With Congress about to reconvene, it’s crunch time for USMCA, the trade pact signed by the United States, Mexico and Canada to update the 25-year-old—and outdated—NAFTA. The Arizona Chamber of Commerce and Industry is part of the major business-community-wide coalition urging Congress to adopt the deal this fall. Its passage is our top federal priority.
The urgency is real and the stakes are high, especially in light of increased trade tensions between the U.S and China, the world’s two largest economies. The most useful inoculation against a recession in the U.S. is passage of USMCA. Congress can’t dawdle on this one.
It’s with this environment in mind that I hopped on a plane last week to speak with top Mexican political and business leaders to discuss how our friends in that country could help us reach a positive outcome on USMCA here at home. Here are my observations from the trip:
Support for T-MEC is rock-solid in Mexico. It should be in the U.S. too.
Mexico’s political and business establishment strongly supports the USMCA, known as T-MEC in Mexico. Support, starting with Mexico’s President Andrés Manuel López Obrador, is rock solid.
In fact, Mexico months ago was the first of the three North American nations to ratify the trade agreement by a landslide vote of 114-4. And earlier the Mexican Congress passed a landmark labor reform that was necessary to fulfill some of the terms of the pact. The next executive budget package will contain funding to ensure the resources are there to enforce all provisions of the deal.
There is confidence that Canada will do its part. And there is an understanding that the votes are easily there in the U.S. Senate to ratify the agreement. In fact, the votes are probably there now to pass the agreement in the U.S. House of Representatives. It all comes down to whether Speaker Nancy Pelosi allows the agreement to come up for a vote. Presidential politics will only complicate matters, though. Either a vote happens in 2019, or the degree of difficulty to secure passage in 2020 goes up dramatically.
Arizona’s brand in Mexico is strong
I started the visit with a talk before Mexico City’s English-language Rotary Club at the elegant Club de Industriales. I was invited by Larry Rubin, who in addition to being a Mexico City Rotary leader, is a major mover and shaker in the city with his finger on the pulse of the town’s international business community. He says the multinational business leaders that call Mexico City home not only are enthusiastic about USMCA, they can’t understand what’s taking the U.S. so long to pass it.
I provided the audience information hot of the press on the status of the agreement and also plugged the excellent Arizona Mexico Commission website, USMCANow.org, a resource that provides granular information by congressional district across America on trade with Mexico and Canada. I talked about the health and dynamism of Arizona’s economy. When in Mexico I always note how important Mexico is for Arizona’s economy across almost all sectors. Tourism is one I always highlight, as well as the emerging auto sector, and our perpetually strong aerospace, mining, electronics and semiconductor sectors. We export more to Mexico than any other country by about a factor of four.
Right before my remarks for Larry’s group, I called into a National Association of Manufacturers-sponsored tele-townhall featuring Gov. Doug Ducey and Congressman Greg Stanton, which we at the Chamber were proud to host. All that good news I shared in my speech about Arizona’s relationship with Mexico is true in no small part because of leaders like the governor and congressman. Gov. Ducey has made a stronger relationship with Mexico a top priority throughout his tenure, and Rep. Stanton during his time as mayor of Phoenix conducted over a dozen trade missions to Mexico, many of which I was privileged to join. In Congress, he’s already stepped out and publicly urged the speaker to bring the USMCA to a vote, something he’s confident can happen this fall.
Their work and that of Arizona business community leaders and key players like American Airlines, which continues to expand service in Mexico via Phoenix, has made a tremendously positive impact. I can attest to the warmth extended to Arizona from Mexico’s business and political sector. The difference between today and a decade ago is tremendous.
Business and government united around T-MEC
I visited with several leading business groups, including the American Chamber Mexico (AMCHAM) and CONCAMIN, an industrial chamber that represents over 120 trade associations representing about 35-40 percent of the economy.
I also had the pleasure of visiting with a key official in Mexico City’s economic development agency. The vision of Mexico City Mayor Claudia Sheinbaum, the city’s first female mayor, is befitting that of North America’s largest city (eclipsing New York City in population by nearly a half million inhabitants). The focus of the new administration is solar energy deployment, sustainable markets, improved waste management, mobility, and driving entrepreneurship for the city’s burgeoning small- and medium-sized businesses.
I also had the opportunity to visit Mexico’s Senate twice during the visit. Arizona’s neighboring senator from Sonora was kind enough to invite me to his office. Sen. Arturo Bours has a background in business and agriculture and much of our conversation revolved around trade. It’s no surprise that the senator, part of the ruling Morena party, voted for T-MEC.
I also met with Chihuahua Senator Gustavo Madero. The senator from the PAN party is one of the leads on trade for the Senate and, of course, supported T-MEC. Our discussion centered on the best course of action to help remove any doubts—especially those held by members of Congress in the U.S.—of Mexico’s commitment to enforcing the USMCA’s labor provisions. Mexico is serious about upholding its end of the bargain; its leaders are committed to ensuring USMCA’s success and preserving the tariff-free trade framework that has defined the North American marketplace since 1994.
Excellent resources for U.S. business to connect with Mexican customers
I visited with Paul Oliva of the U.S. Commercial Service. Across the world the U.S. Commercial Service is a secret weapon for U.S. businesses looking to expand into an export market. Citizens, businesses and taxpayers are well served by this part of the U.S. Department of Commerce. The Mexico unit is even more important now that Mexico is not only Arizona’s top trading partner, but the country earlier this year grabbed the top spot overall among U.S. trade partners.
During the trip, I had the chance to visit with Natalia Perez, who runs the state of Arizona’s Mexico office. Kevin O’Shea, who heads the Arizona Commerce Authority’s international efforts, also joined. Both were fresh off the opening of Arizona’s new offices in the states of Chihuahua and Guanajuato. These offices are valuable resources for all Arizona businesses looking to navigate Mexico. They will be even more important after USMCA is ratified.
A special thanks to José Andrés Garcia, partner at Estrategia Global and the Mexico City representative of Molera Alvarez; Mara Pernick; Luis Ramírez; Lorena Schmidt; Irayda Flores; and Malisha Quintana for helping to arrange and staff the meetings. And a very special thanks to Senator Bours for the incredible hospitality shown by him and his staff. I was treated to a very special night tour of the Senate of Mexico. It will be an experience this former U.S. Senate staffer will always treasure.
Glenn Hamer is president and CEO of the Arizona Chamber of Commerce and Industry.