“God made us neighbors, let us be good neighbors.” Arizona Governor Paul Fannin set an aspirational vision for Arizona’s relationship with Sonora, Mexico, in the late 1950s. The United States and Mexico share an over 2,000-mile border and, as with any longstanding friendship, the relationship has had its share of ups and downs. This dynamic friendship is again at a crossroads as Mexico’s burgeoning middle class and rising economic status stand to change the dynamics once more. Arizona should take advantage of this moment and continue advancing positive relationships and trade partnerships with Mexico.
Mexico is currently the 14th largest economy in the world, the United States’ No. 2 ranked export market, and third–largest trading partner, according to the U.S. State Department. In 2013, goods and services trade between the two nations totaled over $550 billion, over $1.5 billion daily. Nearly 80 percent of Mexico’s exports came to the United States. Looking forward, Mexico is projected to be the world’s fifth largest economy by 2050, according to Goldman Sachs. These figures reflect an impressive growth in our trade relationship and showcase a tremendous opportunity to deepen our economic ties and move forward together as a more globally competitive region.
Mexico’s economy has shifted from an agricultural and commodity-based system to one dominated by manufacturing and services oriented industries. Mexico, the United States and Canada recently celebrated 20 years of the North American Free Trade Agreement (NAFTA.) Mexico is also part of the Trans-Pacific Partnership (TPP), a region representing more than 40 percent of global GDP and a third of global trade, and the Pacific Alliance. With the cost of doing business in China continuing to rise, Mexico and its proximity to the United States have made Mexico a more compelling place to do business.
President Enrique Peña Nieto came into office in December 2012 and has worked to implement a series of reforms previously thought unimaginable. Among Peña Nieto’s groundbreaking initiatives are structural reforms to tax collection and the privatization of PEMEX, the state-run energy company. These reforms took tremendous political will by Peña Nieto and the Mexican Congress, as they had to break through decades-old beliefs about what was previously considered politically sacred to Mexico.
Mexico is the world’s sixth largest crude oil producer and depending on how the reforms are implemented, stands to gain untold wealth and power in the global market. The question of security still looms and it is incumbent on Peña Nieto’s administration to address the issue in a way that helps global investors feel more comfortable.
The Obama administration has taken note of Mexico’s growing economy and the president has made over five trips to Mexico and initiated the High Level Economic Dialogue (HLED) — an initiative to create jobs on both sides of the border. Arizona recently joined the ranks of Texas and other states to inaugurate the Arizona State Trade and Investment Office in Mexico City to attract new investment to Arizona and expand the state’s presence and investment into Mexico. Arizona also created the Transportation and Trade Corridor Alliance, a multi-state agency alliance with a vision to move Arizona toward being more globally competitive on investment, trade and infrastructure.
Arizona stands at a crucial moment in our relationship with our neighbor. Currently, our annual bilateral trade with Mexico is
$14 billion and $28 billion worth of imports and exports go through our ports of entry annually. Clearly, we are a stronger Arizona when we work together as a region. Economists have noted that the global marketplace is increasingly becoming one of regional economies. Mexico’s former President Vicente Fox recently made his third annual visit to Arizona to underscore the importance of staying engaged and reiterating the message that more trade equals more jobs. Other recent visits to Arizona by Mexican Foreign Minister Meade, and the announcement that Mexico is opening a ProMexico trade office in Phoenix, signal a willingness by the Mexican government to work more closely together.
The time is right to set a new goal of not only being good neighbors, but also strong partners in trade, thereby maximizing the global competitiveness of the Arizona-Mexico region, and bringing more diverse wealth and jobs to our region.
— Laura Franco French serves as Mexico liaison, director of community relations and legislative liaison for the Arizona Office of Tourism.