On Dec. 1, Mexico inaugurated its new president, Enrique Peña Nieto, who will serve for six years. With his victory, the PRI, which ran Mexico with a powerful hand for 71 years until losing the presidential elections to the PAN party in 2000, returns to power.
Peña Nieto inherits a country that has managed to avoid an extreme financial meltdown or crippling currency devaluation, due to the disciplined fiscal and monetary policy practiced by outgoing PAN President Felipe Calderón. However, he faces a daunting slew of challenges.
Peña Nieto needs to quickly craft his agenda in order to gain the support of the Mexican public and private sectors. During the presidential campaign, he was accused of being a “lightweight,” after having made several high-profile gaffs. Many people accused him of being a candidate without substance who was a product of the re-emerging PRI party.
Even after he won the elections, he is still being viewed with suspicion by a large portion of the Mexican population, many of whom are worried that he will attempt to rebuild the PRI into the party that ruled Mexico with an iron fist, often using nebulous means to do so.
Key to Peña Nieto’s success or failure will be the relationship he builds with the U.S. Less than a week before his inauguration, he flew to Washington, D.C., to meet with President Barack Obama – a sign that political analysts in both nations view positively. Obama also needs to build a solid relationship with Mexico, an objective that had mixed results during his first term.
Both presidents will need to focus on issues that are of importance to both countries. These issues can be grouped into three areas: trade, security and immigration. The economies of the two countries are tightly intertwined. Since the North American Free Trade Agreement was implemented in 1994, bilateral U.S.-Mexico trade has grown from $106.4 billion to $459.8 billion, as of August 2012, according to the Congressional Research Service publication, “U.S.-Mexico Economic Relations: Trends, Issues, Implications.” This publication states, “The U.S. is by far Mexico’s leading partner in merchandise trade, while Mexico is the U.S.’ third-largest trade partner after China and Canada. Mexico ranks second among U.S. export markets after Canada, and is the third leading supplier of U.S. imports.”
It is expected that bilateral trade will top $500 billion a year in the near future. Despite the enormous rise in trade during the NAFTA period, both countries will have to work on bottlenecks that impede additional trade growth. These include aging infrastructure at the border, long waiting times at the commercial ports of entry, and red-tape regulations that serve to impede or discourage trade.
Peña Nieto inherits a country that is trying to recover from the cartel drug violence ignited when Calderón launched his war on drugs in 2008. Although the violence has been decreasing during the past year, flare-ups are still occurring, and the wherewithal that the cartels have to corrupt officials has not decreased. Border cities such as Juárez saw their retail and commercial sectors decimated by the drug wars, organized crime, and widespread corruption that drove many businesses to close or migrate to the U.S.
The drug issue is not solely Mexico’s issue. The U.S. accounts for the lion’s share of drug use between the two countries, thus fueling the shipments of drugs north across the border and the violence that results on behalf of the drug cartels fighting for dominance in this multibillion-dollar industry. Border security is a focus of interest between the two countries, as Mexico tries to reduce the violence and the U.S. tries to prevent it and organized crime from crossing the border into its territory.
Immigration reform has been a sore issue between the U.S. and Mexico during the past 20 years. It is estimated that 80 percent of the 12 million illegal immigrants are Mexican nationals. The gridlock in addressing complicated issues between the U.S. Congress and Obama has put any kind of immigration reform on the back burner. While Mexico can be a source of badly needed labor in certain U.S. economic sectors, the U.S. has not revised its policy for allowing legal Mexican immigrants into the country to work or to deal with the millions already here. Both presidents have a vested interest in working out some kind of compromise that is mutually beneficial.
The new presidential administrations will now have four solid years of being able to work together on these issues. Peña Nieto will need to rapidly curry support if his objectives are to be successful. Since the 1930s, the PRI has faced a constant struggle of being fiscally and monetarily disciplined, versus the enormous pressure, which exists in a developing country such as Mexico, to spend liberally on social policy. The world also will be watching to see if Mexico’s new president attempts to rebuild the PRI into the juggernaut whose control guaranteed an unbroken streak of rule.
In the U.S., Obama and Congress will need to find a way to work on the three major issues if our successful relationship with Mexico is to continue. The elections are over and now it is time for both countries to get down to work.
Jerry Pacheco is the executive director of the International Business Accelerator, a nonprofit trade counseling program of the New Mexico Small Business Development Centers Network. He can be reached at 575-589-2200 or at email@example.com.