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Mexico is one of the top three international trading partners for over 30 U.S. state economies, and it is the top trading partner for the two largest U.S. state economies (California and Texas).

Mexico as Viewed from Washington: Optimism for an Even-Better NAFTA

August 16, 2017 5 minute Read by Nicholas Saliba
If the U.S. can’t get its relationship with its southern neighbor “right,” what kind of signal will it send to the rest of the world?

Resources:

NAFTA Negotiations
Five Steps to Improve North American Trade and Competitiveness

Trade Balance Has Very Little to Do with Trade Policy
The Administration’s preoccupation with the trade balance breaks with seventy years of U.S. trade policy

Trade negotiators from Canada, Mexico, and the United States formally began the renegotiation of the 23 year-old North American Free Trade Agreement (NAFTA). Against this serendipitous backdrop, members of the George W. Bush Institute team are traveling to Washington, D.C. and Mexico to participate in the inaugural Center for American Progress U.S.-Mexico Leaders Initiative. The cohort of leaders from across the U.S. will meet with government and industry officials from both sides of the border to discuss a wide variety of issues relevant to not only the NAFTA renegotiation but also the overall strength of the U.S.-Mexico relationship.    

To kick off the week, the participants gathered in Washington for a discussion with U.S. policymakers on how Mexico and the U.S.-Mexico relationship are viewed from Washington. Speakers, including former White House officials and advisors to Congress, lamented the damage caused by the recent anti-NAFTA and anti-immigrant rhetoric in the U.S. However, they expressed optimism that the renegotiation of NAFTA will offer an opportunity to strengthen, not weaken, the bilateral partnership. 

Above all else, the sheer magnitude of the economic relationship between the two countries will make it unwise, if not impossible, for U.S. policymakers to drastically scale back the original agreement or enact new trade barriers. Mexico is one of the top three international trading partners for over 30 U.S. state economies, and it is the top trading partner for the two largest U.S. state economies (California and Texas). Jobs throughout the U.S., far away from the border, are tied to trade with Mexico and would be threatened if NAFTA’s cross-border manufacturing supply chains were disrupted. That being said, there is certainly room to improve the original NAFTA agreement. 

The reopening of NAFTA will give policymakers a chance to modernize the original agreement to address modes of exchange that were far less important or did not even exist in 1994, such as e-commerce, digital data transmission, and trade in services. Furthermore, a NAFTA renegotiation can strengthen the enforcement mechanisms for oft-forgotten parts of the original agreement, including labor, environmental, and intellectual property rights (IPR) standards. Deepened cooperation on issues related to border security will also be essential for the U.S. and Mexico to facilitate ever-expanding volumes of cross-border trade and traffic. Since the original NAFTA, Mexico has opened its energy sector to private investment, presenting another sector ripe for joint production and enhanced U.S.-Mexico regulatory cooperation. 

Below the federal level, the heightened awareness of NAFTA amongst the public necessitates that state policymakers continue to extoll to their constituents and to Washington the benefits of free trade with Mexico, which include job creation, greater security and stability in Mexico, and expanded access to affordable consumer goods on both sides of the border.

Moving beyond NAFTA, there is recognition in Washington that both the U.S. and Mexico need to get their respective houses in order. With the help of the U.S., Mexico must continue to work to rid itself of the corruption that persists across all levels of government and the economy. The U.S. must, hopefully sooner than later, fix its immigration policy to provide certainty around the status of the over 11 million undocumented immigrants living in the U.S. Progress on these fronts will go a long way toward improving the average American’s perception of Mexico. 

Tying it all together, the panel in Washington vehemently underscored the importance of the U.S.-Mexico relationship in the broader context of U.S. foreign affairs. As one panelist put it, if the U.S. can’t get its relationship with its southern neighbor “right,” what kind of signal will it send to the rest of the world? 

Stay tuned to the Bush Institute blog throughout the next week for more updates about our visits to Washington, D.C. and Mexico.


Author

Nicholas Saliba
Nicholas Saliba

Nicholas Saliba is a consultant for the George W. Bush Institute and a Fellow with the Maguire Energy Institute in the Cox School of Business at Southern Methodist University in Dallas, Texas. He graduated Magna Cum Laude with Honors from Southern Methodist University in May 2014, receiving a B.B.A. in Finance, B.S. in Economics with Financial Applications, and B.A. in Public Policy. He also received minors in History and Political Science, along with a concentration in Energy Management.

Mr. Saliba has been a writer and researcher for the 4% Growth Project, the North America Scorecard Project, and the North America Working Groups of the George W. Bush Institute. He has co-authored numerous studies, and spoken on issues pertaining to finance, economics, and public policy in the energy sector. In 2013, Mr. Saliba was the co-author of the book "The Energy Logjam: Removing Regulatory Obstacles to Fuel the Economy," published by the George W. Bush Institute. Additionally, he has consulted on issues pertaining to energy, economics, and public policy for organizations including Consumer Energy Alliance, Texas Education Service Centers, D Magazine, Bracewell & Giuliani LLP, the Ohio Oil & Gas Association, and Energy Future Holdings.

Mr. Saliba is a member of Delta Sigma Pi Professional Business Fraternity, Omicron Delta Epsilon International Honor Society in Economics, and Phi Beta Kappa.

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