Why the Status Quo with Mexico Isn't Working

Mexican president Enrique Peña Nieto. Flickr/Creative Commons/A. Davey

The United States can't afford to treat Mexico with benign neglect.

Aside from Hillary Clinton, the biggest loser in our presidential election was Mexico. In the winning campaign narrative, the United States exports jobs to Mexico, and Mexico exports poverty and crime to the United States, casting our relations with Mexico in zero-sum terms. If Mexico is gaining, the United States must be losing; an unfair characterization, but to many Americans, not without an element of truth.

Will the U.S.-Mexico relationship be treated as a major foreign policy objective for the new Trump administration, or will it be treated with benign neglect, as it has for the last several years? Initial signs suggest that President-elect Trump might prioritize Mexico, at least in the first part of his term.

Two of Trump’s major proposals directly impact U.S.-Mexico relations: building a wall on the southern frontier and renegotiating the North American Free Trade Agreement (NAFTA). Hyperbole aside, these proposals address legitimate concerns. We have a sovereign right to control our southern border, and we can renegotiate—or walk away from—NAFTA at any time. But treating both initiatives in just U.S. terms might damage our solid relations with Mexico and undermine other important aspects of Trump’s agenda, such as improved law and order and making America energy independent.

Therefore, maintaining a stable, prosperous and democratic Mexico must be a strategic priority for the United States. This cannot be achieved by maintaining the status quo. The U.S.-Mexico relationship has been a key feature of our geoeconomics—how we stay competitive with the rest of the world. But it needs to deepen. Mexico has real issues, with out-of-control violent crime and stalled democratic reforms. The United States can’t afford to ignore Mexico.

The key will be to convert a supposed zero-sum relationship into a positive-sum relationship, resulting in wins for both nations. These reforms should improve America’s strategic goal of remaining powerful and competitive in world affairs. Here are some suggestions on how Trump might do that, and a warning on the risks if he fails.

Modernizing NAFTA.

It pays to recall why NAFTA was initiated in the first place: to establish a grand North American trading bloc to compete with the European Union. This has been largely successful, resulting in more than $500 billion in goods traded per year, although the overall impact on the U.S. GDP has been modest. More important might have been NAFTA’s political impact in undergirding Mexico’s economic and political liberalization. NAFTA, initiated by President George H.W. Bush in 1990, backstopped the reform effort begun by Mexican President Carlos Salinas to open the economy and the political system. Mexico is a stable democracy today in large degree because of NAFTA.

NAFTA provided another benefit, often overlooked: it expanded the U.S.-Mexico “social field”— the interconnected private associations, business supply chains, and law enforcement exchanges that have grown and spread since NAFTA went into effect in 1994. It would damage the prosperity and security of both countries to interrupt these linkages.

Despite its unpopularity with unionists and economic nationalists, NAFTA’s dispute resolution system and liberal rules will help make Mexico’s new energy reforms, which give private oil companies access to Mexico’s 10 billion barrels of proven reserves, a success. In the future, and with the incentive of higher oil prices, Mexico’s increased output can help us maintain our energy independence from the unstable and authoritarian Middle East.

Presidential candidates often complain about NAFTA. Obama ran against it in 2008. But updating the agreement should not be an insurmountable problem. Last week the Mexican government wisely seized on Trump’s proposal, welcoming the opportunity to modernize NAFTA. Proposals to upgrade NAFTA could focus on infrastructure upgrades and better labor and environmental standards. Expect Mexico to emphasize increasing legal flow of labor too, which would be a natural, and necessary, complement to the trade agreement, but something that we’ve never seriously addressed.

Deepening the Border Wall

Ironically, much of the debate over illegal immigration has occurred during a period when our southern border security has been improving. In the 1990s, policymakers decided that little could be done to improve border security. The 9/11 attacks changed that, and we began dedicating more resources to stop illegal immigration. Since 2001, we have stemmed the rising tide of illegal crossings. In 2015, illegal alien seizures were about 337 thousand, down from 1.6 million in 2000, according to Border Patrol data. During this time, net Mexican migration reversed, and, in 2014 for the first time more third-country nationals were detained at the border than Mexicans. We have stanched, but not stopped, illegal immigration.