Is Mexico at a Turning Point for Diversifying Its Economy and Ending Dependency on the U.S.?

 Photo by Luis Hernández

Photo by Luis Hernández

 Professor Tony Payan

Professor Tony Payan

 Economist Lucinda Vargas

Economist Lucinda Vargas

 Professor Francisco Llera

Professor Francisco Llera

 Dr Kathy Staudt, Moderator

Dr Kathy Staudt, Moderator

By Kathy Staudt

On February 20, The Social Justice Education Forum sponsored a panel entitled "US-Mexico Border Relations in the Time of Trump" at the University of Texas at El Paso Rubin Center Auditorium.  The distinguished panelists responded affirmatively, with extensive, up-to-date detail.  Below I offer a summary and highlights of the presentations.

Dr. Tony Payan, Director of the Mexico Center at Rice University's Baker Institute for Public Policy, began by saying that our 'interdependent borderlands' appear to be devolving, not evolving.  The anti-Mexico and anti-free trade rhetoric will only get worse when (not if) more border walls get built around a "Fortress America."  Payan doubts that a border wall will solve problems; for example, ~80% of the drugs coming to the US come through ports of entry, he said.  Nationalism is on the rise in both the U.S. and Mexico: a populist right in the U.S. and a populist left in Mexico. 

Payan noted the many ways that Mexico has assisted U.S. policy goals, at considerable costs to its own budget and development priorities.  One is that Mexico deported more Central Americans than did the U.S. Another is that Mexico spent far more fighting the 'war on drugs,' around $15-20 billion (and up to 250,000 lives lost) versus U.S. assistance to Mexico in the Mérida initiative, amounting to $1.4 billion.  As Mexico considers its future policy options, including the 'cards' it brings to the negotiating table over NAFTA (North American Free Trade Agreement) and the new US administration, it could very well spend its own resources on its own economic development goals.

Mexico, said Payan, is in a ninety-day consultation period in the renegotiation of NAFTA.  "Mexico must be willing to walk away from the table."  In the borderlands, "we've allowed the feds [in both countries] to capture our community."

Economist Lucinda Vargas began by saying that NAFTA could be repealed, rather than renegotiated.  What's needed in its place is a North American FAIR Trade Agreement. The U.S. and Mexican industries "complement one another" in the annual binational one-trillion dollar trade.  Vargas provided extensive data about the U.S. auto industry and its dependence on co-production in Mexico.  Without the NORTH AMERICAN "production machine," she indicated, the "U.S. auto industry would be hard-pressed to remain competitive." If the Trump Tax (tariffs) would be implemented, Vargas anticipated that Mexican manufacturing would need to be retrofitted; until that happens, the economy would be weakened, hitting the poor the hardest.  Surely migration would also surge.  

Vargas went on to discuss the significance of Mexican purchases, that is imports from the US, focusing on the totals for the U.S. (16% of total exports), Texas (38% of total exports), and El Paso (80% of exports).  She went on to discuss the amount of corn (maiz) that Mexico purchases from the U.S., but is now looking to Argentina and Brazil as sources if NAFTA is no longer relevant.  Similarly, the U.S. cotton market sells mainly to Mexico.  The potential future trade relationships could be devasting to U.S. farmers.

In her conclusion, Vargas said that NAFTA made Mexico "complacent."  Trump's attacks have given Mexico an opportunity to diversify its economy.  She said that Mexico has developed a list of ten objections to the tone and practices of U.S. policies, among them the insistence that Mexican migrants be treated with respect, that a free flow of remittances be allowed, and that no more border walls be built (walls which will certainly NOT be paid for by Mexico). 

In the final presentation, Dr. Francisco Llera, professor at the Universidad Autónoma de Ciudad Juárez, offered comments on both NAFTA and on alternatives for borderland localities in this and future eras.  Llera said that while NAFTA created jobs and was good for maquiladora owners, the trade agreement overall was not good for Mexican “industrial competitiveness.”  Llera noted that Mexico has over 40 trade agreements with different countries besides the U.S., and it is "time for diversification."  Mexico could move forward with a version of the Trans-Pacific Partnership (without the U.S.) and could consolidate trade with China as well.  In a recent poll from El Universal, nearly half of respondents supported economic diversification. He sees Mexico developing new bilateral trade agreements with other countries.

With the erosion of NAFTA, Llera proposed multiple options for sustaining jobs and creating new diverse jobs in the borderlands, including in the service sector and with alternative companies that produce in the maquiladoras.  Specifically, he proposed that borderlands people move forward with medical tourism and with real estate development for U.S. retirees whose dollars will go further in an ever-increasingly costly U.S. standard of living. He visited Corozal, Belize, which successfully developed this strategy.  (Already, 1.2 million Americans are living in Mexico--"allies" said Payan in a response later, who understand Mexico and Mexican perspectives.)  Llera seeks "a bottom-up binational plan for the borderlands."

Many in the near 150-person audience were inspired and buoyed with the content of presentations.  Multiple questions emerged, including the short-term negative consequences of Mexican independence and diversification.  One example would be the return and absorption of up to 2 million people (noting that only less than half of the ~10.5 million undocumented people in the U.S. come from Mexico).  Payan predicted that many of the U.S. citizen children, who return to Mexico with their parents, will settle near the northern border with their bilingual and educational skills. 

In sum, this new Trump era has become a "wake-up call," as Vargas commented.  It is the catalyst Mexico needed to diversify its economy and establish greater independence from the United States.