Mex­ico can thrive with­out Trump

The Washington Post Sunday - - SUNDAY OPINION - BY ERNESTO ZEDILLO The writer, a pro­fes­sor in the field of in­ter­na­tional eco­nomics and pol­i­tics at Yale Univer­sity, was pres­i­dent of Mex­ico from 1994 to 2000.

The Mex­i­can govern­ment has been cour­te­ous to­ward Don­ald Trump, as both a can­di­date and now U.S. pres­i­dent. In­deed, Mex­i­can Pres­i­dent En­rique Peña Ni­eto has paid a high po­lit­i­cal cost at home for his be­ing open to work­ing con­struc­tively with Pres­i­dent Trump. But Peña Ni­eto has done the right thing by putting the in­ter­ests of Mex­ico and the preser­va­tion of mu­tu­ally ben­e­fi­cial re­la­tions with our neigh­bor above his per­sonal pop­u­lar­ity. Nev­er­the­less, the time has come to ad­mit that the ac­tions of the new ad­min­is­tra­tion have closed off, at least for the fore­see­able fu­ture, the pos­si­bil­ity of any agree­ment be­ing achieved through di­a­logue and ne­go­ti­a­tion that could sat­isfy the in­ter­ests of both par­ties.

This is an un­for­tu­nate and sad sit­u­a­tion, but the ef­fort to ac­com­mo­date Pres­i­dent Trump’s capri­cious wishes has proven worth­less and should not be con­tin­ued. It is not use­ful for Mex­ico or the United States.

In ret­ro­spect, the prob­a­bil­ity of reach­ing a mu­tu­ally ben­e­fi­cial agree­ment on the top­ics on Pres­i­dent Trump’s Mex­ico agenda was al­ways small, con­sid­er­ing that his de­mands have de­fied le­gal and eco­nomic ra­tio­nal­ity all along.

For ex­am­ple, Pres­i­dent Trump’s as­pi­ra­tion to rene­go­ti­ate NAFTA stems from the in­cor­rect idea that the trade bal­ance be­tween the two coun­tries orig­i­nates in Mex­i­can ad­van­tages built into NAFTA and that a trade bal­ance, if pos­i­tive for Mex­ico, means the au­to­matic trans­fer of jobs from the United States to its south­ern part­ner. Both con­cepts are mis­taken.

Equally er­ro­neous is Pres­i­dent Trump’s fail­ure to ac­count for how modern trans­porta­tion sys­tems and in­for­ma­tion tech­nol­ogy have changed in­ter­na­tional trade. This progress has cre­ated so­phis­ti­cated sup­ply chains that de­liver prod­ucts and ser­vices, in­clud­ing new ones, at low prices.

Given its amaz­ing tech­no­log­i­cal and en­tre­pre­neur­ial ca­pac­ity, the United States has been the main ben­e­fi­ciary of this new way of or­ga­niz­ing in­ter­na­tional pro­duc­tion and trade. Many Amer­i­can firms are able to com­pete suc­cess­fully around the world with those from Europe and Asia, and there­fore can pro­vide high-qual­ity, good­pay­ing U.S. jobs, pre­cisely be­cause they are free to de­velop links along their sup­ply chains in places such as Mex­ico — in this case thanks to NAFTA.

That’s why it should have been ev­i­dent from the start that it would be im­pos­si­ble to ac­com­mo­date Pres­i­dent Trump’s ob­jec­tive of bal­anc­ing the trade ac­count with Mex­ico by tweak­ing NAFTA alone. If Pres­i­dent Trump re­mains ob­sessed with that wrong­headed ob­jec­tive, Mex­ico should take that as a wish to kill NAFTA, which of course is some­thing that he has the le­gal abil­ity to do.

It would be a waste of time for the Mex­i­can govern­ment to play a NAFTAtweak­ing game with the Trump ad­min­is­tra­tion. Only if the U.S. govern­ment sub­mits a se­ri­ous and clear agenda of NAFTA-re­lated points, con­sis­tent with the in­ter­ests of the two coun­tries, should Mex­i­can au­thor­i­ties move to restart the di­a­logue. At this point, how­ever, such a sce­nario is most un­likely, and the pru­dent thing would be to as­sume that Pres­i­dent Trump will kill NAFTA. Of course, this would be costly for the two economies — and, at least ini­tially, dis­pro­por­tion­ately so for Mex­ico.

But such an out­come should not be cause for de­spair in my coun­try. NAFTA has been an ex­cel­lent in­stru­ment, but it is only one among many tools available to pur­sue the goals of eco­nomic growth and de­vel­op­ment. Un­like its north­ern neigh­bor, Mex­ico should re­in­force its com­mit­ment to open­ness and sound eco­nomic poli­cies. We can­not af­ford to do other­wise.

Mex­ico can cre­ate new con­di­tions that will keep, and even en­hance, our stand­ing as a good place for global com­pa­nies to pro­duce for our own and other im­por­tant mar­kets, not least the United States. We should re­as­sure global com­pa­nies, with con­crete ac­tions, that Mex­ico will re­main open for busi­ness and that our govern­ment will not try to in­tim­i­date them or tell them what, where and how to pro­duce. The cur­rent Mex­i­can ad­min­is­tra­tion, which suc­cess­fully launched in­cred­i­bly am­bi­tious eco­nomic re­forms in its early years, should return to this re­formist im­pulse. The end of NAFTA, as dis­rup­tive and costly as it would be in the short term, could be com­pen­sated for with the right set of poli­cies.

Of course, as he has threat­ened, Pres­i­dent Trump may wish to go be­yond the can­cel­la­tion of NAFTA and try to im­pose ad­di­tional bar­ri­ers on trade with Mex­ico. My coun­try must be ready to use all le­gal in­stru­ments pos­si­ble, par­tic­u­larly those pro­vided by the World Trade Or­ga­ni­za­tion, to con­test any ar­bi­trary and il­le­gal ac­tion. Pres­i­dent Trump could even en­ter­tain the with­drawal of the United States from that cen­tral ar­biter of in­ter­na­tional trade dis­putes, at which point the Mex­i­can is­sue would be­come a global prob­lem that would have to be con­fronted by the full in­ter­na­tional com­mu­nity.

As for Pres­i­dent Trump’s border wall: Ob­vi­ously there is lit­tle the Mex­i­can govern­ment can do to en­cour­age more en­light­ened U.S. im­mi­gra­tion poli­cies; these are strictly a do­mes­tic mat­ter, de­spite the con­se­quences for other coun­tries, in­clud­ing Mex­ico. But it’s clear that if eco­nomics counts, it is far bet­ter to make good laws than per­ni­cious walls. Those laws must sup­port a well-func­tion­ing U.S. la­bor mar­ket with­out pro­vid­ing in­cen­tives for a black mar­ket of un­doc­u­mented lowskilled work­ers.

Of course, re­peat­ing this to Pres­i­dent Trump would be be­side the point; the wall seems to be an­other of his ob­ses­sions vis-a-vis Mex­ico, and it’s none of Mex­ico’s busi­ness if the U.S. govern­ment wants to add to its na­tional debt by build­ing a white ele­phant on its own ter­ri­tory. What we re­ject, un­der any cir­cum­stances, is any at­tempt to use a sin­gle inch of our ter­ri­tory to build such an abom­inable struc­ture. All Mex­i­cans are be­hind Pres­i­dent Peña Ni­eto when he tells Pres­i­dent Trump that we will not pay for his ex­trav­a­gant, of­fen­sive and use­less project.

JUSTIN SUL­LI­VAN/GETTY IM­AGES

A man walks along the U.S.-Mex­i­can border fence near Ti­juana, Mex­ico, on Fri­day.

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