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China And Mexico Should Build Stronger Ties

US President Donald Trump's doctrine of "America first" is hurting relations between his country and Mexico. Trump is committed to renegotiating the North American Free Trade Agreement (NAFTA). The tension has been growing in the last few months and it's hard to say whether the treaty - which is set to be discussed in June or July - will survive the demands of the new US administration.

What Trump is not seeing is that the end of NAFTA would damage the economies of the three countries involved, including his own. US trade with Mexico is bigger than Trump thinks; in fact, Mexico is the US' third-biggest trading partner. Furthermore, NAFTA has helped to consolidate North America as the most competitive region in the world.

Nevertheless, Trump claims that Mexico has encouraged unfair trade with his nation, and he is pushing his southern neighbor to accept a deal that will profoundly damage Mexico's economy and society, something that Mexican President Enrique Peña Nieto is not willing to accept.

Mexico's government has said that NAFTA must be upgraded and that it's willing to renegotiate the treaty, but only if there is respect for its national sovereignty and for the rule of law; if the negotiations are creative, comprehensive and constructive; and if the dialogue between the three nations has the goal of achieving North America's integration, not only in the economic arena, but also with regard to issues like migration, security, terrorism and drug and weapon trafficking. Trump appears less interested in this approach. But when one door shuts, another opens.

Mexico's economy is dependent on the US to an unhealthy degree. So it needs to find reliable trade partners to diversify its commercial activity, not only in case NAFTA comes to an end, but also because the US has became an unstable partner. For that reason, Peña Nieto should target more promising relationships and China must be the first option.

The controversial cancellation of the Chinese rail project in Mexico damaged relations, but the two countries have great opportunities to do business together, since they are both focused on trading. In this regard, it should be noted that Mexico is the 12th-biggest exporter around the globe, while China is the biggest. Furthermore, both countries have plenty of manufacturing experience. So both nations have the experience and knowledge to create solid and strong relations, but neither of them has tried very hard to do this so far.

With 12 free trade agreements, Mexico can be the gateway to new markets for China, including the Latin and North American ones. For its part, China can help Mexico boost its entrepreneurship. This could allow Mexico to stop being just a manufacturing location, and became a strategic partner in the Chinese production chain.

While Trump threatens and criticizes both Mexico and China, the two nations must remain calm and smart. They must not respond to his aggression in the same way. In fact, being together at a time when populism and protectionism are huge threats is the best option for both countries. Chinese President Xi Jinping recognizes the importance of free trade and the need to consolidate China's leading position; now it is time for Mexico to seek more promising trading partners, and to restore its relationship with China.

Source: Global Times

By: Eleizabeth Deborah Martinez Aguilar

Mexico Manufacturing Industry News

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