Today's challenges working with Mexico

 Today's challenges working with Mexico

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Mexico in 2024 mirrors the Mexico of 1994 more closely than the democratic rise of 2000, with a technocratic presidency, a supermajority, and potential for crony capitalism. In 1994, technocrat Dr. Ernesto Zedillo was elected President of Mexico, a year marked by pivotal events: the enactment of NAFTA, the Zapatista uprising, the assassination of Luis Donaldo Colosio, and the severe financial turmoil known as the "Tequila Crisis," which led to a US bailout.

Today, Mexico sees parallels with its first female president, Claudia Sheinbaum, who brings a PhD and left-leaning views, governing with a divisive party. Sheinbaum's agenda includes depetrolizing the state, greening public finances and energy policy, supporting the global climate agenda, developing state industrial policy, addressing security issues, and renegotiating the USMCA in 2026. She will also navigate judicial reforms proposed by President Andrés Manuel López Obrador. With a technocratic presidency and supermajority, Sheinbaum's public policy agenda may advance quickly but could also provoke economic, social, and political unrest.

In addition, Mexico’s political landscape is notable for the leadership of women in key positions. Ana Lilia Rivera leads the Senate, and Norma Lucía Piña Hernández heads the Supreme Court. This historic alignment presents both opportunities and challenges as these leaders work together to shape the nation's future.

Sheinbaum aims to enhance healthcare, childcare, and wellbeing but must also address the challenges posed by her predecessor's militarized police force, which has increased femicides due to inadequate local enforcement. Additionally, education faces weak institutions and insufficient support for teachers. Unlocking Economic Potential: How a U.S.-Mexico Customs Union Could Benefit the U.S. Economy

The next president of the USA, either Kamala Harris or Donald Trump, should consider initiating a Customs Union between the United States, Mexico, and Canada within her first hundred days in office. This strategic move could significantly transform the US-Mexico dynamics and foster a more cohesive North American regional partnership.

Although the 2026 timeframe offers a valuable chance to reset and revitalize US-Mexico relations, the previous agreement—the United States-Mexico-Canada Agreement (USMCA)—was essentially a revised version of NAFTA, intended to modernize and enhance its predecessor. Despite addressing some concerns, many critics argue that the USMCA merely perpetuated several limitations and shortcomings of NAFTA, resulting in a "watered-down" agreement. This has left unresolved issues and ongoing areas of contention between the two countries.

A Customs Union, which entails removing trade barriers among member countries and establishing a common external tariff, offers numerous benefits for the US economy. By harmonizing trade policies and regulations, the US could strengthen its economic ties with Mexico and Canada, leading to enhanced regional stability and growth. One of the primary advantages of such a union would be the facilitation of trade. The US-Mexico trade relationship is already substantial, with over $650 billion in goods exchanged annually. A Customs Union could streamline cross-border trade by reducing tariffs and simplifying customs procedures. This would lower costs for businesses and consumers alike. For instance, removing trade barriers could boost exports of American goods, which currently face tariffs and logistical challenges. Enhanced trade efficiency would also stimulate economic activity, potentially creating new jobs and boosting wages in key industries.

Additionally, a Customs Union would address complex issues beyond trade. It could incorporate coordinated approaches to migration, labor rights, and environmental regulations. Addressing migration through such a framework would be crucial, given the ongoing challenges at the US-Mexico border. By integrating migration policies, the union could facilitate legal and orderly migration processes, benefiting both economies. Research indicates that immigrants contribute positively to the US economy by filling labor shortages and driving innovation. Coordinated labor policies could further enhance these benefits, ensuring fair treatment and better working conditions across the region.

Environmental policies could also see improvement under a Customs Union. By aligning standards and regulations, the member countries could work together to address climate change and promote sustainable practices. This could lead to shared investments in clean energy technologies and infrastructure, benefiting the environment and creating new economic opportunities.

In terms of security, a Customs Union would offer a platform for enhanced cooperation on border security and narcotrafficking issues. Streamlined procedures and coordinated efforts could improve the efficiency of border operations and strengthen the fight against illegal activities. This collaborative approach would not only enhance security but also facilitate smoother and more reliable trade flows.

The potential for nearshoring—moving production closer to the US—could also be a significant benefit. With increasing global supply chain disruptions, companies are looking to relocate manufacturing closer to home. A Customs Union could make North America a more attractive destination for these investments, benefiting the US economy by boosting local production and reducing reliance on distant supply chains.

The potential economic impact is substantial. For example, under the USMCA, which is less integrated than a Customs Union, the US-Mexico trade relationship has already seen positive results. The agreement has facilitated significant trade and investment flows, demonstrating the potential for even greater benefits with deeper economic integration.

In summary, a Customs Union between the United States, Mexico, and Canada could bring numerous advantages, from enhanced trade and economic growth to improved migration and environmental policies. By considering this move within her first hundred days could reshape the economic landscape, strengthen regional ties, and address pressing issues with a collaborative approach. This strategic initiative could mark a significant step forward in building a more prosperous and integrated North American partnership.