In today's complex and often-unstable global political environment, there are many elements that have weight, possessing the potential to act as a stimulus for shift in relations -- the economy is arguably the prominent of these. Since 1994, and creations of NAFTA, Mexico and the United States of America have been more than ever interwoven with one another, a relationship that, while often downplayed, is vital for the success of both nations. As explained by Arturo Sarukhan, a former Mexican Ambassador to the United States, over the past two decades the two nations have "built a strategic and forward-looking partnership predicated on shared responsibility and on the premise that if one nation succeeded, the other one world, too" - a relationship founded and maintained on the basis of flourishing international trade.
While NAFTA has seen, on paper, benefits across the board for both the USA and Mexico (as well as Canada), there have been those throughout both nations that have suffered - a demographic in the United States that, throughout the 2016 United States Presidential Election, has been seen to have the ability to cause political swing. While newly elected President Donald Trump worked his campaign by touching on many ideas and political ideologies, some of the most prominent, and most different from previous US policy, were his opinions on NAFTA, and his draw to those whom had suffered as a result (or perceived result). However, while his views and opinions on NAFTA are not utterly unique, nor in the right circumstances detrimental to a flourishing relationship between the two nations, it is the manner in which President Trump is approaching negotiations that is. While President Trump has long used Twitter as a means to convey his thoughts, beliefs and general rhetoric, in the more recent future he has done so while representing the United States as a whole. In saying this, time and time again he has used social media to post unofficial personal statements on international political negotiations, and, as expected, there has been consequences. While these consequences are not always easily identifiable to exact measures (as there are many casual factors in the multifaceted Mexican-USA international relationship), posts such as that posted on August 27th, 2017 (shown above), "We are in the NAFTA (worst trade deal ever made) renegotiation process with Mexico & Canada.Both being very difficult,may have to terminate?", are highly detrimental to both short term discussions, and a fraying long-term relationship.
I. NAFTA Importance
NAFTA created the world's largest free trade agreement of 450 million people. It is an economic system worth about $20 trillion, which is measured by the Gross Domestic Product (GDP). NAFTA is essential in the way it connects the economies of the United States ($18.5 trillion), Mexico ($2 trillion), and Canada ($1.7 trillion). Since 1993, trade between these three countries increased significantly, from $297 billion to $1.15 trillion. NAFTA stimulates economic growth, earnings, jobs, and decreases consumer prices in all three nations. This agreement also significantly lowers tariffs. In the US specifically, it lessens the risk of inflation and allows the Federal Reserve to keep interest rates low.
NAFTA increased US economic growth by .5% every year. The sectors that benefited the most were agriculture and automobiles. US agricultural exports to Mexico and Canada grew by 156%, and exports to the rest of the world were 65%. Farm exports to Mecico and Canada were greater than exports to the next six largest markets combined, NAFTA also increases ranch exports because it eliminates large Mexican tariffs. Mexico, is the top export destination for US meats, grains, produce, and corn sweeteners. It is also, the largest export destination for oil and soy products.
NAFTA created over five million new US jobs. US producers created more than 800,000 jobs solely between 1993 and 1997. Since NAFTA was created, US foreign direct investment (FDI) in Mexico and Canada has doubled. The FDI reached $452 billion by 2012, which boosted profits for US businesses by giving them more opportunities to develop, and markets to sell to.
II. Current Relations Between United States and Mexico
The current relationship between the United States is strained, both in ideal and vision, but also on economic terms. The United States and Mexico have had a profound and complex relationship in the past, and heavily rely on each other following the enactment of NAFTA. The current presidential administration is at a standstill and pivotal point for the future of relations between the United States and Mexico. While President Trump uses the current U.S. Trade deficit, which is 502 billion dollars, to justify his "America First" rhetoric, the reality is Mexico represents a mere 8% of the total trade deficit. In addition, the United States actually has a larger trade deficit with Japan, Germany, and China, with respective deficits of 69 billion, 65 billion, and 347 billion respectively. Moreover, Mexico is the second largest export destination for the United States.Nevertheless, nearly 5 million jobs depend on trade with Mexico, and nearly 1.6 billion dollars a day are traded in both directions between the countries. However Donald Trump and his anti-Mexico rhetoric, which has been at the forefront has posed a significant threat to these seemingly positive economic interactions between both countries. The Mexican government is willing to renegotiate the NAFTA treaty, as long as there is communication, equal partnership, and willingness to negotiate other agreements between the country. However, Washington, especially under the Trump Leadership is not the type of authority to compromise with its southern neighbor. The archetype built in many American minds, is that the people of Mexico are threatening, instead of equal players in thriving economic partnership. This type of fear, especially the fear that "American jobs are going to foreigners", is only fueled by a leader who taps into racist, and xenophobic attitudes to fuel his ascension to greater power. As former Mexican ambassador to the United States, Arturo Sarukhan puts it "A stark asymmetry of power will always persist between both countries". This power dynamic puts the United States in the forefront, pushing their issues such as border security, trade deficits, and drug trafficking, solely on Mexico. Trump is clearly anti-NAFTA, as he believes it takes away American jobs, and devastated state economies such as when Trump tweeted that NAFTA destroyed Ohio and how John Kasich is to blame since he voted for it. Donald Trump repeatedly has tied NAFTA, to the negative economic effects in the Rust Belt such as the loss of jobs in steel and coal. However economists can't pinpoint whether the job losses even partially influenced by NAFTA, due to economic recessions, and the increase mechanization of industries. The final winner in the trade deal according to CNN Money is the United States because automakers in particular benefit from the cheap labor.
III. Mexico's Response + Conclusion
The Ministry of Foreign Affairs of Mexico has been adamant that they will not renegotiate NAFTA with the United states through "social media or any others new platform," as stated in a press release issued on August 27th of 2017. Through this press release, Mexico has set a clear precedent that they will not engage in NAFTA negotiations through public, social media platforms. However, Mexico's foreign minister, Luis Videgaray, has dismissed the United States President Donald Trump's tweets. Videgaray even told a local Mexican news station that President Trump was "negotiating in his own particular style," seeming to undermine Trump's tweets as a means of obtaining public attention rather than a true political statement. In a meeting with Reuters on September 15th of 2017, Videgaray stated that, "Mexico is much bigger than NAFTA," as nearly half of Mexico's trade with the United States is regulated through other channels, such as the World Trade Organization. Mexico itself has also become increasingly less reliant on the United States for trade, insteading forging relationships with nations within the European Union, Australia, New Zealand, Brazil, Singapore, and Israel. Videgaray has hinted that if NAFTA negotiations were to ever be rendered obsolete, it would not necessarily be detrimental to Mexico's economy, as Mexico has placed itself in a position where they could placing higher tariffs on United States' products.
The former president of Mexico, Vicente Fox, has echoed the sentiments of Mexico's current foreign minister, as Fox has claimed that, "there are a lot of great friends around the world, like China, like Japan... like Latin America, where Mexico can do business." The current President of Mexico, Enrique Pena Nieto, has taken a more diplomatic approach to negotiations with President Trump than Fox's statements. On January 27th of 2017 in a phone call between President Nieto and President Trump, President Nieto stated that he, "would insist very specifically... for [Mexico and the United States] to find a route towards the dialogue to find a balance in our trade." On October 12th of 2017, Justin Trudeau, the Prime Minister of Canada, and President Nieto discussed ways in which NAFTA can be renegotiated in a manner that is equally beneficial for all nations involved (Canada, Mexico, and the United States).
Extra: How (And Why) Donald Trump Tweets https://www.youtube.com/watch?v=geEVwslL-YY
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