With so much hanging on the balance, especially with immigration reform and border security between both countries, is it prudent for the US to take its neighbors south of the border for granted? …and what can Mexico say differently to place its agenda on a priority list for high level officials in Washington?
Foreign Affairs Forum
At a recent forum at the Council on Foreign Relations in New York City called, Mexico as a Global Player sponsoredby the Foreign Affairs publication as part of a series on Mexico titled, Mexico’s Muscle, Revealing the Strength, the Minister of Economic Growth for the State of Mexico, Adrian Fuentes Villalobos, along with a cadre of supporting experts from both countries, sat on various panels where they proposed the idea of a NAFTA Version 2.0 (North American Free Trade Agreement). This enhanced version of the 1994 NAFTA agreement would seamlessly combine Canada, US, and Mexico into a North American partnership, one based on shared job creation and prosperity building.
Over the past twenty years, NAFTA used up most of its political capital in Washington and depending upon who you ask has rendered mixed results. The Huffington Post, for example, underscores the net loss of 1 million American jobs plus a net US trade deficit of USD$181bn, while Mexican-sponsored research groups show a contrasting view that highlights the creation of 6 million jobs between both countries along with a 500% increase in trade capacity. Despite their differences of opinion, one indisputable benefit was the development of a manufacturing hub for heavy industry located in the center of Mexico.
What was once a sparsely populated territory has now been transformed into a series of industrial parks that when viewed from 30,000 feet high appear organized like the floor of a modern plant. Top multinationals such as GM, Chrysler, GE, BMW, Boeing, Nescafe, DuPont, and Embraer, to name a few, have established a presence in the region with their key suppliers located nearby. As testimony to their commitment and confidence in its future prospects, many companies are continuing to invest hundreds of millions of dollars to accommodate their imminent rapid growth. Foreign investors including global banks have had a key role in boosting Mexico’s FDI (Foreign Direct Investment), which has doubled to USD$35.2bn in 2013 when compared to the year before.
For a country that has carefully mapped this massive expansion and has been responsive to the strategic needs of global manufacturers, one would expect that by all reasonable standards, Mexico’s achievements thus far would have earned it international recognition, and yet, when it comes to members of the US Congress, nothing could be further from the truth. For a slew of political reasons, elected US officials have conveniently stuck to two key issues when discussing US-Mexican relations, immigration reform and border security. With good reason, members of the panel spoke of their efforts to change the dialogue with the US but have done so with little success. The US Ambassador from Mexico to the US, Eduardo Medina Mora, described his personal hidden frustrations as he described his daily reminders to members of Congress on the many potential benefits Mexico can offer to the US. Clearly, the two pending bills have greatly polarized US-Mexican relations, which has resulted in a decoupling between Washington politics and the multinationals operating in Mexico.
The newly elected President Enrique Peña Nieto recognized his country’s political shortcomings early on after being sworn into office and in a series of extraordinarily bold moves pushed through four noteworthy bills to help bring his country closer to a US framework. These include:
- An energy reform bill that for the first time allows foreign direct investments to improve the country’s energy portfolio and infrastructure.
- A telecommunications bill that has broken a long-held monopoly among cell phone and television operators.
- An education reform bill that among other challenges will reward teachers on the basis of merit.
- A labor bill that makes it easier for companies to hire and fire employees.
In each case, President Enrique Peña Nieto had to take on powerful labor unions and business tycoons to successfully dismantle their influential centers. His efforts won him praise both domestically and internationally. His ingenuity and leadership earned him the respect from his country peers at the G-20 economic meetings. However, despite President Peña Nieto’s notable achievements, Mexico still has never been recognized as a priority by either the Obama Administration or members of the US Congress. Not all was lost. In response to Mexico’s relentless requests to gain access to high level officials in Washington, the White House finally acquiesced in May of 2013 to form the HLED platform, which stands for, you guessed it, High Level Economic Dialogue. Truly an unimaginative acronym and more than likely a US stalling tactic, the HLED limits Mexico to one annual meeting with cabinet-level officials in Washington.
According to one of the panelists, what Mexico needs is a revised narrative, one that addresses key mutual benefits that elected US officials can pitch to garner the support of their constituents. Just asking the US to change their dialogue away from immigration reform and border security, may not be enough. I believe something more is needed and have taken the liberty to lay out a few suggestions below (see appendix) that could help a Mexican delegation send the same intended message to the Obama Administration but, hopefully, in a more compelling manner.
I would be remiss not to mention the current threat from drug cartels in Mexico and the illegal immigration of Central and South Americans that travel through Mexico to reach the US border. No doubt it is one of the key concerns that weigh on elected officials’ minds and the American people. However, as history has shown us repeatedly, a strong economy is a far greater deterrent than an over-extended border protection scheme. By boosting medical tourism along the US-Mexican border, expanding the State of Mexico’s manufacturing hub, and educating both US and Mexican youth to meet increasing STEM job demand, drug cartels will be forced to circulate elsewhere. As for non-Mexican immigrants, they should find employment in their own respective countries caused by a spillover effect triggered by NAFTA Version 2.0.
Hopefully the acronym HLED will some day soon be changed to read The North American Partnership or TNAP – (NAFTA Ver. 2.0). There members would agree to meet at least monthly with US cabinet officials. Maybe then, Mexico will know it is no longer being taken for granted.
By Tom Kadala