It helped fuel his ascent in the primaries, and Republican nominee Donald J. Trump has continued to pummel NAFTA, making the U.S. trade deal with Canada and Mexico one of the biggest punching bags of this presidential campaign season.
Lately, he has piled on the negative superlatives, calling it “one of the worst deals ever made of any kind, signed by anybody” in the recent debate. He has used it to pillory Democrat Hillary Clinton by association: Her husband signed its implementing law as president in 1994.
The attacks on the massive trade deal may seem 20 years too late, but they play well today with Mr. Trump’s base. He often seems most confident when slamming Mexico, a country he has demonized perhaps most among those he says are “ripping off” the U.S.
But Mexican Consul General Javier Diaz de Leon isn’t worried. The country’s top diplomat for Georgia, Alabama and Tennessee believes that the weight of the economic relationship will anchor it during this political storm.
With more than $1 billion in trade crossing the border every day (about $1 million per minute), vested interests tend to prevail, he said.
“In the long run, we always know that reality sets in,” Mr. Diaz told Global Atlanta during the September installment of Consular Conversations, a series of on-the-record, public interviews with Atlanta’s diplomats.
Mr. Diaz should know. He has served in San Diego, Calif.; Raleigh, N.C., and now Atlanta, three of the 50 consulates through which Mexico serves its estimated 11.5 million nationals residing in the United States.
Some 850,000 Mexicans are located within Mr. Diaz’s three-state jurisdiction. Counting their children, many of them U.S. citizens, his office provides services to more than 1 million people.
Politics can create caricatures of the truth, but Mexico and the United States know their futures are interlinked, despite slogans that score points with pockets of voters, Mr. Diaz said, noting that a perception gap exists even on the Mexican side.
“It’s not necessarily connected to facts, sometimes, but it is part of democracy. We’ve seen it before,” Mr. Diaz said during the discussion at the Midtown law offices of Miller & Martin PLLC, which is sponsoring the Global Atlanta event series.
He painted a picture of U.S.-Mexican relations in stark contrast with Mr. Trump’s view of a zero-sum game in which one wins and the other invariably loses.
Despite Mr. Trump’s warnings against “open borders” and immigrants “pouring into the country,” Mr. Diaz said Mexican migration to the U.S. has actually been negative in the last decade. (The bigger problem is Central Americans traveling through Mexico to the U.S. border, an issue both sides are working to address.)
This decade is the first since the Great Depression in the 1930s in which more Mexicans are leaving the U.S. than coming, in part thanks to the slower U.S. recovery, demographic shifts back at home and the steady growth in Mexico’s economy over the past 15 years.
“If you’re Mexican, that’s not normal. When we grew up, that was not something we were used to in Mexico. We were used to cyclical economic recessions,” Mr. Diaz said.
Making Things Together
But thanks to the openness that NAFTA helped engender, Mexico has become an advanced manufacturing hub and a prolific exporter even as it has undertaken ambitious reforms to its labor laws, energy markets, education system and telecommunications sector — with varying levels of success.
When Mexico sells more, either to the U.S. or otherwise, American companies generally profit too, Mr. Diaz said.
“We buy peaches and you buy tequila, but it’s a lot more sophisticated than that,” he said. “Out of every single Mexican product that goes into the global market, 40 percent of that product is American [content]. We are actually not competing with each other to see who buys more from each other. We manufacturing products together.”
Meanwhile, Mexico sends 60 percent of its exports to the U.S.
On NAFTA, Mr. Diaz conceded that trade liberalization always creates “winners and losers.” The U.S. textile sector fled en masse to set up Mexican maquiladoras in the 1990s. But Mexico also paid a price for its openness. A flood of imported food from the U.S. harmed Mexican farmers, and Mexican t-shirt and toy makers eventually lost out to China and other low-cost destinations.
But NAFTA helped build the scaffolding for its success in more advanced clusters like electronics, automotive and aerospace. Mexico now has free trade agreements with more than 40 countries, and its society has opened along with its economy, Mr. Diaz said.
The “winners and losers” challenge also hits home in Mexico itself, where southern states like Michoacan have been left behind by other more prosperous states like Queretaro and Guanajuato in central Mexico or cities like Monterrey closer to the U.S. border in the north. Drug violence and instability tend to go hand-in-hand with the lack of economic opportunity.
“We need to be able to establish public policies that bridge the gaps between different Mexicos, because there are different Mexicos going on. There’s a highly modern, industrial northern Mexico, and a southern Mexico that is struggling to engage with the global economy,” Mr. Diaz said.
Trump’s Ill-Fated Trip
The need for understanding was precisely why the Mexican government invited the two major-party U.S. presidential candidates to visit with President Enrique Peña Nieto during the campaign, Mr. Diaz said.
Only Mr. Trump obliged, causing a stir both in Mexico and back in the U.S. when he made a hasty trip to Mexico City in August.
Mexicans wondered aloud why Mr. Peña would host a man who has repeatedly denigrated Mexicans, saying famously in his campaign announcement that Mexico is sending “rapists” and other criminals to the U.S. He has vowed to build a border wall and force Mexico to pay for it, repeating that claim in a major immigration speech that took place just after his meeting with Mr. Peña. “They don’t know it yet, but they’re going to pay for it,” he said in Arizona hours after leaving Mexico.
Mr. Peña tweeted just the opposite:
Al inicio de la conversación con Donald Trump dejé claro que México no pagará por el muro.
— Enrique Peña Nieto (@EPN) August 31, 2016
As strange and theatrical as it all seemed, with neither side seeming to have garnered any political benefit, Mr. Diaz said there was precedent for such a visit.
Mexico often invites candidates during the election process “to make sure the real dimension of the importance of our relationship is discussed.” Republican nominee John McCain visited as a candidate in 2008, the consul general said.
But for Mr. Peña, the visit stoked further declines in an already dismal approval rating. Finance Minister Luis Videgaray, a key Peña ally who took responsibility for arranging Mr. Trump’s visit, was apparently forced to step down over it. And in reiterating his long-held stances on immigration, Mr. Trump failed to use the visit to project a more statesmanlike image.
Mr. Diaz, who didn’t comment on the visit directly, said it is sometimes worth political fallout to ensure a strong relationship.
“There are those on both sides of the border — I would say, in Mexico in this case — who think that there is a choice to be made as to whether we want or not to engage with the United States. That is not a choice; that’s a need,” he said.
To drive home the need for collaboration, Mr. Diaz shared some statistics with the Atlanta crowd that Mr. Peña most likely shared with Mr. Trump.
“If you look at the bilateral relationship Mexico and the United States have and you compare it to China, then you start talking about U.S. deficits, you will probably see where you have a problem. I will give you a hint: The problem is not in Mexico,” Mr. Diaz said.
The U.S. ran a $60 billion trade deficit with Mexico in 2015; with China, that figure was $367 billion. And Mexico bought $235 billion in American exports, doubling China’s total.
More important, though, is how their cooperation on trade helps both Mexico and the U.S. better compete with other nations including China, he said.
“It’s not like we are trying to engage in the global markets isolated as a nation. We are actually behaving as a region. We are behaving as North Americans. We just don’t talk about it. We don’t have a North American flag or a North American hymn,” Mr. Diaz said. “We don’t politically behave as a region, but we definitely behave as a region economically, especially in manufacturing.”
That’s why when the U.S. asked Mexico to be part of the 12-nation Trans-Pacific Partnership, it agreed, Mr. Diaz said. The deal has been under fire by trade critics and is opposed by both U.S. presidential candidates. Its future is murky, though some are holding out hope for a vote during the lame-duck session after the elections.
The Border As an Asset
Mr. Diaz ended his talk by reframing the border between Mexico and the U.S. as an asset rather than a threat. He highlighted intense security cooperation and pointed out that 1 million people cross it legally every day. Apprehensions of Mexicans aiming to cross illegally are nearing record lows, according to the Pew Hispanic Center.
“We misunderstand the border. We don’t know it,” Mr. Diaz said of Mexico City and Washington. The people living near the border just want it to function so they can get on with their lives, he added.
That same logic works for the bilateral relationship: About 6 million jobs in the U.S., according to one study, are dependent on Mexican trade.
“If our border is not efficient, if our border doesn’t work, jobs will be lost in the United States and in Mexico,” Mr. Diaz said.
The interview took place just after Global Atlanta returned from a five-day reporting trip to Mexico.
Stay tuned for more reporting on the state’s economic relationship with the country at GlobalAtlanta.com/mexico.
More about Mr. Diaz can be found here.