Business and political leaders from the U.S. and Mexico gathered Friday to promote greater trade at a time when actions by both governments have rattled investors, expressing optimism despite times of uncertainty and tensions over the border and illegal immigration.
Investment in Mexico has been cool pending passage of the new U.S.-Mexico-Canada trade agreement that is meant to update NAFTA, and due to other concerns for the global economy, and attendees saw ratification as a solution to that.
Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, stressed the valuable U.S.-Mexico relationship, noting that every day the countries do more than $1.7 billion in trade and some 500,000 people cross their shared border legally for work, school, or tourism.
“That’s why we have fought vigorously for the successful completion of the USMCA,” Donohue said, “and we’re going to keep up that fight until the deal is ratified and implemented.” He also called for Washington to lift steel and aluminum tariffs against Mexico and Canada before Congress considers the trade deal.
In remarks to assembled executives and political leaders, Donohue issued a pointed rejection of President Donald Trump’s recent threats to close the United States’ southern border and warnings to immigrants not to come because “our country is full.”
“America has the lowest level of unemployment in 65 years. Simply stated, we’re out of people,” Donohue said, adding that the business community was leading efforts to expand the U.S. labor pool and toward passage of “an effective immigration bill as soon as possible.”
That message resonated well with the Mexican audience.
“We just heard that the United States has money and lacks people. We lack money and have people to spare,” said Carlos Salazar Lomelín, president of Mexico’s Coordinating Business Council. “There’s no … more clear reason to be allies.”
Donohue’s and Salazar’s organizations signed a cooperation agreement at the end of the meeting. Also Friday, Mexico’s lower house of Congress approved a labor reform aimed at ensuring workers can freely vote for their union representation and contracts, a change needed to win approval of the USMCA.
While Trump recently walked back his threat to seal the country’s southern frontier, redeployments of border agents to handle a surge of migrant families led to long wait times at points of entry, with drivers sleeping in their trucks to keep their place in line.
Possible disruption of the cross-border industrial supply chain worried some at the gathering.
“For purposes of enforcement (the administration) is drawing down on what is needed to move trading, to move people and goods legally and efficiently across our points of entry,” said Antonio Garza, former U.S. ambassador to Mexico.
Laurence Fink, chairman and CEO of investment management firm BlackRock, spoke of ample investment opportunities in Mexico and called for the two neighbors to work together.
“I am deeply saddened by the rancor and the tension that has grown between our countries. …. Antagonism between our nations dehumanizes and demands, it poisons the well of economic opportunity and dims the vision that businesses, workers and investors have about what is truly possible.
However Mexican President Andrés Manuel López Obrador has rattled some nerves by canceling a multibillion-dollar airport project for the capital that was already about a third built shortly after taking office Dec. 1.
Representatives were promoting his signature infrastructure project Friday: an ambitious “Maya Train” that would link cities, beach resorts and archaeological ruins in the country’s southeast. During a dinner gala the previous night at a lavish hacienda north of Merida, Mexican officials assured the guayabera-clad executives that their investments would be safe.
Still, Mexico has work to do to woo foreign capital. Mexican political and economic analyst Macario Schettino wrote recently for the newspaper El Financiero that unless trends change, investment could fall 5% in the first trimester and possibly remain at similar levels throughout 2019.
López Obrador said Mexico remains committed to things such as strengthening rule of law, policies favoring investment, lowering taxes and raising wages without harming business, and respecting contracts. He also promised to work with Central American nations that are the source of much northward migration to ensure that leaving one’s country “is optional, not forced.”
U.S. Deputy Energy Secretary Dan Brouillette said after meeting with Mexican Energy Secretary Rocío Nahle and Chief of Staff Alfonso Romo that there is no desire to roll back reforms that opened the energy sector to private companies five years ago under López Obrador’s predecessor, then-President Enrique Peña Nieto — only an intention to review and evaluate their performance.
“I didn’t get any indication that they were looking to undo those reforms or somehow upend that effort. …. What we heard from Mr. Romo and what we heard from Minister Nahle is that they understand the sanctity of contracts, and that’s very important for U.S. companies,” Brouillette said.
Often historically tricky, U.S.-Mexico relations became particularly fraught following the election of Trump, who repeatedly hammered the United States’ southern neighbor on trade, the border and migration.
“I congratulate the new presidential administration in Mexico for its strong emphasis on improving the economic development of this region in particular,” U.S. Commerce Secretary Wilbur Ross said at the gala. “We also thank them for assisting us as we confront the crisis at our southern border.”
Mexico is the United States’ second-largest export market and its third-biggest trading partner, with more than $678 billion in goods and services changing hands last year, according to Ross. U.S. foreign direct investment in Mexico was over $109 billion in 2017, he added, and Mexican investment in the United States has reached more than $35 billion.
As the 2020 presidential campaign ramps up, candidate Trump is seen as likely to try to keep illegal immigration front-and-center as meat for his base.
“When he is competing electorally or out there on the stump, he goes to a dark place, and Mexico is often in that place,” said Shannon O’Neil, senior fellow for Latin American studies at the Council on Foreign Relations.
“Whether it’s immigration or drugs or other security threats or Mexico’s effect on the economy as he perceives it, I think that will be the mainstay of his rhetoric,” said O’Neil, who was not at the Merida gathering.
Before López Obrador took office in December, many had been concerned about possible clashes between Trump and the leftist populist who won the presidency in his third try. But so far, ties between Washington and Mexico City seem to have generally held up well, with the two administrations working closely on a number of bilateral issues and López Obrador officials reluctant to react to critical tweets from Trump.
Mexican officials said in Merida that from the earliest days, López Obrador’s administration has looked to private sector leaders in both countries, executives with deep and longstanding cross-border ties, for cues on navigating what they expected to be a trying relationship.
“I should thank President Donald Trump for being open to dealing with our commercial, migratory and security issues with respect and in a way that I consider most effective,” López Obrador said, “through permanent dialogue and with cooperation for development.”