Jessica De Alba Ulloa is a research fellow at COMEXI and researcher at Anáhuac University
During the 2016 United States presidential campaign, Donald Trump promised to put ‘America first’ by bringing in several measures. One of them was building a “beautiful wall” along the country’s southern border in a bid to halt migration. Another was to end “unfair” trade agreements which had “left the US at a disadvantage”, such as the North American Free Trade Agreement (NAFTA), signed in 1994 by Mexico, Canada and the US.
During his first week of government, President Trump promptly signed an executive order directing agencies to secure the Mexican frontier “through the immediate construction of a physical wall on the southern border, monitored and supported by adequate personnel so as to prevent illegal immigration, drug and human trafficking, and acts of terrorism”.
Throughout the campaign, Mexico was one of Trump’s main targets. As President, this trend is likely to continue unless common sense is brought to the discussion, and Mr Trump and his team are made to understand that Mexico is one of America’s best allies, rather than an unwanted neighbour.
Mexico is America’s second-largest export market after Canada, and its third-largest trading partner
So what chance of a future prosperous relationship? Following a rocky history between Mexico and the United States – war, territorial ‘sales’ and occupations included – the 1990s saw a major shift and improvement in ties. NAFTA was signed, giving the Mexican and American economies a significant boost and accelerating their integration. Cooperation has continued, albeit with some complications. While the US, in the aftermath of the 9/11 terror attacks, focused on combatting terrorism, Mexico entered a new period of destabilisation created by the emergence of powerful drug cartels and organised crime. Economic integration flourished, but with dark undertones: the incorrect perception that labour migration harbours terrorists, and the brutal efforts of organised crime groups to supply the American appetite for illicit drugs.
Since NAFTA has been in place, the US has become Mexico’s most important trade and economic partner, accounting for about 80% of its international trade. Mexico is America’s second-largest export market after Canada, and its third-largest trading partner, after Canada and China.
However, it is not just simple trade. As the Wilson Center notes, US-Mexico trade is unique, since there is ‘production sharing’, with 40% of the content of American imports from Mexico produced in the US. The think-tank says: “40 cents of every dollar spent on imports from Mexico comes back to the United States, a quantity ten times greater that the four cents returning for each dollar paid on Chinese imports.”
According to the United States Chamber of Commerce 14 million American jobs depend on trade with Mexico. Two border states have the most jobs: California, where NAFTA’s economic contribution amounts to US$71.9bn, and Texas, with 37% of the Lone Star State’s total exports and 80% of its chicken, eggs, dairy and honey going to Mexico. All of Idaho’s malt export goes to Mexico. 65% of Utah’s minerals exports go south; 99% of Kansas’ corn; 72% of Minnesota’s car parts. The city of Detroit exports $10.9bn in cars and car parts.
Trump needs to understand that market-driven, legal circular migration is an asset to his country
Studies by the George W. Bush Institute suggest that North America out-competes large trading groups, even beating the European Union. And although the NAFTA is not as strong as the US alone, largely because of Mexico’s struggles to maintain the rule of law, America’s high score in the Bush Institute index is partly the result of its close trade and investment relationships with Canada and Mexico, especially in the car, technology and aerospace industries. There is also room for further cooperation and competitive advantage, such as on energy, where North America can emerge as global leaders.
Disrupting this trade partnership and overall relationship would have severe consequences for both parties. But President Trump keeps turning his eyes to Mexico, and not in a friendly way. His Twitter rhetoric continues to be vicious, not leaving much room for the Mexican government to manoeuvre constructively. Trump needs to understand that the US is not being exploited by NAFTA, and that market-driven, legal circular migration is an asset to his country, given the need for highly productive Mexican labour.
A commitment to an improved US-Mexico partnership is crucial not only in terms of economic prosperity for both countries (and Canada, for this matter), but also because it will have an important impact on US national security – which, along with ‘making America great again’, seems to be the main concern of this administration. And, although there is a real need for border security, there is no place for a “great wall”, as beautiful (and dysfunctional) as it may be.
Being great is about generating jobs through competition in trade and coproduction; it’s about a widely-shared culture that bonds the two countries together. It’s about cooperation in the mutual interest. If Trump’s administration does not understand that, it is very likely that the relationship will deteriorate. Neither side needs a bad relationship. And no one wants or needs an angry and destabilised Mexico.
IMAGE CREDIT: SherryVSmithVAB/Bigstock