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When the final trade statistics are compiled for the year ending 2008, remember you read these results in San Diego Metropolitan back in June of 1999. By year end 2008, Mexico will be the United States' No. 1 trading partner.
While there is a sector that says "no way," to that scenario, another is in agreement. The no-way sector bases its opinion on emotional and antiquated perceptions. It sees Mexico as too poor to buy much, too corrupt to make advances, too uneducated to learn, and not big-time producers of anything other than cheap labor.
These folks have to wake up, because Mexicans are making serious progress on economic fronts. Consider this:
- In 1998, Mexico's trade with the United States surpassed Japan's, making it the second largest U.S. trading partner.
- In 1998, Mexico's sales to the U.S. were greater than the total of: China's and Singapore's; Germany's and the United Kingdom's; South Korea's, Hong Kong's and Taiwan's; and of all the other countries in Latin America combined.
- In 1998, for each $100 the U.S. spent on imports, $10 went to a product purchased from Mexico.
Before someone races to send a copy of this article to Ross Perot, consider the following:
- In 1998, Mexico purchased from the U.S. more than the total sum of U.S. exports to South Korea, Taiwan, and Hong Kong; more than the United Kingdom, France and Belgium bought and almost double Germany's U.S. purchases.
- In November of 1998 alone, Mexico's U.S. imports of $7 billion were greater than the annual U.S. exports to Argentina ($5.4 billion), Chile ($3.6 billion), Austria ($2.3 billion), Ireland ($5.1 billion), Spain ($5 billion), and Sweden ($3.5 billion).
How can this be? Maybe the comment made to me by a Mexico City taxi driver on a recent trip there explains it best. "Señor," he said, "there is little doubt but that Mexico is the richest country in the world. Other countries and some of our elitists have been sacking its wealth since 500 years ago, and they're still at it."
It is the people, their attitude and ever present sense of humor that is the real treasure and wealth of Mexico. On paper, Mexico should not be the formidable trading partner of the richest country in the world, but it is. Its per capita income doesn’t approach that of countries like Germany, Sweden, Britain, Taiwan, Japan, France and Belgium. Yet it buys and sells more to the U.S. than any of those countries.
On paper, Mexico looks bad. It’s fighting for an end to corruption, for a sustainable democracy, to be rid of drug barons, to control crime, increase wages, lower inflation and interest rates, improve infrastructure, create environmental awareness, bring justice to its indigenous people and to fight poverty afflicting a near-majority of its population. And those are just the internal battles.
Externally the country is fighting the extreme interventionists in both houses of the U.S. Congress, fending off attacks from populist politicians out for an easy vote, observing U.S. labor unions calling for an end to imports (but wanting to maintain exports), coping with human rights abuses of its citizens in other countries, and trying to counteract the persistent ignorance about the country.
Despite all the country's problems, since 1994 Mexicans have managed to attract more than $57 billion in foreign investment, with $21 billion of that coming from the U.S. As of the end of 1998, records show 9,221 companies operating in Mexico that are fully or partially backed with U.S. capital.
In the five years since the passage of NAFTA, U.S.-Mexico trade has risen 140 percent. But Mexico's other free trade agreements also have created a very impressive increase in its exports and continue to attract major investments from all corners of the world.
Mexico's free-trade agreement partners include Chile, where annual exports are up 600 percent since 1992 when a deal was signed; with Venezuela, where annual exports are up 300 percent; with Costa Rica, where exports are up 300 percent; with Bolivia, where exports are up 160 percent; and with Colombia, where exports are up 50 percent.
Additionally, Mexico is expected to conclude in late 1999 negotiations for free trade agreements with Honduras, Guatemala, and El Salvador — the countries constituting the Northern Central American Triangle — and with Panama. Negotiations also have begun with Ecuador. Mexico and the European Union are preparing for the fourth round of trade negotiations.
Investment in Mexico makes sense for U.S., Far East and European companies, because as Mexico opens up free trade with the rest of Latin America (while the U.S. sleeps), its products can enter those markets free of duty. This in turn creates more jobs in Mexico, produces more capital for infrastructure and helps to create a wider array of products that can be exported to both non-partner and partner nations.
At present, Mexico's preferred place to buy remains the United States. So if we don’t lose them as a client to other nations, Mexico will be our No. 1 overall trading partner within 10 years.
Oh, by the way, I also predict that within five years, the United States will enter into a formal temporary immigrant agricultural labor agreement with Mexico. Write it down — you heard it here first.
Patrick Osio Jr. can be reached through Metropolitan Magazine or by e-mail at posiojr@aol.com
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