Opportunity for massive US investment is Mexico's to lose – policy experts

Mexico has a golden opportunity to attract investment thanks to the implementation of the USMCA trade agreement, the coming boom in the US economy and the willingness of the new US administration to work with its neighbor, but the chance is Mexico’s to waste, say policy experts.

“There will be an opportunity,” said US diplomat and the president of the US Council on Foreign Relations Richard Haas, speaking at a recent forum on bilateral ties organized by Mexico’s banking association ABM. 

On the one hand, said Haas, you have a new administration in the US under President Joe Biden that “is well disposed” to deepening its relationship with Mexico, particularly on the trade and economic front. 

And on the other, “The US economy is going to grow at a phenomenal rate… the next year or two,” he said. “This was true even before the relief package.” 

Duncan Wood, senior advisor to the Mexico Institute at The Wilson Center, speaking on the panel, expressed concerns, however.

“I fear that Mexico is going to waste this opportunity, an opportunity that’s been brought about by an administration that wants to do business with them, an opportunity that’s brought about by an American economy which is recovering, an opportunity to really move the issue of North America forward,” said Duncan Wood (pictured) on the ABM's Zoom panel.

“This should be Mexico’s time to shine,” said Duncan. “Mexico should be drawing billions and billions and billions of dollars of investment every single year... we’ve overcome an enormous hurdle, which is the updating of Nafta into USMCA.” 

“The United States still has trade conflicts with major countries around the world,” he added, pointing out that Mexico and Canada are the only two countries in the world to have a massively negotiated, ratified and newly implemented free trade agreement with the US. 

Unfortunately, he added, “What I’ve seen over the last two years is that [Mexican President] Andrés Manuel López Obrador is a genius at wasting these kinds of opportunities and, I’m sorry to say, things are going to get a lot more difficult before they get better.” 

The outlook moved Haas to see a parallel with Israeli foreign minister Abba Eban's famous 1973 quote that “the Arabs never miss an opportunity to miss an opportunity.”

Nevertheless, Haas said that having the USMCA framework in place at the start of Biden’s term has been a true gift from the previous administration, a gift that “would be far tougher for this administration to negotiate.”

Haas cited recent discussions on the CPTPP as lacking any clear direction, adding there is no consensus within the Democratic Party on trade. 

Having USMCA in place gives both countries an advantage and common ground to build their relationship. 

It goes to show, he said, “Even though the situation isn’t perfect, there are some possibilities.”

“There is openness on the US side, almost transactional,” said Haas. “We’re open to having greater involvement with Mexico and doing things with them, but only if it works.”

Haas said “A lot of this is a political, almost psychological, challenge or question for people in Mexico, which is: the degree to which you are willing to see the US as a partner… If we’re seen as a threat to Mexican independence and nationalism… Ok, so be it.” 

The US has long had the luxury of being able not to have to focus much of its energy on problems at its own borders, much like Russia and China do today, he added. And as such, it’s in the US’s political and economic interest to have Mexico as a partner. 

“If not, then we’ll simply try to stabilize the relationship and move on… focus elsewhere,” he added.

On the other hand, he said, if Mexico wants more in a relationship, they would find in the US “a very welcoming partner.” 

 “The relationship is really more Mexico’s to define right now,” he underlined.