|
by Chris Dalby
MEXICO CITY, Aug. 20 (Xinhua) -- No country appreciates being turned into a political punching bag.
Mexico has been systematically victimized by U.S. Republican presidential candidate Donald Trump, who has accused the country of sending rapists to the United States, is planning to build a border wall, and to stop remittances being sent to Mexico. These reasons have all made most Mexicans eager supporters of his Democratic opponent Hillary Clinton.
However, the issue of free trade may become Mexico's largest concern in the presidential race of the United States, a country that has pioneered the global economic model.
Both candidates have openly spoken out against the Trans-Pacific Partnership (TPP), the world's largest free-trade agreement (FTAs) signed in 2015 between 12 countries, including Mexico, the United States, Australia and Japan.
For decades now, Mexico has made free trade a cornerstone of its economic and foreign agendas. It has more FTAs with 45 countries, the most of any nation in the world, and much of its economic development has come from rivaling the likes of China and Vietnam as a manufacturing destination.
Its North American Free Trade Agreement (NAFTA) treaty, signed with the U.S. and Canada in 1994, also anchored Mexico's competitiveness by being arguably the only developing economy in the world with such privileged access to these markets.
The unexpected body swerve away from free trade by both Clinton and Trump may well have Mexico spooked. At a one-day summit with President Barack Obama and Canada's Prime Minister Justin Trudeau in June, this Mexican preoccupation was made clear.
In his address, Mexican President Enrique Peña Nieto said Mexico "is now a country that jealously protects its macroeconomic strength."
For Peña Nieto, this strength is based on free trade. "The partnership Canada and Mexico have with the United States is on track to make North America a much more competitive and productive region."
Trump's slogan "Make America Great Again" screams of cheap jingoism but it also strikes at a desire to bring jobs back and rebuild America's manufacturing heartland. Interviewed by CNN, Raul Benitez Manaut, a Mexican researcher on North America at the National Autonomous University of Mexico (UNAM), said "NAFTA has been heavily criticized by Democrats and Republicans alike for two decades. No matter whether it is Clinton or Trump, it will surely be revised and updated."
"Trump has been very aggressive and put in doubt the future of the TPP, which involves Mexico," he said, adding that Clinton would probably be friendly toward free trade overall, as Presidents Barack Obama, George W. Bush and Bill Clinton have all been.
However, Benitez Manaut's confidence about this may not be certain. Clinton's track record indicates an openness toward free trade. Her husband was in office when NAFTA was signed and she also supported FTAs between the United States and Oman, Chile and Singapore while in the Senate.
Despite that, she has been markedly careful at towing a line between supporting the idea of free trade yet providing few specifics as to what pro-trade measures she would support.
In an interview with CBS in April, Clinton said that "any trade deal has to produce jobs and raise wages and increase prosperity and protect our security. We have to do our part in making sure we have the capabilities and the skills to be competitive. It's got to be really a partnership between our business, our government, our workforce, the intellectual property that comes out of our universities, and we have to get back to a much more focused effort in my opinion to try to produce those capacities here at home so that we can be competitive in a global economy."
There is no doubt that will play well with the American electorate but it was not what Mexico wanted to hear. Far from being content with simply assembling American cars or packaging pre-produced goods, Mexico is actually looking to move up the value chain.
The country produces over 130,000 engineers a year, many of whom aim to work for American companies. Ford has an R&D lab in Mexico, designing parts for the new Ford Fiesta, among others. Should policy arguments about free trade lead to protectionist policies being passed by Congress, such companies would face a very difficult time.
News website, Economia Hoy (Economy Today) speaks of the irony of how Trump "has used NAFTA as cannon fodder", promising protectionism and to "eliminate any regulation which annihilates jobs" while his free trade opposition would harm both the U.S. and Mexico.
However, American Ambassador to Mexico Roberta Jacobson said that she doubted any move away from FTA would actually materialize.
"We feel that trade between the two countries, worth 1.6 billion U.S. dollars a day, means that it is one thing to say we want to separate and another thing to actually do it. We are so integrated that I do not think it is possible to make any quick changes," said Jacobson in an August interview with Mexican daily, Excelsior.
For Jacobson, since NAFTA was signed over 20 years ago, all the administration share the understanding that this is a very important, fruitful relationship for the U.S.
In this, the ambassador is probably right. Presidential candidates might campaign in poetry but they must govern in prose when reality kicks in. Railing against free trade may play well in Rust Belt states, which have undoubtedly suffered from jobs being exported, but the U.S. is too dependent on the benefits of free trade.
Trump has spoken of renegotiating NAFTA and of slapping 35 percent tariffs on goods imported from Mexico. That would not be a renegotiation of NAFTA at all, that would mean throwing it out and starting a trade war. Companies who still make finished goods in the U.S. would be punished for importing parts and raw materials. This would be passed on to customers, who would see prices spike on everything from foodstuffs to freezers.
This is where protectionism often falls apart. The world is too interconnected for countries to make such radical changes to their trade policies, without paying a stiff price, as the UK is now feeling after Brexit.
Politicians find it very difficult to undo broad legislation once enacted. As pointed out recently by Alberto Barranco, a political columnist for Mexican daily, El Universal, the TPP is a rare area where Obama and many Republicans agree. The president has stated that he wants Congress to ratify the TPP before he leaves office. If House Speaker Paul Ryan obliges him, and Mexico also ratifies it as planned, neither government will have the stomach for a renegotiation.
Jacobson says she cannot foresee a future for U.S.-Mexican relations without NAFTA or TPP. "We may have a fight ahead with TPP but I think all countries will ratify it, including the U.S.," she stated confidently.
At the Canada summit, Peña Nieto expressed his agreement. "The TPP revitalizes the NAFTA agreement, by putting it on another scale and at another level."
The free flow of goods across borders is the grease that keeps the global engine of growth turning. For years, this was drilled into Mexico's head by its northern neighbor. For all its social and economic problems, Mexico learned this well. Since NAFTA was signed, far more complaints were filed against Canada than against Mexico. The country has a real commitment to open markets and to global fair trade rules. It is the exemplary pupil of the global economic model pioneered by the United States.
It would now be a real shock if the pupil surpassed the master.
