Deepen NAFTA to Strengthen Our Economies

"U.S. economic recovery and measures to ensure stability are paramount to Mexico's well being."

I want to congratulate the American people for an election campaign that was not only historic but reassuring to the rest of the world. The primary season was particularly reassuring: the fact that two of the candidates for the Democratic Party nomination were a woman and a man of Mexican-American descent, with the eventual winner an African-American man, speaks volumes about the vibrancy of the American melting pot and the inclusiveness of U.S. society.

The campaign delivered a clear message from the American people to their candidates and parties: “We want change!” Record numbers of Americans participated in the electoral process, no doubt in part because of its historic nature, but also because the voters wanted to express their desires for a strong economy and for improvements in the education, health care, and energy sectors. The campaign debates over the war in Iraq, free trade and immigration also underlined voter concerns about the global position of the United States.

We in Mexico were heartened by the quality of the candidates for the two major parties. In both men we saw a firm commitment to re-establish dialogue and strengthen relations not only with our country but with Latin America and the world.

Frankly, we must acknowledge that as the world’s greatest economic and military power, the United States is the indispensable nation.

My first recommendation to the President-elect is to recognize that it is essential for America to exercise its power under the rule of law. Not only Latin America but the world needs an America that plays the role of leader, ensures that international law prevails and uses international institutions to promote cooperation and peace.

The anti-American attitudes expressed by some segments of the region’s population and the inflammatory rhetoric that is popular among some leaders in the hemisphere troubles the vast majority of Latin Americans. Through dialogue the new president should seek to establish mutual trust. We in Latin America want to trust in his leadership and, in turn, to be trusted by the new administration.

My second recommendation concerns our mutual interest in a strong U.S. economy. The fate of the Mexican economy is closely tied to U.S. economic decisions. The president must keep in mind that U.S. direct investment and trade will make a crucial difference to the future prosperity of the region. As a Mexican businessman, I can state unequivocally that Mexico benefits when the U.S. economy is healthy. U.S. economic recovery and measures to ensure stability are paramount to Mexico's well being.

A third recommendation is to strengthen the North America Free Trade Agreement (NAFTA). That is critical for Mexico and its North American partners of the U.S. and Canada. The damaging rhetoric during the primary campaigns about repealing NAFTA must be left behind—not only by the newly elected president, but by the new U.S. Congress as well. While the main focus of the debate has been on supposed job losses in the U.S., the many substantial benefits of NAFTA in particular and of free trade in general are often ignored. For example, nearly 90 percent of the goods that Mexico imports come from the United States. In seven years following the establishment of NAFTA, those exports have generated more than one million jobs in the U.S. In addition the lowering of tariffs and trade barriers are meant to reduce prices for consumer goods.

One specific measure that would strengthen NAFTA, reduce red tape and improve its impact would be the elimination of the rules-of-origin requirements which stipulates that goods traded in the treaty area must make clear where they have been manufactured. While these rules have a laudable intention, that is, to insure that none of the three partners become a simple pass-through for a nation outside the trade area, their implementation has created more headaches and controversies than true benefits.

Now is the time that we should seek to strengthen our regional ties and cooperation, especially in light of the increasing economic clout of China and India. Together, our combined economies must become more competitive and must generate well paying, high-skilled jobs in all three countries.

Alejandro Bailléres is the Chief Executive Officer of the board of Grupo Nacional Provincial (GNP). He also serves as a member of the Board of Trustees of Instituto Tecnológico Autónomo de Mexico (ITAM).

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