Mexico’s trade apprehensions

Representatives from the governments of Canada, Mexico and the United States have met four times regarding the revision of the North American Free Trade Agreement (NAFTA). Although NAFTA needs updating and most trade negotiations usually include a batch of acrimonious subjects, Canada and Mexico view some of the American revision demands as very extreme. This has led some negotiators and analysts to suspect that the Trump administration’s real goal is to put an end to the agreement. Since additional negotiating sessions remain scheduled, the NAFTA trade talks will continue for a while. As the talks drag on, however, the involved business communities of Canada, Mexico and the United States have growing fears that a deal will not be concluded. In the current testy NAFTA negotiating environment, it is difficult to see how a revised agreement can be negotiated that will be approved by the Canadians, Mexico, Congress and the White House. The growing sense of economic unease will surely affect Arizona’s economic ties with Mexico in the future.

if he abandons NAFTA, there is a danger that President Trump’s strident policy could help turn Mexico’s 2018 election into an anti-American event. As a consequence of the NAFTA issue, there is concern among Mexico’s reformers that Andres Manuel Lopez Obrador could be elected president. Analysts think his economic policies are mostly unworkable and that the result will be an increase in conflicts with the United States. Although Mexico’s democratic institutions have improved in recent years, Mexican leaders who have been pushing for reform now feel abandoned by the United States. At home, Mexican reformers still face the massive problems of income inequality, corruption and violent crime. About six million Mexicans reside in the United States without legal status. If the Trump administration decides to deport them, how will Mexico cope with the massive inflow of returning deportees?

Mexican officials point out that American farmers export $2.6 billion worth corn to Mexico to be used as cattle feed. They say that American manufacturing jobs remained stable after NAFTA came into force in 1994. And U.S. manufacturing jobs withered after China joined the World Trade Organization in 2001. Mexico is being unfairly blamed for the American job losses that China mostly caused. It is clear that the bilateral trade relationship with Mexico is in trouble. In Canada, Mexico and the United States, investor confidence in NAFTA is starting to erode. As the trade relationship with Mexico sours, it will probably have an effect on United States-Mexico cooperation on other issues such as immigration, illegal drugs and terrorism.

Through September 2017, Arizona’s merchandise exports to Mexico amounted to $5.6 billion, down from the $6.2 billion recorded for the same time period in 2016. Arizona ranked behind Texas ($71.7 billion), California ($19.5 billion), Michigan ($9.4 billion) and Illinois ($7.2 billion). Mexico’s economic growth rate for 2017 is projected at 2.2%, the same rate of growth as forecast for the United States.

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