U.S. President Barack Obama heads to Costa Rica and Mexico from May 2 through 4, in the leader’s first visit to Latin America since last June’s G-20 Summit in Mexico. He will meet with Mexican President Enrique Peña Nieto, as well as numerous heads of state at the Central American Integration System (SICA) summit. Costa Rica’s Laura Chinchilla, the Dominican Republic’s Danilo Medina, El Salvador’s Mauricio Funes, Guatemala’s Otto Pérez Molina, Nicaragua’s Daniel Ortega, and Panama’s Ricardo Martinelli are due to attend. AS/COA looks at potential topics of discussion between Obama and Latin American leaders, focusing on trade, immigration, security, and energy.
- Watch a video of our April 30 event in Washington previewing President Obama's trip to Mexico and Costa Rica.
- Visit Americas Quarterly's in-depth page on the president's May 2-4 trip.
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Given that Mexico is the third-biggest U.S. trading partner, the two countries’ economies are deeply connected. The North-American Free Trade Agreement (NAFTA) is closing in on its twentieth birthday, and U.S.-Mexican trade neared $500 billion last year, representing more than a fivefold increase since pre-NAFTA days. As Herminio Blanco, one of the deal’s chief negotiators, commented on NAFTA to AS/COA Online last month: “[I]f somebody would have told me, in 20 years Mexico will be exporting more than a billion dollars per day, I would say, ‘You must be crazy.’” In 2011, trilateral trade between Canada, Mexico, and the United States “reached the $1 trillion threshold,” notes a Congressional Research Service report.
More recently, the three countries have become party to negotiations of a larger trade agreement—the Trans-Pacific Partnership (TPP), a multilateral deal seeking to boost economic integration among Pacific Rim countries. In terms of hemispheric membership, Chile and Peru are also members; Colombia, Costa Rica, and Panama are observers (a new Americas Quarterly article notes that Costa Rica “is close to signing with all members, one of the requirements of full membership”). “A concluded TPP would solidify North America as an integrated production platform with Asia-Pacific and parts of South America, while also offering an opportunity to strengthen NAFTA—cutting edge when it entered into force almost 20 years ago but now in need of an update,” says COA Vice President Eric Farnsworth. “This is in equal measure why both Mexico and Canada should be invited to join the United States in the pending negotiations with Europe at the front end, not brought in after the fact when negotiations may already be well advanced,” he added, referring to the EU-U.S. Transatlantic Trade and Investment Partnership announced in February.
It was during Obama’s last trip to Latin America in June 2012—for the G20 in Los Cabos—that the United States backed Mexico’s membership in the TPP. This time around the Mexican government could seek U.S. support to join in the EU-U.S. negotiations.
The border—and how to decrease congestion to increase commerce—will likely be another trade topic when Peña Nieto hosts Obama. The White House and Los Pinos issued a joint declaration in April 2010 calling for “twenty-first century border management” to promote cross-border economic competitiveness. Studies show that wait times at border crossings—affected in part by increased security since 9/11 and by recessions—have an economic cost in both countries. U.S. Secretary of Homeland Security Janet Napolitano warned in February that budget cuts would affect staffing and increase delays, noting that wait times at the five busiest points of entry on the Mexican border lead to an economic loss of $116 million per minute of delay. Some seek other options to boost funding for border infrastructure; the Cross-Border Trade Enhancement Act of 2013 introduced in the U.S. Senate and House would seek public-private partnerships for staffing and improved infrastructure at ports of entry.
With immigration at the forefront of a policy debate in Washington, the issue will likely be a topic of discussion between Obama and Peña Nieto. Around 29 percent of the 40 million immigrants living in the United States hail from Mexico. In addition, over half of undocumented immigrants living in the United States come from Mexico. But Mexican migration to the United States came to a near standstill last year, due in part to Mexico’s growing job market and recession in the United States, says Pew Hispanic. At the same time, U.S. deportations of immigrants are at an all-time high—over 400,000 people were deported last year. In 2011, Mexicans accounted for 75 percent of deportees.
Obama’s trip coincides with a legislative push for comprehensive immigration reform in Washington. Introduced in the Senate in mid-April, the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013 would implement changes to visa procedures, guest worker programs, and border security. It would also introduce a path to residency and citizenship for undocumented immigrants. The DREAM Act portion of the bill would allow qualified undocumented youth an even quicker route to residency by attending school or joining the military.
The legislation would create a new low-skilled jobs program allowing for 20,000 visas beginning in 2015. In addition, the bill would allow for 337,000 agricultural worker visas over three years, starting when the law is implemented. “Immigration reform and the legalization of undocumented immigrants would open up new opportunities for labor mobility so that previously undocumented Mexican workers could freely cross and then recross the border to be able to more easily contribute to the economic vitality of the Mexican economy,” said AS/COA Policy Director Jason Marczak. The proposed legislation would also double the number of visas for workers with advanced degrees science, engineering, and math.
Border security also forms a key part of the bill, which could potentially be an area of discussion. Reform legislation dictates that border control measures must be put into place before undocumented immigrants gain the ability to apply for residency. The bill calls for around $3 billion to improve border security and $1.5 billion for border fencing. It establishes a five-year goal that the entire southwest border must be under surveillance, and border control must apprehend 90 percent of undocumented immigrants trying to cross. However, security along the border has already grown under Obama’s administration, with 4,000 more border-patrol agents, as well as double the miles of fencing and surveillance towers. During his first administration, Obama spent a record $73 billion on immigration enforcement—more than all other federal law enforcement agencies combined.
The Mexican government welcomed the bill in a statement from the Secretariat of Foreign Relations, saying the move was “very encouraging.” Peña Nieto has spoken in favor of U.S. immigration reform, and voiced support for reform when visiting Washington as president-elect in November 2012.
SICA leaders could also take up conversation on the proposed legislation. Around 3.1 million Central American immigrants—or 8 percent of the total immigrant population—lived in the United States in 2011. Salvadorans make up the largest group of Central American immigrants with about 1.3 million people living stateside, followed by Guatemalans (850,900) and Hondurans (490,600). Around 14 percent of all undocumented U.S. immigrants hail from these three countries. As such, the governments of El Salvador, Guatemala, and Honduras expressed support for the reform bill.
However, some leaders are also interested in continuing one of the U.S. government’s immigration policies: extending Temporary Protected Status (TPS). TPS allows immigrants to stay in the United States temporarily due to conditions such as environmental disasters or armed conflicts in their home countries. El Salvador, Honduras, and Nicaragua currently have TPS, though El Salvador’s is set to expire in September. Funes has said he hopes that Washington will renew El Salvador’s TPS—which benefits 208,000 Salvadoran immigrants— regardless of the outcome of the immigration bill.
With concerns about organized crime groups operating in Mexico and Central America, security will be on the agenda during Obama’s trip. Peña Nieto sought to redefine bilateral relations, shifting focus from security to economic ties. With that in mind, one topic for Obama’s trip could be the changing shape of the Merida Initiative. Launched in 2008, the security cooperation agreement has already shifted from U.S. training and equipment of Mexican security forces toward more preventative measures such as institution building and confronting social issues. The Peña Nieto government could seek to push those changes further. “It will have to be adjusted on many levels, not just because there has been a change of administration, but also because we are at a different stage of the institutional strengthening of Mexico,” said Mexican Secretary of Foreign Relations José Antonio Meade, talking about the Merida Initiative in an interview with McClatchy during his recent visit to Washington. Meade also said the agreement “has enough flexibility” to make such adjustments. A Congressional Research Service report notes that from FY2008 to FY2012, U.S. Congress appropriated $1.9 billion to Mexico via the Merida Initiative, with $1.1 billion delivered by the end of November 2012.
But a portion of security funding to Mexico is being withheld over human rights concerns. A group of 23 U.S. legislators hopes Obama will bring up that subject while in Mexico. In a letter to the U.S. Secretary of State John Kerry, the lawmakers note that the State Department is withholding $18 million of security aid “until the United States identifies areas of future collaboration with the Peña Nieto government on key human rights issues,” pointing out that Peña Nieto’s predecessor saw a quintupling in human rights complaints against Mexican soldiers and police. The congressman added: “We are encouraged by Peña Nieto’s strong statements affirming his commitment to human rights and we believe they provide the United States with an important opening to raise our concerns with the Mexican government.”
While the trafficking of drugs and other illicit goods from Mexico into the United States remains a top bilateral security concern, the flow of smuggled weapons in the other direction has fueled violence. U.S. figures from 2012 found that two out of every three illegal guns recovered in Mexico came from the United States. A 2011 study published by the University of Notre Dame estimates that the 2004 expiration of the U.S. Federal Assault Weapons Ban led to a 16.4 percent increase in Mexico’s homicide rate between 2004 and 2008. As such, Mexico has sought for the United States to help stem the flow of guns. But even as the U.S. administration stepped up support for gun-control efforts after the December school massacre in Newtown, Obama arrives in Mexico without good news, two weeks after gun control legislation failed in the U.S. Senate.
With Mexican organized crime groups shifting operations south, crime and violence has been a growing concern in Central America as well, and will be a topic when Obama meets with that region’s leaders in Costa Rica. At three times the global average, Central America accounts for the world’s highest homicide rate, reports an AS/COA policy brief on private-sector efforts to reduce violence in El Salvador. While Washington plans to decrease security funding for Mexico, the new U.S. State Department budget proposal allocates $161.5 million for the Central American Regional Security Initiative (CARSI)—an increase of $26 million since 2012.
Like the Merida Initiative, CARSI is a security initiative focusing on preventing organized crime in Central America that dates back to 2008 and, said U.S. Assistant Secretary of the Bureau of International Narcotics and Law Enforcement Affairs William Brownfield at a March 2012 AS/COA event, it must also evolve for changing circumstances. “Strategies take time to develop, not days, weeks, and months, but years,” said Brownfield, estimating that 65 percent of cocaine trafficked from South America travels through Central America. “We should not be embarrassed or ashamed to say that what we are doing today is actually very different from what we thought we were going to be doing four years ago.”
On energy, Obama and Peña Nieto could discuss a host of issues, ranging from a pending bilateral oil exploration agreement to shale gas to pipelines.
Mexico and the United States serve as major energy suppliers for one another. Mexico is one of the largest sources of oil imports to the United States, providing 377,350 barrels to its North American neighbor last year. (However, Mexican oil exports to the United States declined over the last several years, while Canadian oil exports to the United States grew.) Joint cooperation on offshore oil exploration is a likely topic of discussion between the two leaders, specifically the Transboundary Hydrocarbons Agreement, signed last year.
The deal seeks to end a moratorium on drilling along the U.S.-Mexico maritime border in the Gulf of Mexico, which would allow exploration in 1.5 million acres previously off-limits. The agreement also establishes a framework for joint inspections, resolving disputes, disaster response, and management of energy resources. The U.S. Congress is currently considering a bill to ratify the accord, and Mexico’s Senate approved it in April 2012. Should the agreement be ratified, it would also permit Mexico’s state-run oil company Pemex to develop joint projects with independent oil companies from the United States. “Ratification of the agreement would enhance the rule of law for companies operating in the area and would establish a cooperative process for managing the maritime boundary area,” said AS/COA Energy Director Christian Gómez.
Natural gas is another key area for the two countries. The United States is one of Mexico’s largest providers, mainly via pipeline. Given rising demand for electricity, natural gas imports from the United States more than doubled from 2007 to 2012. The two leaders could potentially talk about a $460 million pipeline between Mexico and Arizona, slated to be built by a Japanese company. Pemex is also looking for companies to invest in the $3 billion Los Ramones pipeline between southern Texas and central Mexico.
Shale gas and the electric grid present other areas of potential collaboration. Mexico is home to the fourth-largest reserve of shale gas in the world, and numerous areas have potential for exploration. The Eagle Ford field, located in south Texas and northern Mexico, extends 50 miles wide and 400 miles long with stores of shale gas and oil. This area could be further explored on the Mexican side of the border, observers say. The government is also making efforts in other areas of the country. Last month, the Secretariat of Energy announced a $244 million investment in shale gas and oil exploration in Coahuila and Veracruz states. When it comes to power, the North American electricity grid currently covers only a small part of Mexico, in Baja California. But deepening the integration of the electricity grid through North America represents another opportunity for U.S.-Mexico collaboration, said Gómez.