Without minimizing the ongoing security concerns south of the United States border, President Barack Obama and Mexico's President-elect Enrique Peña Nieto have an opportunity today, as they sit down together for the first time, to enhance American public understanding of what is likely to become the most important economic relationship for the U.S.
Ask the average U.S. citizen about Mexico, and the issues that come to mind most prominently are drug violence, corruption and illegal immigration, according to a recent survey by strategic consultanting groups Vianovo and GSD&M.
The war on and between the Mexican drug cartels that supply the lucrative illegal U.S. drug market has battered lives as well as Mexico's reputation. In 2009, the Pentagon, noting the rise in gang-related violence, warned that Mexico could become a "failed state." But that overly dire prediction never materialized and the drug-related violence appears to be rapidly localizing and subsiding.
Even as gruesome violence was capturing headlines, decent economic fundamentals were helping Mexico roar back from the financial crisis of the last decade. Mexico's banking sector is, by most accounts, stronger than that of the U.S. Mexico's energy sector is poised for growth. And Mexico's 44 free-trade agreements — more than any other nation — combined with convenient proximity and access to the U.S. consumer market, make it very attractive to global manufacturers.
A report in this week's Economist notes that "the joint effect of pay, logistics and currency fluctuations ... made Mexico the world's cheapest place to manufacture goods destined for the United States, undercutting China as well as countries such as India and Vietnam."
The North American Free Trade Agreement that linked Canada, the United States and Mexico economically was signed nearly 20 years ago. But in many respects, the commercial integration of North America's two most populous countries is just beginning.
Accordingly, it makes sense for Washington to spend considerably more attention than it has to maturing its cross-border economic relations. Washington could, for example, do more to encourage competitiveness in monopolistic Mexican sectors such as its energy and telecommunications.
But all of these vital commercial and trading opportunities ultimately depend upon trust, and trust rests upon safety and security to persons, property and agreements. On this side of the border, the U.S. federal government could increase trust by helping clarify the legal status of the millions of Mexicans who have migrated to the states in the last three decades. But on the other side of the border, Peña Nieto must increase trust by continuing to show the utmost resolve in battling the drug cartels and the corruption that have eroded confidence in sovereignty and the rule of law.
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