Battle4Liberty

On Monday I addressed a group of business leaders in Mexico City. We covered a lot, including global trade. I wasn’t surprised that Trump, NAFTA, and the wall were hot topics in the Q&A. Essentially, I was asked to explain the Trump-trade phenomenon by Mexican managers who have benefitted over the years from the growth in US-Mexico trade.

For the record, I’ve been to Mexico dozens of times to lecture, conduct research, and speak to business groups. Their managers are talented and engaging, and they always express frustration with government corruption and infrastructure problems. My address on Monday was scheduled before the election when most Mexicans expected Hillary Clinton to win. The focal point changed when she was defeated. There is some uneasiness there about Trump, but they seem to understand the issues pretty well.

If you a regular on this blog, then you know my position on trade. Free trade is undeniably positive, but it’s really just an academic concept. In practice, there are lots of issues to negotiate, including currency manipulation, intellectual property protections, differences in tax policies and regulatory environments, state-owned enterprises (SOEs) and “catch up” provisions that allow one country to protect “infant” industries. In practice, negotiators from each country must hammer out their differences before trade can occur. President-elect Trump widely criticized NAFTA and other trade deals during the campaign, threatening tariffs as a means of addressing inequities. The US is a huge market for Mexico, and this is what makes Mexican business leaders nervous.

And then there is the wall. Nations have recognized the need to control borders for millennia. Hillary Clinton even voted for constructing a fence in 2006 while in the Senate. Regardless of one’s view on immigration, making sure individuals have permission to enter the country is a sound part of any policy. But the US does not have control of its southern border, a problem that has actually been a boon to our southern neighbors, as Mexicans working in the US send an estimated $25-50 billion home every year, accounting for 2-4% of Mexico’s GDP.  There is no doubt that simply enforcing laws currently on the books—along with a structure that eliminates most of the free passage between nations—would negatively hit the Mexican economy.

I understand the Mexican concerns given their strong ties to the US economy. Unfortunately, their press seems to follow the lead of the US mainstream media, stoking fears that the President-elect wants to completely abolish trade with Mexico. Overall, they were respectful of the election process and seemed to understand the concerns of workers who drove the results in the rust belt. None of them expressed the kind of disdain for Trump that numerous HRC supporters continue to do, although it would have been easy to do given I was the only American in the room. Their primary concern is trade, not the wall. In fact, several executives told me that they fully understand the need to secure the border, and they complimented Trumps economic plan to business prowess. They also noted the widespread frustration with President Peña Nieto, something that I did not hear reported when the media criticized Trump’s trip to the DF during the campaign.

Mexican business leaders see these issues from the Mexican perspective, but I was impressed with their ability to empathize with Trump’s concerns and work with him as our nation’s duly elected leader. I wish those American protesting and rioting could display the same class.