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U.S., Mexico Business Leaders Plan To Convince Trump Cross-Border Trade Is Good For Both Countries

U.S., Mexico Business Leaders Plan To Convince Trump Cross-Border Trade Is Good For Both Countries

MEXICO CITY — Mexican and U.S. business leaders are quietly strengthening coalitions from America's heartland to North Texas to persuade a skeptical Donald J. Trump to maintain strong ties between the two countries. The president-elect has sent ambiguous signals over future and past trade deals and building a wall, or perhaps just a fence along the border with Mexico.

To help gain leverage with Trump, Mexico is also pondering several options, including replacing Foreign Minister Claudia Ruiz Massieu with former Finance Minister Luis Videgaray, according to three senior Mexican officials with knowledge of the plans.

The plan is to make the case that Mexico is not China and should be treated not as an adversary, but as an ally on matters ranging from economic to cultural integration, with security the critical glue binding both sides, business and policy leaders on both sides of the border said.
North Texas is key in that effort.

"You have powerful people from Mexico talking, drinking, having dinner with very powerful Texas people," said James Hollifield, director of the Tower Center at Southern Methodist University, or SMU, and a founding member of the Mission Foods Texas-Mexico Center.

"These guys and gals have known each other for years," he said. "They will push this agenda. You will see a powerful binational coalition forming between these two countries. That's what I have been watching take place over the past 20 years and I'd be surprised if that's not happening again."

Nearly 5 million U.S. jobs depend on trade with Mexico, with more than $400 billion in goods and services crisscrossing the border. Of that figure, $179 billion is between Texas and Mexico.

Over the years, the two countries have set up supply chains that snake across the countries, often along the Interstate 35 corridor, carrying manufactured goods, including cars, assembled in both countries. Cars built in places like Arlington crisscross the United States and Mexico border, including Silao, Guanajuato, at least eight times during production, according to a study by the Woodrow Wilson Center's Mexico Institute.

"This relationship is not optional," said U.S. Ambassador Roberta Jacobson. "And this relationship isn't just about economics, or cultural ties, but security too."

Critical timing

The timing in Mexico is critical. The country of more than 120 million is facing uncertain times, and Trump’s ascent can either mean a slower growth rate, or recession. During the presidential campaign, Trump referred to Mexicans as "rapists" and criminals, drug dealers — “although some, I assume, are good people,” he said.

He promised to deport millions of undocumented immigrants, which would curtail more than $22 billion in annual remittances into Mexico. And he also wants to renegotiate trade deals, including the North American Free Trade Agreement, or NAFTA, that over the past 22 years has woven an infrastructure of new industries stretching from Mexico, the United States to Canada.

Since the late 1980s, Mexico has shifted from a close, privately held economy into one of the most open in the world, hedging its bets on trade agreements, including NAFTA in 1994. Today, the average Mexican has about one-third of his income from jobs tied to trade.

Trump has also threatened a trade war with Mexico by slapping 35 percent tariffs on cars and auto parts imported from Mexico. His most applauded pledge was to build a wall with Mexico and have the Mexican government pay for it, leading supporters to chant “Build That Wall.”

But since his election, Trump has seemed to back off his promises.

“What shocked so many of us during the presidential campaign was not that a candidate could describe Mexican immigrants as criminals and rapists or that he would threaten a trade war with Mexico,” said U.S. Rep. Beto O’Rourke, D-El Paso, who's from a region that’s been transformed by trade. “What was shocking was that so many people throughout the country seemed to agree with those sentiments. The vilification of Mexico and the undervaluation in the U.S. of our bilateral relationship did not happen overnight. It will take many years to get it back on track.”

In Mexico, “all possibilities are on the table,” said a senior Mexican official who was not authorized to speak publicly.

That includes bringing back Videgaray, who fell from grace as the mastermind of Trump’s last-minute, controversial visit to meet with President Enrique Peña Nieto in Mexico City last August. Videgaray promptly resigned amid the fury that ensued. But following Trump’s victory, Videgaray’s stock rose. The U.S.-trained technocrat is known as a friend to key binational business leaders and has ties to some of Trump’s key people, including the president-elect's son-in-law, Jared Kushner.

The fiasco contributed to Peña Nieto's worsening approval ratings — now in the low 20s — and fallout with the Democratic Party in the U.S.

Mexico will need to “simultaneously engage the incoming (Trump) administration and rebuild ties with the Democratic party,” said Arturo Sarukhan, Mexico’s former ambassador in Washington. “If NAFTA were to unravel, it would be the proverbial spanner in the works, one that will damage Mexico and the United States alike.”

Other challenges for Mexico range from gasoline price hikes and shortages to more corruption, impunity in his administration, and renewed drug violence in regions, including Ciudad Juarez, across from El Paso. In the first 10 months of 2016, more than 17,000 people were killed in Mexico, the highest 10-month tally since 2012. That has generated fears among citizens of a return of gangland mayhem that’s marred Mexico for more than 10 years.

“I don’t know that we’ve ever felt safe again,” said Francisca Jimenez, a cleaning woman in Ciudad Juarez. “There’s also more uncertainty for Mexicans here in and in the United States with the arrival of el señor Trump.”

Slowing immigration

Slowing immigration

Ironically, over the years, Mexico has dramatically slowed illegal immigration north, in part due to a decades-long campaign to lower fertility rates and transform its economy into a mega center for cars, TVs, aerospace manufacturing and computers.

“Mexican business leaders need to go to Wisconsin, Kansas City, Michigan, Oklahoma, North Texas and skip Washington, D.C., and the border,” said a senior U.S. official without permission to speak publicly. “The heartland, middle America, is where the fight is. There is a need to remind Americans that Mexico is a partner, not a rival.”

O’Rourke added: “It's important that those who understand the importance of this relationship — especially in those places far from the border where the positive value of Mexico is not as intuitive — work as hard as they can to bring the facts to the broader public.”

Top exporting to Mexico

Larry I. Rubin is president of the American Society in Mexico, which represents U.S. interests in Mexico. He's one of several candidates being vetted by Trump’s team as a possible new U.S. ambassador to Mexico. During the presidential campaign, Rubin took groups of Mexican business leaders to U.S. regions, including the Midwest, to narrow the gap of understanding.

Rubin estimates more than 1 million Americans live in Mexico, a number that fluctuates seasonally. More than 35 million Americans trace their roots back to Mexico.

“Texas is used to its huge Latino population, and its integration with Mexico, but that kind of assimilation, integration is ongoing throughout both countries,” said Rubin, also leader of the Republican Party in Mexico and a dual citizen whose father is from Cleveland, Ohio. “We need to work closely with Mexico to secure the entire region and a wall is one way to do that, but it’s not the most effective way to deter terrorism.

"Broader knowledge and deeper understanding about the U.S.-Mexico relationship needs to happen on both sides of the border," he said. "Neither side understands each other fully. We all say we do, but we really don’t.”

Tortilla diplomacy

Business leaders like Javier Velez Bautista, CEO of Mission Foods’s U.S. headquarters in Dallas, understands the urgency. He welcomes “updating” and “reviewing” NAFTA because he said after 22 years of experience with the agreement, there are areas the countries can agree on that need to be improved.

Yet, interrupting the economic integration between both countries may prove disastrous for both sides, he cautioned.

Take tortillas, for example. Nationwide, on a daily basis, Mission produces some 100 million tortillas in its 21 U.S. plants. In Dallas alone, Mission, a unit of Monterey-based Gruma S.A., employs more than 1,000 people and is constructing a new plant in Grand Prairie. Once the plant is fully operational sometime after the fall of 2017, Mission plans to make more than 35 million tortillas per day — more than twice what it was making some 20 years ago.

“The growth is not coming just from Mexicans, because tortillas are everywhere today, shrimp tacos, sushi places, etc.,” said Velez, who’s also a board member of the Mission Foods Texas- Mexico Center at SMU. “The main growth comes among non-Mexicans, which is representative of the economic integration we’re seeing nationwide. That’s something I hope the new administration will see more as an opportunity than a threat.”

Texas-Mexico trade facts

--Texas is the top exporting state in the U.S., and its main export market is Mexico.

--Trade between Texas and Mexico was more than $176.5 billion in 2015, with a surplus of $8 billion for Texas. This represents more than a third of the state's total trade.

--Texas is No. 1 in the U.S. for export-related jobs, with 382,000 jobs in Texas depending on trade with Mexico.

--The Dallas-Fort Worth metro area is the country's eighth-largest exporter. In 2015, Mexico was DF-W's top foreign market with 17 percent of its total goods exports.

--Texas exports to Mexico are highly diverse, with computers and electronics making up over one fourth of exports, followed by transportation equipment at 12 percent and petroleum products at 11 percent.

--Mexican immigrants continue to remit billions of dollars annually to Mexico, adding to economic growth and increasing investments in everything from housing to infrastructure, and adding to the purchasing power of Mexican consumers.

Source: Mission Foods Texas-Mexico Center at SMU, Dallas Federal Reserve

By: Alfredo Corchado

Mexico Manufacturing Industry News

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