Mexican officials mainly concerned about NAFTA future
Mexico's President has said his country will not pay for a border wall
It’s time to talk about the wall.
US President Donald Trump signed executive orders calling for a border wall Wednesday, followed hours later by Mexican President Enrique Peña Nieto’s promise Mexico would never pay for it.
Officials from both countries were set to meet next week before Peña Nieto said he was canceling his upcoming visit to the US. The Mexican leader’s decision, announced Thursday via Twitter, came after Trump suggested Peña Nieto should bow out of the meeting if he isn’t willing to pay for the wall.
For many, the wall is a sign that Trump plans to follow through on his campaign promises regarding Mexico – meaning there’s more than just the wall at stake.
Many Mexicans argue what’s really at stake is pride.
Trump kicked off his election campaign in 2015 with a speech in which he accused Mexicans of bringing crime into the United States and of being “rapists.”
It’s unclear how Peña Nieto’s cancellations will affect talks between the two countries. Mexico’s new foreign minister, known to have a good relationship with Trump’s senior adviser and son-in-law Jared Kushner, met with Mexican senators Tuesday ahead of his first face-to-face diplomatic meeting with the Trump administration in Washington, scheduled for Thursday.
Mexican government officials tell CNN that the immediate concern is NAFTA, not the wall.
The free trade agreement between Canada, Mexico and the United States has been a major boon to the Mexican economy, but Trump believes that is because it siphoned jobs from the US, shipping them south.
Manufacturing jobs in the United States have declined significantly since 2000.
One of Trump’s signature campaign promises was to renegotiate the pact, which went into effect in 1994, in order to bring jobs back to the United States.
Mexico agrees NAFTA can be renegotiated, but only under certain terms, according to Mexico’s foreign and economy ministers.
Economy Minister Ildefonso Guajardo said Mexico will walk away from negotiations with the US if Trump tries to make Mexico pay for the wall in any way or imposes a tax on remittances.
“Mexico is prepared to walk away from a deal if (the United States) fails to respect Mexico’s sovereignty and dignity,” Foreign Minister Luis Videgaray reiterated.
Exports to the US have given the manufacturing industry and employment in Mexico a major boost. Eighty percent of Mexican manufactured exports go to the United States – nearly half are automobiles. Getting rid of free trade between the countries would hurt the Mexican auto industry in two ways: by raising the cost of vehicles exported to the US and, if imported supplies are taxed, by raising the cost of production for Mexico.
According to the Office of the US Trade Representative, US goods imported from Mexico totaled $295 billion in 2015, up 638% from 1993 (pre-NAFTA).
Oil is the backbone of the Mexican economy, and a lot of it is sold to the US.
Crude petroleum oil has been one of the leading US import items from Mexico by a wide margin, according to a Congressional Research Service report.
The US purchased $27.7 billion of it in 2014 – nearly 30 percent more than the next leading item.
If the US Treasury Department were to slap a tariff on oil or put some sort of sanction on Mexico, it would likely significantly impact the Mexican economy (though it would also affect US businesses that purchase oil from Mexico.)
Remittances and visas
Mexicans abroad, mainly in the US, sent nearly $25 billion in 2015 to their relatives and loved ones back home, Mexico’s Central Bank reported in early February – the first time remittances were the most important source of revenue for Mexico since officials started tracking the figure in 1995.
That money is a lifeline for many poor Mexicans, especially when the economy is struggling.
The Trump administration could make it much harder for Mexicans or Americans in the US to send cash to the country by blocking remittances – an idea he floated on the campaign trail in a letter to The Washington Post.
In the same letter, the Trump campaign also threatened to cancel visas and raise visa fees as means to either fund the wall or get Mexico to pay for it.
The Trump administration could threaten to pull out of security agreements with Mexico that help the country in its war on organized crime and the drug trade.
The US provided $139 million to Mexico for security assistance in the 2016 fiscal year – and some $2.6 billion from 2008 to 2016 – according to a report by the Congressional Research Service.
But pulling assistance could backfire. If the violence and drug cartels become more powerful, the effects could spill over into the United States.
Foreign Minister Videgaray has laid out a 10-point strategy plan for its relationship with the United States this week, emphasizing human rights, free trade and immigration.
“I think it is a win-win situation. (Trump) needs to see that. It is something that, well, the reality from Washington to the border is completely different,” said Sen. Gabriela Cuevas Barron, head of Mexico’s Foreign Affairs committee. “(Trump) needs to understand the border and the bi-national families, industries, business. There is a different reality that Trump and his team need to see.”
Time to stand firm?
Some senators say it’s time for Mexico to stand firm and will doubtless be pleased that Peña Nieto canceled his meetings with Trump.
“We don’t accept any aggressions. We are a country that must be treated as equals, even though we have a lot of asymmetries. We have been friends. We have been commercial associates. We are two countries that continue to share a prosperous future,” Sen. Armando Rios Piter told CNN.
Prior to Peña Nieto canceling the meetings, Sen. Roberto Gil Zuarth, from Mexico’s National Action Party, tweeted, “Given the announcement on the wall, the visit of the Mexican delegation today only makes sense to warn that there will be no meeting.”
CNN’s Joshua Berlinger and Rafael Romo contributed to this report.