• Monthly
  • $25
  • $50
  • $100
  • $other
  • use PayPal

ONE WEEK TO DOUBLE YOUR DONATION!

A generous CounterPuncher has offered a $25,000 matching grant. So for this week only, whatever you can donate will be doubled up to $25,000! If you have the means, please donate! If you already have done so, thank you for your support. All contributions are tax-deductible.
FacebookTwitterRedditEmail

AMLO Should Threaten to Leave NAFTA

Photo by Israel.rosas83 | CC BY 2.0

Now that the leftwing populist – Andrés Manuel López Obrador (referred to also as AMLO, his initials) – has become Mexico’s next President, his concrete policy proposals will begin to take shape.  On the campaign trail, he was frequently criticized for providing few specifics on a variety of his promises, including how to combat corruption, improve public safety, and address economic inequality.  One idea that Obrador should seriously contemplate is to threaten to leave NAFTA. This threat, which Obrador can credibly make given certain features of the Mexican economy, will potentially improve the value of Mexico’s exports.

Such an abrasive, even confrontational move, is unlike the more conciliatory tone that Obrador is currently striking.  For instance, his victory speech on July 1stwas restrained, calling for stability and harmony until his government takes power on December 1st.  When asked about his approach to the United States in general, Obrador has said he hopes to build a relationship based on mutual respect and cooperation. Threats of any sort seem far from the style of governance that AMLO would conduct.

Yet, as Obrador tries to make good on his promise to improve the Mexican economy, it’s hard to believe that the United States will simply help Mexico grow.  It may take coercion and threats to get better terms in trade deals, with the most critical for Mexico being NAFTA.  Furthermore, there is a sound economic rationale to threaten leaving NAFTA, one that Obrador can appeal to if the US would “call his bluff.”  Basically, Mexico can turn its exports away from the United States and to a variety of other countries.

Mexico is a middle-income country, which means that most of its economy is devoted to producing industrialized goods and services.  Yes, Mexico exports various kinds of agricultural goods to the United States. According to the United States Trade Representative, in 2017, Mexican fruits and vegetables amounted to over US $10 billion in export sales. Far outpacing agriculture, however, are cars, machinery, and electronics.  Respectively, each of these areas is responsible for US $84, US $62, and US $54 billion of sales. Mexico is where many Ford and General Motors cars are made, as well as where  Dell, Hewlett-Packard, and Lenovo manufacture a variety of their electrical inputs.

This is part of the reason why trade deals with China have never really materialized between the two countries.  Last year, as the Trump administration threatened to pull the United States from NAFTA, there was some talk of Mexico forging deals with China. The problem is Mexico and China are competitors for the consumer markets of high income countries, such as the United States.

This brings us Mexico’s place in NAFTA.  Economically, it is in Mexico’s self-interest to seek out new, additional export markets.  Currently, about 80% of the country’s exports are destined for the United States. Meanwhile, some economists, such as Paul Krugman, have voiced concern over a coming US recession. The question is not if an economic downturn will happen, but when and to what effect.  Central to Obrador’s promises are strengthening agriculture and manufacturing, both of which would benefit from playing the field and searching out better deals.  Basically, Mexico’s economy would suffer if its exports decline as consumer demand in the US shrinks.  Domestically, diversifying export markets to countries other than the United States makes sense for Mexico.

There also has been some real movement on changing the country’s export markets. Mexico inked a trade deal with the European Union in April of this year, focusing on pharmaceuticals, machinery, and transport equipment.  In early June, Mexican and Japanese officials met to negotiate terms for a trade deal that could potentially benefit the former country’s automobile manufacturers. In effect, Mexico is moving away from General Motors, and more towards Nissan, Mitsubishi, and Toyota.  Furthermore, Mexico has been in discussions with the South American trade bloc– Mercosur (composed of Brazil, Argentina, Uruguay, and Paraguay) – concerning agricultural exports. Michoacan’s avocados, instead of going north, may now go south, to Brazil or Argentina.

Perhaps Mexico will stay in NAFTA, maybe it won’t. If Obrador threatens to leave the agreement, then he could negotiate better terms.  Other deals, with Europe and Japan, are also in development, just in case negotiations fail or Mexico does not like the terms.  For too long, Mexico has been made subordinate to the United States.  Donald Trump has simply taken such a position to extremes, evoking racist stereotypes to depict Mexican immigrants and believing that he can boss the country into funding his border wall project.  Obrador has a chance to strongly take a stand against the United States, not only for political gain, but also for the economic well-being of Mexico.

More articles by:

Anthony Pahnke is a Professor of International Relations at San Francisco State University. His research covers development policy and social movements in Latin America. He can be contacted at anthonypahnke@sfsu.edu

bernie-the-sandernistas-cover-344x550
Weekend Edition
October 18, 2019
Friday - Sunday
M. G. Piety
“Grim Positivism” vs. Truthiness in Biography
John Kendall Hawkins
Journey to the Unknown Interior of (You)
Christopher Fons – Conor McMullen
The Centrism of Elizabeth Warren
Rebecca Gordon
Extorting Ukraine is Bad Enough But Trump Has Done Much Worse
Kathleen Wallace
Trump Can’t Survive Where the Bats and Moonlight Laugh
Clark T. Scott
Cross-eyed, Fanged and Horned
Eileen Appelbaum
The PR Campaign to Hide the Real Cause of those Sky-High Surprise Medical Bills
Olivia Alperstein
Nuclear Weapons are an Existential Threat
Jonah Raskin
Here’s Hoping
Colin Todhunter
Asia-Pacific Trade Deal: Trading Away Indian Agriculture?
Sarah Anderson
Where is “Line Worker Barbie”?
Brian Cloughley
Yearning to Breathe Free
Jill Richardson
Why are LGBTQ Rights Even a Debate?
Jesse Jackson
What I Learn While Having Lunch at Cook County Jail
Kathy Kelly
Death, Misery and Bloodshed in Yemen
Maximilian Werner
Leadership Lacking for Wolf Protection
Arshad Khan
The Turkish Gambit
Kollibri terre Sonnenblume
Rare Wildflower vs. Mining Company
Dianne Woodward
Race Against Time (and For Palestinians)
Norman Ball
Wall Street Sees the Light of Domestic Reindustrialization
Ramzy Baroud
The Last Lifeline: The Real Reason Behind Abbas’ Call for Elections
Binoy Kampmark
African Swine Fever Does Its Worst
Nicky Reid
Screwing Over the Kurds: An All-American Pastime
Louis Proyect
“Our Boys”: a Brutally Honest Film About the Consequences of the Occupation
Cesar Chelala
Donald Trump vs. William Shakespeare
Susan Block
How “Hustlers” Hustles Us
Ron Jacobs
Calling the Kettle White: Ishmael Reed Unbound
Stephen Cooper
Scientist vs. Cooper: The Interview, Round 3 
Susan Block
How “Hustlers” Hustles Us
Charles R. Larson
Review: Elif Shafak’s “10 Minutes 38 Seconds in This Strange World”
October 17, 2019
Steve Early
The Irishman Cometh: Teamster History Hits the Big Screen (Again)
Jonathan Cook
Israel Prepares to Turn Bedouin Citizens into Refugees in Their Own Country
Stan Cox
Healing the Rift Between Political Reality and Ecological Reality
Jeff Klein
Syria, the Kurds, Turkey and the U.S.: Why Progressives Should Not Support a New Imperial Partition in the Middle East
Charles Pierson
Bret Stephens’ American Fantasy
George Ochenski
The Governor, the Mining Company and the Future of a Montana Wilderness
Ted Rall
The First Thing We Do, Let’s Fire All the Cops
Jon Rynn
Saving the Green New Deal
Ajamu Baraka
Syria: Exposing Western Radical Collaboration with Imperialism
Binoy Kampmark
A Coalition of Support: Parliamentarians for Julian Assange
Thomas Knapp
The Down Side of Impeachment
Harvey Wasserman
What Really Happened to American Socialism?
Tom Engelhardt
American Brexit
October 16, 2019
Patrick Cockburn
How Turkey’s Invasion of Syria Backfired on Erdogan
Chitrangada Choudhury – Aniket Aga
How Cotton Became a Headache in the Age of Climate Chaos
FacebookTwitterRedditEmail