Texas Lawmakers: Add Mexico to Trade Group

Despite trade between Mexico and the United States surpassing $460 billion in 2011 — a 17 percent increase from 2010 — America’s southern neighbor wasn’t initially considered as a partner in the Trans-Pacific Partnership, a multi-country affiliation meant to increase trade and reduce tariffs between member countries.

A group of Texas lawmakers recently sent a letter to U.S. Trade Representative and former Dallas Mayor Ron Kirk asking him to consider including Mexico, whose five largest trading destinations include the trade districts of Laredo, El Paso and Houston, in the partnership dialogue. They argue that including Mexico could add to the 6 million jobs supported by the current trade relationship.

As negotiations have progressed, the Obama administration has expressed its support for Mexico to enter into the negotiations. But others have reservations, citing how expanded free trade agreements like NAFTA could lead to lower wages in partnering countries and a loss of jobs in the U.S.

The countries included in the partnership are Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the U.S. The partnership’s mission, according to Kirk’s office, is to “enhance trade and investment among the TPP partner countries, promote innovation, economic growth and development, and support the creation and retention of jobs.”

Calls to Kirk’s office were not immediately returned. But in a statement following last week’s North American Leaders Summit, President Obama said the U.S. welcomes Canada and Mexico’s interest in joining the TPP.

Mexico’s exports to the U.S. increased 20.95 percent in 2011 while imports rose 14.57 percent. Laredo witnessed about $207 billion of that trade, followed by El Paso at $78.1 billion and Houston with $31.4 billion, according to U.S. census data analyzed by WorldCity, which tracks global trade patterns.

“Last year alone Mexico consumed nearly $200 billion in U.S. exports, making it the second-largest U.S. export market,” U.S. Rep. Henry Cuellar, D-Laredo, wrote in the letter to Kirk. “Additionally Mexico spends half of its export earnings on U.S. goods, while a remarkable 37 percent of the content of Mexican global exports comes from the United States.”

The letter was also signed by U.S. Reps. Francisco “Quico” Canseco, R-San Antonio; John Carter, R-Round Rock; Michael Conaway, R-Midland; John Culberson, R-Houston; Blake Farenthold, R-Corpus Christi;  Charlie Gonzalez, D-San Antonio; Kay Granger, R-Fort Worth; Ralph Hall, R-Rockwall; Ruben Hinojosa, D-Edinburg; Michael McCaul, R-Austin; Pete Olson, R-Sugar Land; Silvestre Reyes, D-El Paso; Pete Sessions, R-Dallas; and Lamar Smith, R-San Antonio.

Mexico’s Ambassador to the U.S., Arturo Sarukhan, said that initially, his country wanted to more closely examine the TPP before engaging in any discussions. Now Mexico appears to have warmed up to it.

“The TPP is a natural step forward in Mexico's trade and foreign policy strategies, reinforcing our commitment to maintaining an open economy and strengthening our international trade and investment links,” Sarukhan said in an email. “Mexico's access to TPP markets would also benefit the U.S., as there is a 37% U.S. content in Mexico's total manufacturing exports (compared to less than 4% of China).”

Closer to home, however, stakeholders are being firmer in their support. Nelson Balido, the president of the Border Trade Alliance, a pro-trade, nonprofit alliance, said including the NAFTA countries only makes sense.

“If this hemisphere is going to be as competitive as we once were, we have to have these agreements with these partners,” he said. “There are more and more plants going into Mexico as China becomes less attractive.”

Balido points to Ford Motor Company’s recent announcement that it plans to invest $1.3 billion in Mexico to construct a manufacturing plant in the city of Hermosillo as proof that investment in Mexico, despite high levels of violence there, remains attractive.

But others say there remain issues that should be addressed first.

“From Mexico's standpoint, you bet they should welcome inclusion,” said former U.S. Ambassador to Mexico Antonio Garza, a South Texas native. “But before we set them a place at the table, they need to be more proactive in addressing matters relating to intellectual property and agriculture.”

When asked why he thought there was such a push to include Mexico despite its current inclusion in the long-standing NAFTA, Robert E. Scott, an economist with the nonpartisan Economic Policy Institute, said he was sure it was motivated by politics.

“This is a way to get more cheap and unfairly traded and subsidized imports into the United States and directly in to Mexico and into their production process,” he said. “It drives down wages in Mexico, it drives down wages and jobs in the United States. So whatever is bad for U.S. workers is good for U.S. businesses, it’s pretty much as simple as that.”

Scott also said there is an inherent hypocrisy in the fact that some members who support including Mexico are some of the most extreme on issues of border security and immigration.

“What they have done is try to create secure corridors and all kinds of ways to expedite the physical movement of goods while walling off the movement of people and I think it’s exactly the wrong thing to focus on,” he said.

Balido concedes that NAFTA resulted in manufacturing jobs moving south, but said trade agreements like it produce a net gain for both countries because it also keeps engineering jobs in the U.S. If jobs are going to migrate away from the U.S. he added, it makes more sense that they go to Mexico, which he called a “friend.”

“These are the same folks that have to worry about immigration issues and violence,” he said. “The more jobs you have, the less illegal immigration you are obviously going to have. The more jobs you have, the less people have to resort to other things that are unspeakable, so it’s the health of the entire North American area that you have to focus on.”