Assumptions

Items

• Assumption 1: North American free trade is a good thing

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  The two countries share a common border of 2,000 miles (about 3,200km). During the last century economic relations between Mexico and the US have become progressively closer. The border region (made up of ten US and Mexican states) now has a population of nearly 100m: in GDP terms alone it can be considered to be the world’s fourth-largest economy. Two-way trade is running at around US$1.4bn a day. Legal daily border crossings run into the hundreds of thousands. There are over 12m Mexicans living in the United States, and one million US citizens living in Mexico. Over 20m US citizens visit Mexico every year as tourists. The US is Mexico’s largest trading partner, far outstripping all other contenders. Mexico is the United States’ second-largest export market (after Canada) and it third-largest trading partner (after Canada and China). The accumulated value of investment in Mexico by US companies is US$101bn, while Mexican companies have around US$17.6bn invested in the US. Mexicans living in the US send home over US$20bn each year in remittances to friends and family.

  The growth of this dense web of economic ties between the two countries has gone hand-in-hand with the belief that in an increasingly global economy, an open trading relationship between Mexico and the US is mutually beneficial, and helps both countries become more competitive. That view was formalised in the 1994 North American Free Trade Agreement (NAFTA), which created a free trade zone between Canada, the US, and Mexico. Implicit in NAFTA is the belief that reducing obstacles to trade is ultimately beneficial to all parties, even those that might suffer some short-term losses or imbalances in the process.

  The precise economic impact of NAFTA over the last two decades is still open to debate. But the pre-Trump consensus view was that it has helped both economies. Even NAFTA’s most ardent supporters accepted that there were imbalances. Many US companies took advantage of more competitive wage rates in Mexico to set up production plants there: this helped them become more profitable, but it also limited the growth of manufacturing employment in the US. As part of the ‘near shoring’ phenomenon, many moved production operations, previously based in Asia, back to Mexico to take advantage of both competitive wage costs (the cost of Chinese labour had grown to outstrip that of Mexican labour) and lower logistics costs. Mexico’s economy can be segmented into three areas: first, the undeveloped and poor south; second, the sluggishly growing domestic-focused market around the centre of the country; and third, the much-more dynamic north, closely integrated into the US and global economies. For Mexican policy-makers that dynamic north, closely tied into NAFTA and the US business cycle, was a core driver for the rest of the economy.

• Assumption 2: Undocumented migration poses a problem; ‘gradualist’ solutions are best

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  Mexicans have been migrating north to the United States for more than half a century. US labour shortages during the Second World War led to the launch of the Bracero programme in 1942 allowing Mexican farm labourers to work in the US. Under this and other legislation Mexicans were able to work and live in the US for extended periods, employed not only in agriculture but also in manufacturing and the services sector. They benefitted from consistently strong labour demand in a growing US economy. Given the big differential in wage rates, over a number of decades many hundreds of thousands of Mexicans moved to the US, both legally and illegally. A relatively porous border helped illegal migration. The number of Mexicans arriving in the US every year remained high for around four decades, but has recently stabilised.

  In 2014 there were around 11.7m Mexican immigrants living in the United States, representing the largest immigrant group in the country – they accounted for 28% of the 42.4m foreign-born population. The Mexican diaspora – defined as those who were either born in Mexico or, while being born in the US reported Mexican ancestry, was estimated to be over three times larger, at around 35.4m in 2010-2014, according to US Census Bureau data. However, the size of the Mexican-born population group inside the US is beginning to level off. In the five years to 2005 the number of Mexican immigrants in the country expanded by 2m, but in the following five years, to 2010, growth was only 200,000. Net inward Mexican migration into the US has actually turned negative – more Mexicans have left than arrived in recent years. This important change is attributed to a number of factors, including lower US labour demand following the 2000-2009 economic crisis, tougher border enforcement, the ageing of the Mexican population (meaning there are relatively fewer young men, who are typically the most likely to emigrate) and rising living standards within Mexico itself.

  Mexicans still form the largest group of unauthorised immigrants in the country, numbering around 6.2m in 2013. Mexicans without green cards were the largest group in the country illegally, representing an estimated 56% of those living in the US without proper papers. What to do about these illegal immigrants has been a key issue facing successive US governments, influencing their relations with Mexico. Broadly speaking, all governments in the pre-Trump era followed twin-track policies combining some deportations of people without green cards with gradualist proposals such as partial amnesties to allow some of the undocumented workers to acquire residence rights. Implicitly or explicitly there was a recognition that even undocumented workers were providing some of the labour needed by US business.

  President Barrack Obama (2009-2017) made various attempts to reform immigration policy, with mixed results. In 2012 he introduced the Deferred Action for Childhood Arrivals (DACA) initiative that protected the children of illegal immigrants from deportation. He sought to target adult deportation efforts on illegal immigrants charged with or convicted of serious crimes. There were in fact record-high deportation numbers (more than 2.7m in 2009-2016; the figure refers to all illegal immigrants, not just those of Mexican nationality). The Obama administration also faced a major shift in immigration flows from Latin America, with Central American refugees, rather than Mexicans, becoming the largest group of new arrivals. Obama did propose comprehensive immigration reform, that would have offered “a path to citizenship” for 11m undocumented immigrants as long as they had entered the country before December 2011 and had no criminal convictions. The bill was, however, rejected by the Republican-dominated House of Representatives.

• Assumption 3: There are shared responsibilities in the struggle against drug-trafficking and organised crime

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  Drug trafficking from Mexico into the United States has been a major issue between the two countries since the 1970s. It has increasingly been recognised that the cross-border relationship between drugs and organised crime is complex and interrelated. Mexico is a major producer or shipper of a range of drugs including marijuana, cocaine, heroin and methamphetamines. The business is run by powerful criminal cartels. It is estimated that as part of their illegal operations the cartels move between US$19bn and US$30bn a year. Since 2006, stepped-up efforts to combat these cartels using the Mexican armed forces have led to violent clashes in which over 150,000 people have been killed. The US is involved at various different levels. Some argue that Mexican drug supply has arisen almost entirely because of US drugs demand. The US is the world’s largest single consumer market for illicit drugs. US arms traders also provide much of the weaponry used by the Mexican drug cartels. And the Washington government remains deeply concerned over the security implications of the activities of the Mexico-based cartels, and the possibility that their illicit businesses may be used as cover by political or terrorist organisations seeking to attack the United States.

  The drugs issue has once more gained political attention because of a growing heroin and opioids crisis in the United States. Heroin produced in Mexico is increasingly being laced with fentanyl, a powerful synthetic drug mainly manufactured in China. This has led to a situation where the human cost of drug production and consumption is visibly impacting both societies. In Mexico that cost has typically been reflected in a very high homicide rate, caused by armed clashes between the security forces and the drug cartels, and between the cartels themselves as they fight for control of drug smuggling routes. In the United States, in contrast, the human cost is reflected in high fatality rates caused by drug overdoses. Recent data suggests that the scale of these two problems may be comparable. Mexico’s homicide rate in 2016 was 18.7 per 100,000 members of the population. In 2015 the rate of death from opioids in the United States was over 10 per 100,000.

• Assumption 4: Bilateral relations should be conducted in an atmosphere of mutual respect

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  Mexico and the US have a long political and diplomatic history including notable moments of collaboration, but also some of outright conflict. Some Mexican nationalists argue that throughout its history the country has suffered at the hands of US imperialism. In 1845 the US annexed Texas, which had been considered part of Mexico; in the subsequent Mexican-American war (1846-1848) Mexico lost a large swathe of territory including present-day California and New Mexico. The Mexican revolution in the early part of the 20^th century rejected both capitalism and foreign intervention. US oil companies were nationalised in the 1930s. However, successive Mexican governments stopped short of full-scale nationalisation and state control: over the years the country has maintained a relatively strong private sector, and one which has grown in significance since the country joined NAFTA. There has nevertheless been an ongoing contrast between the economic power and the high living standards enjoyed in the US on the one hand and the comparatively less developed Mexican economy on the other, although the gap between the two has narrowed somewhat. The US remains the world’s largest single economy, while Mexico is currently ranked 14^th.

  What all this means is that although successive Mexican governments have sought and enjoyed close relations with the US, they remain highly sensitive to the tone and language used in bilateral diplomacy, and to the symbols and rituals of government-to-government interactions. Any behaviour that is seen as being arrogant, disrespectful, or an inappropriate intervention in the country’s sovereign affairs has a very negative impact, not least because it places the Mexican government in an embarrassing position in the eyes of its own domestic public opinion. This requirement for mutually respectful diplomacy has not always been met, but in the pre-Trump era it had become a shared assumption of both the Mexican and US political elites.