Nearly 20 years after the passage of the North American Free Trade Agreement, Mexico and Canada have joined the United States in the Trans-Pacific Partnership, an ambitious trade negotiation with eight other Pacific Rim countries. The inclusion of our closest trading partners in the Western Hemisphere ensures that the deal is truly trans-Pacific, rather than one focused primarily on Asia. While Washington focuses on a “pivot” to Asia, rebalancing our global priorities will prove incomplete without a renewed commitment to our North American neighbors.
The Mexican and Canadian economies are not only our largest export markets, but also joint production platforms. We build goods together, and we must do more to advance cross-border trade.
Our relationship with Mexico presents intriguing possibilities with the new administration of President Peña Nieto. A bold vision for our bilateral relationship should capitalize on Mexico’s growing economic dynamism and diplomatic heft.
Latin America’s second-largest economy, Mexico is outpacing Brazil through export-led growth and sound macroeconomic management. It is one of the most open of the world’s leading economies, with a network of 44 free-trade agreements, while Mexico’s economy has moved increasingly to high-tech operations.
Reasons to be optimistic about Mexico’s economy include domestic momentum for reform and diminished competition from China. Rising wages and higher transport costs make Chinese exports more expensive, playing to Mexico’s geographic advantage as companies seek to cut costs through near sourcing. Mexico is tackling needed reforms, beginning with passage of a new labor law and education reform. Cooperation between Mexico’s major political parties bodes well for an opening of Mexico’s heavily protected oil industry, a potentially huge boost for North American growth.
It is time for U.S. political leaders to recognize what our private sector already understands: the importance of Mexico to U.S. prosperity.
Unfortunately, when the U.S. looks south, we tend to focus on the security and violence. We applaud the unprecedented bilateral cooperation in the fight against transnational organized crime, and we have advocated for U.S. security assistance to Mexico in that effort. It is time to shift to a greater focus on economic and geopolitical opportunities.
A joint competitiveness agenda should begin with making business easier at our common border. Important security gains have been achieved, but trade facilitation has received insufficient attention, despite the steady integration of cross-border supply chains. Long and unpredictable crossing times mean bottlenecks at the border, and relatively few ports of entry have seen major upgrades. Infrastructure investment and expansion of pre-clearance programs will require intense bilateral cooperation and consultation with the private sector in both nations.
More broadly, we must harness the strategic power of our inextricable economic links. As a stalwart free-trade advocate and a member of the G-20, Mexico is well positioned to be a significant player in global financial and economic coordination. It is also a responsible international actor with which the U.S. shares commercial interests and political values.
More sophisticated and effective engagement with Mexico would see our governments acting as partners in multilateral settings. Mexico’s inclusion in the Trans-Pacific Partnership (TPP) trade negotiations was a critical step, offering a vehicle to update our trade relationship to the standards of the 21st century and to explore new markets for jointly produced goods. Like the United States, Mexico is interested in deepening its economic relations with Asia, so why not pivot together? As China and the United States vie for economic influence, Mexico’s participation in TPP advances a vision that spans the Pacific to link the Americas and Asia – in contrast to China’s preferences for regional agreements that exclude the Western Hemisphere.
We should champion North American integration in other multilateral contexts. For example, as trans-Atlantic momentum builds for a free-trade agreement between the United States and the European Union, we should consider the possibility of negotiating as a North American bloc.
Such initiatives will depend upon leadership from both the White House and the Congress as well as a broader shift in how Americans view our southern neighbor.
This period of political transition and economic promise presents a unique opportunity to forge ahead.
Negroponte, a former deputy secretary of state and former U.S. ambassador to Mexico, is chairman of the Council of the Americas. Granger, Republican congresswoman from Texas, is chairwoman of the House State and Foreign Operations Appropriations Subcommittee. Shapiro, former U.S. ambassador to Venezuela, is president of the Institute of the Americas, a public policy think tank at UCSD. The Council of the Americas and the Institute of the Americas will host a conference on the U.S.-Mexico Competitiveness Agenda on Feb. 13-14. Details can be found at www.iamericas.org.