Mexico’s Relationship with the U.S.

Trade  70% of Mexico’s trade is with the U.S. It’s the U.S.’s 2 nd largest trading partner However, only 14% of U.S. goods go to Mexico, and only 11% of U.S. imports are from Mexico  U.S.-based MNCs invest in Mexico petrochemicals pharmaceuticals food processing machinery footwear  55% of Mexico’s foreign investment is from the U.S.  Mexico is the 2 nd largest exporter of oil to the U.S. (sending over 80% of its exported petroleum here)

Historically speaking  7 states were once part of Mexico (California, Arizona, New Mexico, Texas, Nevada, Utah, and Colorado)  U.S. has “interfered” in Mexico on a number of occasions Texas’ independence (1835) Mexican-American War ( ) Overthrow of Francisco Madero (1913) U.S. Navy occupation of Vera Cruz (1914)  These events have soured Mexicans’ views of the U.S.

NAFTA  Signed in 1993 by Carlos Salinas  Benefited U.S. firms looking for cheap labor and Asian and European firms looking to access the U.S. market  Has increased Mexico’s GDP and trade between Mexico, U.S., and Canada  Mexico has diversified its exports, becoming less dependent on oil (which makes up only 7% of total exports)  It has increased illegal immigration Unlike the EU, labor is not allowed to move freely between the countries Also, subsidies are not given to workers in the poorest countries  Jobs for manufacturers have increased, but cheaper agricultural imports have put farmers out of work.  Mexico has become so dependent on the U.S., that economic downturn here will mean economic downturn in Mexico

Immigration  Estimated $24 billion sent back to Mexico by laborers working in U.S. in 2006  Emigration is called “Mexico’s safety valve.” vents pressure associated with population growth outpacing job growth provides the 3 rd highest source of foreign income (behind oil and tourism)  Vicente Fox is the first president to admit Mexico’s economy depends heavily on labor and monetary flows across the border.  Those who leave Mexico are “hardworking and ambitious and have a higher level of education.”  This means the qualified workers that Mexico needs are leaving

Drugs  Many people are angry over the increase in corruption brought about by this  Citizens fear government run by “narco-politicians”  Fox’s hesitation to rid the government and police of this corruption created public outcry  The big question is, “Who’s to blame?” U.S. government for poor anti-drug policies Mexican government for not working harder to stop the trade U.S. people for consuming the drugs Mexican people for selling the drugs

Leftovers  Economic Liberation-less government regulation of economy and greater participation of private parties. (free market) Ex. Approval of the North American Free Trade Agreement (NAFTA). Closure of state-owned enterprises (SOEs) (former president Salinas). Privatization of banks. Cutting of subsidies to farms. Parastatals (e.g., the state farms, ejidos) sold off by the state. Creation of special laws for maquiladoras (e.g., tax incentives). Joining the World Trade Organization (WTO). Privatization (with mention of specific sectors, e.g., telecom, airlines). Reduction of the power of the oil workers’ union. Replacement of import-substitution with structural-adjustment policies.  Political Liberation-increasing citizens rights and liberties

Leftovers  Political Liberation-increasing citizens rights and liberties Ex. Voter ID cards. Priests allowed to vote. The Federal Electoral Institute was strengthened in Addition of the system of proportional representation (PR) to create mixed legislative elections. End of the rule of impunity (arrest of Raúl Salinas). Election reforms in the late 1990s to reduce corruption. The inclusion of women through party quotas.

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