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Thanks to the lack of trade restrictions, U.S.-based car manufacturers ship car parts to Mexican companies that then ship back completed automobiles—just one of many examples of growing partner- ship in the border region. This picture is borne out in the numbers, too, with Mex- ican industries taking US$140 billion in U.S. intermediate goods in 2015, and U.S. firms reciprocating to the tune of US$111 billion. This sort of cooperative produc- tion allows companies on both sides of the border to specialize in their comparative advantages and bring goods to the market at significantly lower costs. It also might warrant a new “Made in USA and Mex- ico” designation for goods ranging from washing machines to airplanes.
BENEFITS RUN BOTH WAYS
As one might expect from such exten- sive cooperation, millions of jobs on both sides now depend on U.S.–Mexican trade. Mexico’s economy is in large part reliant on exports, which account for about one- third of its GDP in any given year—and four-fifths of those exports are sent to the United States. Meanwhile, an estimated five million U.S. jobs owe their existence to trade in Mexico, even accounting for jobs lost due to shifts in manufacturing locations. While many of these jobs are involved in the manufacture of goods that are then exported to Mexico, a significant number of them stem from Mexican in- vestment in U.S. markets.
The complexity does not end there. While it is well known that major Amer- ican car companies own assembly plants in Mexico, many people do not know that Mexican multinationals employ Amer- icans too. For example, Grupo Bimbo, the biggest baking business in the world, employs nearly 30,000 people in the Unit- ed States and manages such household names as Sara Lee and Entenmann. And Mexican auto parts companies also oper- ate factories in the United States, most notably Nemak and Rassini, which have production centers in Kentucky, Michi- gan, Ohio, and Tennessee.
STEERING THROUGH STORMY WEATHER
It is rare to find examples of perfect coex- istence, even between the closest of neigh- bors. Like many others, the United States and Mexico have had their moments of tension. One type of dispute hinges on the accusation of “dumping.”
Dumping occurs when a company moves into a market by selling a good at prices
that are lower than the cost of produc- tion. In 2014, the American Sugar Coali- tion alleged that Mexico was subsidizing its sugar exports to the United States and harming the national industry to the tune of US$1 billion a year. Nearly 10 years earlier, Mexico had claimed that U.S. firms were dumping high-fructose corn syrup south of the border. In both cases, the countries eventually solved the issue through negotiation.
Another area of conflict is transporta- tion. The ability to move goods is essen- tial to international trade, which is why NAFTA promised Mexican commercial trucks full access to the United States by the year 2000. However, this issue has re- mained contentious to this day, resulting in an inconsistent program rollout. After several years of delays, the Bush admin- istration announced a pilot program in 2007 to allow access to approved Mexican truckers. After lackluster participation, the Obama administration cancelled the program. Mexico responded with retalia- tory tariffs on nearly 100 U.S. products. Presidents Obama and Calderón eventu- ally reached an agreement to end the dis- pute.
A MURKY FUTURE
In the current political climate, the future of U.S.–Mexico relations is uncertain. The 2016 U.S. presidential campaign saw a shift to surprisingly protectionist rhetoric from both major parties, with then-can- didate Trump promising to remove the United States from the Trans-Pacific Partnership (TPP)—a free trade agree- ment that would have included Mexico and Asian and South American coun- tries—and repeatedly bashing NAFTA as one of the “worst trade deals ever signed.”
Upon entering the White House, Trump indeed pulled the United States out of the TPP, leaving many to question NAFTA’s future as well.
A major rhetorical sticking point in the re-evaluation of NAFTA is likely to be Trump’s promise to build a border wall at Mexico’s expense. Mexican leaders have consistently rebuffed this notion, insist- ing that it will not happen. They also dis- agree with Trump’s deportation orders, which state that undocumented migrants from Central America will be deported to Mexico by the Department of Homeland Security. These disputes will no doubt continue to color U.S.–Mexican relations in the near future. They will also have an impact on Mexico’s domestic affairs; as Luis Berrondo Ávalos, President & CEO of global appliance company Mabe points out, the upcoming Mexican election will likely be distorted by recent U.S. postur- ing.
It is worth noting, however, that the partnership between the countries has not halted. In February of 2017, the Unit- ed States Secretaries of State and Home- land Security visited Mexico to speak with President Enrique Peña Nieto about a range of issues. Despite Trump’s rhetoric, the officials chose to emphasize points of collaboration and agreement between the two nations. DHS Secretary Kelly said that the trade relationship with Mexico “has helped create millions of jobs on both sides of the border,” an acknowledgment of the benefits of collaboration. Ilán Katz Mayo put it this way: “In Mexico, we have a lot of problems, but if there’s something that Mexicans understand, it is that we are partners with the United States in many things. In fact, we are more than partners—we are siblings.”
BEYOND TRADE, THE UNITED STATES AND MEXICO COLLABORATE ON A RANGE OF CRITICAL ISSUES INCLUDING ENVIRONMENTAL PROTECTION, LAW AND ORDER, AND EDUCATION.
HERE ARE JUST A FEW EXAMPLES:
•Cooperation on environmental and natural resource issues take shape in a number of cross-border initiatives.
•The High Level Consultative Commission on Telecommunications is just the current iteration of a collaborative approach to telecommunications that stretches back more than 50 years.
•The United States and Mexico have both launched projects aiming to ex- change tens of thousands of students by 2018.
•Security partnerships include the Mérida Initiative, which addresses vio- lence and criminality by disrupting organized crime, enhancing Mexico’s in- stitutions, improving border management, and building strong communities.
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