Mexico’s Relationship with the U.S.

1. Mexico’s Relationship with the U.S.

2. Trade • 70% of Mexico’s trade is with the U.S. • It’s the U.S.’s 2nd 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 2nd largest exporter of oil to the U.S. (sending over 80% of its exported petroleum here)

3. 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 (1846-1848) • Overthrow of Francisco Madero (1913) • U.S. Navy occupation of Vera Cruz (1914) • These events have soured Mexicans’ views of the U.S.

4. 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

5. 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 3rd 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

6. 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

7. 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

8. Leftovers • Political Liberation-increasing citizens rights and liberties • Ex. Voter ID cards. • • Priests allowed to vote. • • The Federal Electoral Institute was strengthened in 2007. • • 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.