At U.S.-Mexico CEO summit, leaders optimistic amid uncertainty
Investment in Mexico has been cool pending passage of the new U.S.-Mexico-Canada trade agreement
MERIDA, Mexico – Business and political leaders from the U.S. and Mexico gathered Friday to promote greater trade at a time when actions by both governments have rattled investors, expressing optimism despite times of uncertainty for the relationship.
Investment in Mexico has been cool pending passage of the new U.S.-Mexico-Canada trade agreement that is meant to update NAFTA, and due to other concerns for the global economy.
Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, said investors get nervous over all manner of uncertainty, from Brexit to the economic collapse of Venezuela to the surge in migrant families from Central America arriving at the U.S. border.
“People all around the world start to sit on their cash,” Donohue told The Associated Press, adding that a main focus of the biannual U.S.-Mexico CEO Dialogue was strategizing passage for the USMCA and “then people will put their money back in the game.”
While U.S President Donald Trump recently walked back a threat to seal his country’s southern frontier, redeployments of border agents to handle a surge of migrant families led to long wait times at points of entry, with drivers sleeping in their trucks to keep their place in line.
Possible disruption of the cross-border industrial supply chain worried some at the gathering.
“For purposes of enforcement (the administration) is drawing down on what is needed to move trading, to move people and goods legally and efficiently across our points of entry,” said Antonio Garza, former U.S. ambassador to Mexico.
Mexico’s President Andres Manuel Lopez Obrador has rattled some nerves by cancelling a multibillion-dollar airport project for the capital that was already about a third built shortly after taking office Dec. 1.
Representatives were promoting his signature infrastructure project Friday: an ambitious “Maya Train” that would link cities, beach resorts and archaeological ruins in the country’s southeast.
During a dinner gala the previous night at a lavish hacienda north of Merida, Mexican officials assured the guayabera-clad executives that their investments would be safe in Mexico.
Still, Mexico has work to do to woo foreign capital. Mexican political and economic analyst Macario Schettino wrote recently for the newspaper El Financiero that unless trends change, investment could fall 5% in the first trimester and possibly remain at similar levels throughout 2019.
Attendees said implementing the USMCA, which must still be voted on by lawmakers in all three countries, could help that.
“We are going to close ranks to win its ratification as soon as possible,” Mexican Foreign Relations Secretary Marcelo Ebrard said, adding that officials were optimistic about announcing a number of investments derived from the dialogue.
Often historically tricky, U.S.-Mexico relations became particularly fraught following the election of Trump, who repeatedly hammered the United States’ southern neighbour on trade, the border and migration.
“I congratulate the new presidential administration in Mexico for its strong emphasis on improving the economic development of this region in particular,” U.S. Commerce Secretary Wilbur Ross said at the gala. “We also thank them for assisting us as we confront the crisis at our southern border.”
Mexico is the United States’ second-largest export market and its third-biggest trading partner, with more than $678 billion in goods and services changing hands last year, according to Ross. U.S. foreign direct investment in Mexico was over $109 billion in 2017, he added, and Mexican investment in the United States has reached more than $35 billion.
Donohue said the Chamber had “vigorously” opposed the idea of closing the U.S.-Mexico border, which would have imperiled that trade.
But even as Trump backed off that threat, he gave Mexico a year to stop the flow of drugs and migrants or face tariffs on cars or other products.
Twelve months from now, the 2020 election campaign will be in full swing, and some say a candidate Trump is likely to try to keep illegal immigration front-and-centre as meat for his base.
“When he is competing electorally or out there on the stump, he goes to a dark place, and Mexico is often in that place,” said Shannon O’Neil, senior fellow for Latin American studies at the Council on Foreign Relations.
“And so whether it’s immigration or drugs or other security threats or Mexico’s effect on the economy as he perceives it, I think that will be the mainstay of his rhetoric,” said O’Neil, who was not at the Merida gathering. “And so yes, I think there’s a growing chance that the border will be a centerpiece of the 2020 U.S. election and not in a way that will be helpful to Mexico.”
Before Lopez Obrador took office in December, many had been concerned about possible clashes between Trump and the leftist populist who won the presidency in his third try. But so far, ties between Washington and Mexico City seem to have generally held up well, with the two administrations working closely on a number of bilateral issues and Lopez Obrador officials reluctant to react to critical tweets from Trump.
Mexican officials said in Merida that from the earliest days, Lopez Obrador’s administration has looked to private sector leaders in both countries, executives with deep and longstanding cross-border ties, for cues on navigating what they expected to be a trying relationship.
“These are businesspeople, and they’re used to climates changing and they’re used to looking out a few years beyond the present,” said Garza, the former ambassador. “And they’re used to having to work very hard to get things done in environments that are, you know, where there’s not a tailwind every day.”