TOYING WITH U.S.-MEXICO RELATIONS
TheJ. TrumpU.S. president-electhas many serious Donald tasks ahead, including navigating the relationship between the United States and Mexico. ¶ Trump’s promises to “build a wall,” his negative characterization of Mexican immigrants, his threat to renegotiate NAFTA, and his general dismissive tone and demeanor toward our neighbor to the south significantly cloud the future of the relationship.
But, the deep economic and cultural ties between our countries, and the opportunities that these ties can bring, tell a very different story. According to the Office of the United States Trade Representative, $583.6 billion (two way) trade of goods and services occurred during 2015 between our two nations, with Mexico the 3rd largest trading partner for the U.S., and the U.S. the largest trading partner for Mexico.
These economic ties create jobs for American workers. According to the U.S. Chamber of Commerce, six million U.S. jobs depend on U.S. trade with Mexico, a flow that has been greatly facilitated by NAFTA, which has helped eliminate costly tariff and non-tariff barriers.
U.S. exports of goods and services to Mexico directly created and supported an estimated 1.1 million jobs in the U.S, accounting for 15.7% of the overall U.S. export market. Mexico was the 2nd largest goods export market for the U.S. in 2015 — a figure
up 468% from 1993 pre-NAFTA trade levels — and its 3rd largest agricultural export market. Clearly the economic relationship between the U.S. and Mexico is a significant direct and indirect job creator for the U.S. in a variety of ways.
Just as important, our two nations work together to feed each other, improving food stability for both countries.
According to the Office of the United States Trade Representative, Mexico is the third largest agricultural export market for the U.S. ($18 billion in 2015), and Mexico is the 2nd largest source of food imports for the U.S ($21 billion in 2015).
Moreover, increasingly, numerous U.S. and other multinational companies that sell goods in the U.S. are migrating from overseas markets like China and India and nearshoring in Mexico. For multinational companies exporting to the U.S., migration to Mexico makes sense given the rising labor costs in China, while the infrastructure, water and energy costs in Mexico are within 10 percent of the U.S. costs.
Proximity to Mexico is key
Mexico’s proximity to the U.S. offers these same multinational companies lower transportation costs, faster delivery times, substantially more real time control over manufacturing quality and delivery, faster response to customer demands than they experience in Chinese-based manufacturing facilities, and far greater intellectual property protections.
Our regional proximity to Mexico makes nearshoring an opportunity for production sharing between companies located in the U.S. and Mexico. With nearshoring, large scale technology, R&D and skilled-worker manufacturing sites located in the U.S. can support the manufacturing sites of relocated multinationals throughout Mexico, with finished products reflecting significant labor and materials inputs from U.S. workers that cannot possibly occur with Chinese-based production facilities.
This phenomenon can be particularly compelling to border states like Arizona that can seize economic development opportunities by offering a favorable production sharing business climate to multinational corporations interested in moving their manufacturing plants from the far east to Mexico, as evidenced by Gov. Doug Ducey’s office creating a Mega Region campaign highlighting the accessibility Arizona offers these corporations.
In fact, just this week, Ducey and Gov. Claudia Pavlovich of the state of Sonora, announced a new $700 million auto plant, Lucid Motors, in Casa Grande, a plant that will employ 2,000 Arizona workers, directly as a result of our proximity and ties to the automotive industry in Sonora, Mexico. These North American ties have tremendous opportunity to expand in this global economic environment.
Despite the negative rhetoric Trump regarding Mexico, the deep economic and cultural ties between our countries tell a very different story, and our cultural similarities far outweigh our differences.
It’s easy to point fingers at “others” when our citizens are facing challenges that cannot be ignored. While U.S. manufacturing jobs have dwindled and technology advances have caused disruptions and displacements in the U.S. workforce, blaming Mexico is not only unfair, it is the wrong focus, and opportunities will be missed.
While our language may be different, we are neighbors, and our geographic proximity, the similar manner in which we live, our shared heritage and traditions, and our deep and mutually beneficial trading relationship are all part of the economic and cultural ties that we must promote and strengthen, not undermine.
Lisa Urias, president & CEO of Urias Communications and managing partner of CoNecs North America. Follow her @LisaUrias1.