Viewpoints: California should strengthen economic ties with Mexico
08/24/2014 12:00 AM
08/24/2014 12:32 AM
As Mexican President Enrique Peña Nieto visits California this week, it’s time for Californians, indeed for all Americans, to take a fresh look at Mexico.
Almost 21 months into an administration characterized by dramatic economic and political reform, U.S. perceptions of Mexico continue to reflect an echo of Mexico’s past rather than the reality of Mexico’s present. Americans see poverty and insecurity rather than a middle-class democracy that has become a rising export powerhouse and valuable economic partner of the United States intent on deepening engagement with its northern neighbor.
It’s time to reorient our gaze; it’s time to focus on what is going right just across our southern border.
Mexico matters for the United States. Behind the headline grabbing stories about migration and drugs lies the world’s eighth-largest producer of automobiles and its fourth-largest exporter of information technology services, a country with rapidly expanding and world-class aerospace and electronics sectors, and an economic partner to which the United States exports more than to the BRICs (Brazil, Russia, India and China) combined and in the process supports 6 million U.S. jobs.
Mexico also matters for California. California exports $24 billion in goods and services to Mexico each year, ranging from computers and electronic products to transportation equipment, video games and agricultural products generating nearly 700,000 jobs in the Golden State.
And Mexico could soon matter much more. Overcoming 25 years of legislative gridlock, the Mexican Congress approved a series of constitutional and legal changes with far-reaching implications for democratic practices, economic competitiveness and U.S-Mexico relations. These include new rules to increase government transparency and oversight, expand the power of citizens to hold their elected officials accountable, improve primary education, make loans easier to obtain, strengthen regulatory authorities and promote foreign investment, all with an eye to enhancing economic productivity and competitiveness.
But the capstone of this process is the energy reform signed into law by Peña Nieto earlier this month which promises to revolutionize Mexico’s energy sector. Actually a complex package of multiple legal and constitutional changes, the centerpieces of the reform are an end to the 75-year monopoly held by Pemex, the national petroleum company, and the opening of the energy sector – from oil and gas to electricity generation to alternative energy production – to private, including foreign, investment for the first time in generations. In the process, Mexico has opened the door to energy integration with the United States, an opportunity of particular importance to the hundreds of independent petroleum firms and alternative energy companies based in California.
Mexico is on the move, and it’s well past time for Americans to update our 20th century view of Mexico to bring it in line with 21st century reality. It’s time to wake up to the fact that a dynamic market democracy is emerging in our backyard and to engage Mexico on that basis.
There has been some movement in this direction. Last year the Obama administration launched the U.S.-Mexico High Level Economic Dialogue promoting strategic Cabinet-level discourse on issues affecting North American competitiveness. Los Angeles Mayor Eric Garcetti and Gov. Jerry Brown also understand the importance of the relationship with Mexico. Both have led high-level delegations to Mexico earlier this year to advance new collaborative initiatives on trade, investment, climate change and transportation. Brown’s trade mission to Mexico also produced an educational exchange agreement – the first time the Mexican government has signed such an agreement with an individual U.S. state.
But more needs to be done.
The U.S.-Mexico border continues to be a profound bottleneck to trade, as do the myriad national regulations governing cross-border economic activities. And closer to home, California is Mexico’s second-largest state-level trading partner in the United States, but it lags No. 1 Texas by a wide margin. At a time when politics in Texas is ruffling feathers in Mexico even as Mexico seeks out U.S. economic partnerships, California is poised to profit.
Yet even taking into account Brown’s recent trip, overall the trade relationship still runs largely on autopilot. States such as Arizona with much smaller levels of trade with Mexico have opened trade offices. It is high time for California to follow suit and to go even further by creating its own high-level dialogues with its Mexican counterparts, actively encouraging job-creating cross-border, and dramatically deepening educational exchange.
Never before has Mexico been such a willing and able economic partner. It’s time to open our eyes to the opportunity sitting on our southern border.
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