Pragmatic Relationship

Mexico’s adherence to the North American concept has geopolitical and geoeconomic overtones.

Important as it is from an economic point of view, the recent announcement by the U.S. and Mexican governments against the re-export of Chinese steel and aluminum to the North American market has important political implications. First, it reaffirms Mexico’s willingness to avoid a clash with its largest trading partner in a dispute that was also highly symbolic, given that the beneficiary would have been a third party and the main U.S. competitor on a global scale. It also allows us to do a favor for Brazil, although I do not recall Brazil doing any favors for Mexico.

The decision expressed in a joint communiqué by Presidents Andrés Manuel López Obrador of Mexico and Joe Biden of the United States is a new sign of Mexico’s apparent interest in resolving or overcoming some trade irritants that, according to experts, it would probably lose in mediation panels, such as the dispute over transgenic corn.

The consideration implied by the reaffirmation of Mexico’s adherence to the North American concept has geopolitical and geoeconomic overtones. First, it facilitates the cancellation of legal disputes that could have become arguments against investment in Mexico and the full exploitation of the so-called nearshoring, that is, the relocation of companies from Asia to Mexico.

It certainly does not eliminate all trade disputes, nor does it mean a surrender of Mexican interests, but it does provide a welcome sign of pragmatism. López Obrador himself stated that “It is very important to maintain the partnership with Canada and the United States, as established in the trade agreement,” and “Mexico has the possibility of importing steel and other goods to the United States and Canada and benefits from that because plants and factories are established in our country […] there is investment … “

The Mexican reality is a literally intimate proximity, determined by geography and society, with the world’s greatest power. The good and the bad is that it implies an enormous economic proximity and, if you will, a problem to be solved: how to reduce dependence, since 80% of Mexican trade is with its North American partners, the United States and Canada. But it is a problem that Mexico shares with Canada, which concentrates 77% of its international trade in the United States and Mexico.

Beyond that, the reality is that Mexico has no alternative. It can, and should, seek ways to reduce its dependence on a single market, but it should also be remembered that this has been sought before with varying degrees of enthusiasm, but always with little success. In exchange for the agreement, Mexico asked to compensate for the ban on Chinese steel by importing Brazilian steel. This is all well and good as an expression of regional interest, but regardless of Luiz Inácio Lula da Silva being “brother Lula” and in trouble, it is worth remembering that Brazil has rarely been in solidarity with Mexico.