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News Link • Mexican United States Relations

How the Mexican Left Embraced Free Trade

• https://fee.org, Marcos Falcone

Earlier this year, left-wing Mexican President Claudia Sheinbaum hosted a rally in downtown Mexico City to celebrate Donald Trump's one-month delay in imposing 25% tariffs on her country. To Latin American observers, this was baffling and not just because the victory was meager, but because since when does the left embrace free trade? Yet Sheinbaum's stance ever since, alongside prior remarks by her predecessor Andrés Manuel López Obrador (AMLO), show that there is a way of committing the Latin American left to free trade: by embracing it in the first place.

During the 20th century, Mexico began liberalizing its international trade through the North American Free Trade Agreement (NAFTA), an agreement with the US and Canada originally proposed by Ronald Reagan. But crucially, Mexico joined NAFTA and reaped the benefits under non-left administrations. The country signed the agreement during the Partido Revolucionario Institucional (PRI) years, a catch-all party that dominated the country's politics in its pre-democratic era. After the country finally transitioned to democracy in 2000, both PRI and the center-right Partido de Acción Nacional (PAN) arose as Mexico's largest parties.

It would not be until 2018 that the Mexican left finally gained power through the Movimiento de Regeneración Nacional (Morena). By then, there was very little room to actively campaign against free trade. Given the behavior of the left across Latin America, this might have been expected, particularly since all major leftist parties had opposed the US-proposed establishment of a free trade zone across the Americas in 2005. But that didn't happen. Less poverty, rising income levels, new jobs, and more exports: the benefits of freer trade were so obvious in Mexico that they were impossible to deny.

NAFTA and its successor, the USMCA (United States–Mexico–Canada Agreement), have had positive effects on the Mexican economy. These agreements resulted in higher foreign investment, particularly from the US and Canada, along with significantly higher exports. Imports also rose, driving down prices. With many new options for consumption, daily life changed. Former Mexican Chancellor Jorge Castañeda even argued: "If Mexico has become a middle-class society… it is largely due to this transformation."

Importantly, many businesspeople and workers now directly interact with American and Canadian associates and are aware of the benefits of free trade. For the general public, the broader negative effects of the Trump trade wars take time to be noticed—but for these individuals, the cost of tariffs is immediately felt. Among major Latin American countries, Mexico is the most open to international trade, according to the Fraser Institute's Economic Freedom of the World Report. Its score for Freedom to Trade Internationally rose from 6.93 in 1970 to 8.10 in 2022 on a scale of 10.

Furthermore, by integrating the Mexican economy into the US, these agreements have shielded Mexico from foreign authoritarian influences such as China's, which have caused concern across the region. Indeed, it's not just that Mexico exports most of its goods to the US, but also that Mexico buys from the US more than it does from any other country. Although the relationship between China and Mexico has gained strength in the last few years, if it weren't for Mexico, China would have already become Latin America's largest trade partner.

Under Trump's presidency, though, the US does not seem to consider USMCA as strategic. The administration has continued imposing tariffs after the initial global reactions in March. In turn, Mexico has continued to work on getting exemptions, and has so far succeeded.


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