Enhancing the U.S. - Mexico Economic Partnership

A Report of the U.S.-Mexico Leadership Initiative

Introduction

Election Years Align

Once every 12 years, presidential elections in Mexico and the United States align, and the outcomes take on even greater significance for the bilateral relationship: 2012 is one of those years. In the United States, President Barack Obama will face a Republican challenge for the White House, and one-third of the United States Senate and the entire U.S. House of Representatives will be elected or reelected to form the 113th Congress. Simultaneously, 11 gubernatorial elections and numerous elections for state legislatures will reshape U.S. state governments. Meanwhile in Mexico, under the constitution President Felipe Calderón may not seek re-election, and citizens will choose their next president from among the four candidates. In addition, strict one-term limits mean all seats in the bicameral national legislature will be subject to open-seat elections. Gubernatorial elections will take place in six states and Mexico City, and hundreds of municipal elections will be held over the course of the year. It is therefore no understatement to say that the 2012 elections can have a considerable impact on the U.S.-Mexico relationship.

Importance of the U.S.-Mexico Relationship

The bilateral economic relationship is of critical importance for both nations. Since the implementation of the North American Free Trade Agreement (NAFTA), trade between the two countries has risen nearly 500%. The United States is, by far, Mexico’s leading trading partner, and Mexico is the second-largest U.S. export market and third in total U.S. trade. Foreign direct investment from the U.S. to Mexico increased by 216% between 1994 and 2011 as a result of NAFTA. Owing to NAFTA, the United States, Mexico, and Canada form the world’s largest free trade area, producing about one-third of the world’s total gross domestic product (GDP). Moreover, through highly integrated production chains, the countries can truly be said to make things together and form a cohesive export platform from which to reach global markets.

This election year presents an opportunity to build on the many strengths of the relationship. Presidents Felipe Calderón and Barack Obama have made important advances in the relationship: agreement on NAFTA trucking provisions; progress on regulatory cooperation; tangible results from the 21st century border action plan; and enhanced security cooperation through the Mérida Initiative, among many others. However, much remains to be done to optimize this mutually strategic relationship.