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Submission of Comments to the USTR on Mexico's Expression of Interest in the Proposed TPP Agreement

January 13, 2012

Council of the Americas appreciates the opportunity to provide the Office of the United States Trade Representative with comments concerning Mexico’s expression of interest in the Trans-Pacific Partnership (TPP). Since 1965 the Council has been dedicated to the promotion of democracy, open markets, and economic and social development based on the rule of law, and we are widely recognized for our policy and commercial leadership throughout the Americas. The Council represents some 200 member companies invested in and doing business throughout the Western Hemisphere.

Council of the Americas strongly supports Mexican participation in the TPP

We view the TPP as the most promising opportunity to drive hemispheric trade expansion with a high-standards approach, and Mexico, as our second largest export market and third largest trading partner overall, is a crucial party in that process.

The Council has unique expertise in this regard. From the time of our founding we organized and ran the U.S. section of the Mexico-U.S. Business Council (MEXUS), which was instrumental in advocating for the idea of a Mexico-U.S. free trade agreement. Such agreement ultimately came to fruition, with the addition of Canada, as the North American Free Trade Agreement. After working for several years on NAFTA implementation issues, MEXUS was re-organized into the North American Business Committee. It was the North American Business Committee which organized the trilateral meeting in Louisville, in January 2006, that convinced the U.S. Government to invite the Council of the Americas to serve as the co-secretariat for the United States of the North American Competitiveness Council, a group of business leaders from Canada, Mexico, and the United States formed in 2006 and active until 2009. Under Council leadership, the NACC coordinated advice from the private sector to present to the three North American leaders on ways to enhance North America’s competitive position, promote increased employment, and foster higher living standards.

Given this background, the Council continues to believe that steps that enhance economic integration between the United States and Mexico are both logical and meaningful as we seek to build global competitiveness for the United States. To provide a better idea of what the commercial partnership with Mexico means to our country, U.S. sales to Mexico are larger than all US exports to the BRIC countries (Brazil, Russia, India, and China) combined. Exports to Mexico support an estimated 6 million jobs in the United States. Over $1 billion in trade crosses the U.S.-Mexican border every day.

North America is increasingly integrated

Given its expanding economy, growing middle class, and increasing economic weight, Mexico’s inclusion in the TPP would potentially deliver an important boost to the economy of North America. NAFTA has enhanced prosperity for the people of all three countries that are party to the agreement through increased trade and investment, stronger economic growth, and lower prices for consumers. But NAFTA is now nearly 20 years old, and technologies, products, and trade disciplines that did not exist when NAFTA was signed were, unsurprisingly, not adequately considered. As well, we have now developed joint production and supply chains to such an extent that, from the commercial perspective at least, national borders no longer define products. Every dollar of U.S. imports from Mexico, for example, includes some 40 percent of US content. Every dollar of Mexican exports to the world contains 35 percent U.S. content.

It is no longer accurate to think in terms of “U.S.” or “Mexican” or “Canadian” products when North America itself has become the production platform. We are strategic production partners. From this perspective, it makes little sense for the United States to enter into potentially significant trade arrangements with countries in the Pacific region without our NAFTA partners. The TPP offers a promising vehicle to support the updating of our bilateral and trilateral trading relationships within North America to the high standards of twenty-first century free-trade agreements.

Mexico would be a valued party to the negotiations

As a nation that shares U.S. commercial and political values, Mexico can also be an important ally in promoting the new disciplines that would improve the efficiency of North American supply chains and allow the United States and Mexico to explore new markets for jointly-produced goods. TPP issues, including regulatory cooperation, trade facilitation, and innovation, would parallel the North American competitiveness agenda, mutually reinforcing both agendas.

As a nation with an impressive trade expansion pedigree—with the nations of the Pacific coast of Latin America, Japan, Europe, and, potentially, Brazil—Mexico has shown leadership on these issues at times surpassing even ourselves.

As a member and host of the next G20 meeting, Mexico is positioned globally to be a long-term and increasingly significant participant in global financial and economic coordination and policy-making.

As a Western Hemisphere nation, the addition of Mexico would help balance the scales to ensure that the TPP is a true pan-Pacific agreement, rather than an agreement that is primarily focused on Asia. Building Western Hemisphere economies, in addition to bolstering our own, supports U.S. security interests in the region; Mexico is a valued friend and ally of the United States on a broad array of hemispheric issues including the fight against illegal drug cartels and security in the Caribbean Basin.

Mexico’s participation would have regional benefits

Down the line, Mexico’s participation in the TPP could also create a critical mass encouraging other nations in the region to come to the table to build a broader trade-integration paradigm based on a comprehensive approach. In this regard, the Council believes that membership in the TPP should not exclude non-APEC members, but potentially include all nations of the Pacific region willing and able to sign on to the high standards, comprehensive approach to trade and investment liberalization represented by the TPP. On trade, economic development, and foreign policy grounds, it should also be open to additional Latin American countries such as Colombia, Panama, and others as appropriate.

The path forward should be expedited

Much of the difficult work, in fact, has already been done, as Mexico has taken the political and economic steps to integrate itself with the economies of North America. This is not to say that there are no outstanding issues of bilateral concern; all negotiating partners must be willing to put all issues on the table and commit to meeting the TPP’s high standards. Mexico’s government has already agreed to this approach.

In sum, public backing of expedited Mexican entry into the TPP would be a strong signal of continued US support for one of our closest regional allies. It is time to move forward with the next chapter of the hemispheric trade agenda, and the TPP offers a unique opportunity to update and improve on existing trade agreements.

The Council urges the Administration to prioritize the Trans-Pacific Partnership as a vehicle for advancing economic integration with like-minded countries not only in Asia, but also in the Western Hemisphere.