Pena Nieto’s visit explores new possibilities for U.S.-Mexico relationship

On Tuesday, Mexico’s president-elect, Enrique Peña Nieto,  met with President Obama on Tuesday in an attempt to shift relations with the United States toward improving the economy and loosening up trade. Mr. Peña Nieto, who takes office on Saturday, discussed a range of issues with Mr. Obama, including negotiations on Mexico’s role in the Trans-Pacific Partnership, a trade agreement being worked out among Asian and Western Hemisphere nations.

Mr. Peña Nieto’s advisers are careful to say that they will continue to work closely with the United States on fighting drugs and organized crime, and he has promised Mexicans that he will reduce drug violence.

But Mr. Peña Nieto, who visits Canada on Wednesday, has made it clear that Mexico’s poor image abroad has slowed its growth. His team plans a strong push to “modernize” trade deals, speed up or add new crossings at the border for commerce, court foreign investment to take advantage of vast, newly discovered shale gas fields near the United States border and generate more quality jobs like the ones here in Querétaro.

“In the next years, the great challenge is to succeed in making these kinds of examples multiply very quickly,” Mr. Peña Nieto said this month.

Mexico fell into a deep recession in 2009 when American demand for Mexican-made imports collapsed. But the recovery under President Felipe Calderón has been notable, with growth expected to reach almost 4 percent this year, roughly twice that of the United States.

While Brazil is often thought of as Latin America’s economic marvel, Mexico’s economy outpaced Brazil’s last year and is expected to do so again this year. Business that had fled Mexico in favor of China has started to return, as the wage gap narrows and transportation and other costs rise. Auto manufacturing, for instance, is surging, with several new plants.

The Obama administration is not expected to let up on its security concerns — almost all of the administration members greeting Mr. Peña Nieto were from the security and foreign policy teams — but economic changes have already altered the relationship between the two nations in some concrete ways. Better opportunities for Mexicans at home, not just the flagging United States economy and stricter enforcement at the border, contributed to a significant slowdown in illegal immigration north in recent years.

A senior Obama administration official said Mr. Peña Nieto’s team made it clear from the start of talks after the July election that it would emphasize economic progress. But, the official said, “there will also clearly be things that we will want to see Mexico do, like accelerate judicial reforms, like being as open and as forward-leaning as possible on reducing human rights abuses when they occur, like ensuring that they do as much as they say they are going to do on corruption issues.”

Still, analysts suggested that Mexico’s president-elect was wise to play up a safer theme. “The way to change the narrative is not to say, ‘Security is not as bad as it seems,’ ” said Christopher Wilson, a scholar at the Mexico Institute of the Woodrow Wilson International Center in Washington. “The way to change the narrative is to talk about other things that are going well, and the economy is a good story now.”

Still, Mexico is far from realizing the middle-class society envisioned nearly two decades ago when it signed the North American Free Trade Agreement with the United States and Canada. A recent World Bank report on the expanding middle class in Latin America noted that although an additional 17 percent of the Mexican population had entered the middle class since 2000, class mobility was still low. Almost 30 percent of Mexican workers toil in the informal economy, without any benefits or protection, for employers who pay no taxes.

Mr. Peña Nieto insists that he wants to push forward with a number of long-stalled economic measures — several blocked in recent years by his own party, the Institutional Revolutionary Party — that experts say choke Mexico’s productivity. He has promised to rewrite the tax laws, open the state-owned oil sector to private investment and rein in Mexico’s powerful monopolies.

His party, moreover, agreed to sweeping changes to the labor code this month that analysts say could pave the way for formalizing thousands of jobs. “With structural reforms we can do much more; the growth rate could go up by several percentage points,” said Gabriela Hernández, the president and chief executive of General Electric Mexico, which is building a campus in Querétaro that will eventually house 1,800 engineers.

This entry was posted in 2012, Border Bulletin, Economic Story, The Intermestic Story. Bookmark the permalink.

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