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Keeping an eye on Mexico

If anything sums up the dysfunction in U.S. politics, it probably is the battle for Congress to pass legislation to authorize Trade Promotion Authority (TPA). President Obama is at odds with his core group of Democratic supporters on this issue, and the president’s most vocal critics during his tenure in Washington, D.C., are at his side.

For those not following this Beltway brouhaha, TPA provides the executive branch with the ability to negotiate trade agreements and then have Congress to vote on them in a simple yea or nay vote. It doesn’t subject the trade agreement negotiations to the typical sausage-making that is the political process, where any elected Congressional representative can tag an amendment onto a piece of legislation if enough support exists. At stake is the Trans-Pacific Partnership (TPP), a trade deal that has been negotiated among the U.S. and 11 other Pacific Rim countries (Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam). The Office of the U.S. Trade Representative reports that the region represents about 793 million consumers and accounts for about 39 percent of the world’s gross domestic product.

And the TPP doesn’t include China. That is a pretty big deal as the world’s largest manufacturing economy is trying to expand its role on the global economic stage. It wants to be the main economic power in not only Asia, but the world.

But back in the U.S., the battle rages over this issue. The far right is concerned about an inability to address potential changes in the TPP once TPA is approved, and the far left sees this as another assault on the U.S. manufacturing base, a final struggle to protect what the North America Free Trade Agreement didn’t destroy when it went into effect in 1994.

Whatever the result of the vote, the U.S. economy will survive. It still will be the consumer market of interest from the world’s goods sellers. But don’t think that the rest of the world is going to sit by and be OK with that current state of affairs.

We can ignore China in this conversation. The focus should be on Mexico.

Mexico has signed trade agreements with more than 40 countries. What about the United States? It has managed to sign agreements with only 20 countries.

Of course, Mexico’s mission to open up its economy to more trading partners began with NAFTA in 1994. Since then, similar deals have followed with Costa Rica, Nicaragua, and Chile. In 2000, a free trade agreement was signed with the European Union (EU), which made Mexico the first Latin American country to have preferential access to the EU market. (In 2001, Mexico signed an agreement with the European Free Trade Association, which was made up of Iceland, Liechtenstein, Norway, and Switzerland. It now has full access to the European market.)

You might have noticed the number of international automakers setting up shop in Mexico over the past several years. Toyota, Ford, BMW, and Audi have that announced plans to set up plants in Mexico, joining several other facilities down there. These companies are bypassing the U.S. Southeast, where several automakers had set up shop over the years. They have found a new home.

And don’t think that those Mexican trade agreements don’t play a part. These companies are using the Mexican market as a platform from which to trade with the world, not just the U.S.

It’s something to keep in mind as the debate continues on TPA and TPP.

About the Author
The Fabricator

Dan Davis

Editor-in-Chief

2135 Point Blvd.

Elgin, IL 60123

815-227-8281

Dan Davis is editor-in-chief of The Fabricator, the industry's most widely circulated metal fabricating magazine, and its sister publications, The Tube & Pipe Journal and The Welder. He has been with the publications since April 2002.