Mexico

     

A third lightning round of North American Free Trade Agreement (NAFTA) talks begins in Ottawa on September 23. Negotiators reportedly made progress during the first two go-rounds in Washington and Mexico City, reaching tentative agreements on intellectual property, e-commerce, and environmental protections, likely following the general outlines hammered out within the Transpacific Partnership agreement, or TPP. Yet the thornier issues – investor dispute settlement options, rules of origin, Buy American clauses, and importantly labor rules and wages – remain. And even as trade negotiators met in round-the clock sessions to get these initial breakthroughs, U.S. President Donald Trump revived his public existential threats, saying he will end up “probably terminating NAFTA at some point.” Commerce Secretary Wilbur Ross chimed in that ending the agreement is “the right thing” to do if the United States doesn’t get what it wants by the end of the year. Trump, along with many Americans, condemns NAFTA for taking jobs. The president repeatedly asserts Mexico is “killing us on jobs and trade” and NAFTA is “a one-way highway out of the United States.” Average Americans echo these fears. In 2016 two out of three Americans believed globalization was good for the overall economy and country, but only forty percent thought it created employment and just one in three thought it protected jobs already here. NAFTA is viewed with particular skepticism, with nearly half of Americans believing the United States got a bad deal. The facts belie these perceptions. The non-partisan Congressional Research Service, reviewing dozens of studies conducted over the last twenty years, found that the trade agreement has had little to no effect on net employment in the United States. Yes, jobs were lost, as others were gained, leading to a net wash. And while these transitions are undoubtedly hard for individual workers, NAFTA-inspired job losses (leaving aside the new positions created by more trade) accounted for less than 1 percent of the nearly 18 million positions eliminated every year. These limited effects reflect the fact that even at $1.2 trillion dollars, North American trade represents just 6 percent of the U.S. economy. In the larger worry over jobs, the United States should be commiserating rather than condemning its southern neighbor. A recent International Labour Organization (ILO) report shows that Mexican workers, like their U.S. colleagues, suffered the most from Chinese competition, not each other. Over the last two decades, Mexico lost nearly 650,000 net jobs to the Asian giant, as textiles, shoes, and computer factories shuttered in the face of cheap imports or as management moved operations across the Pacific. The United States, according to estimates by scholars David Autor, David Dorn, and Gordon Hanson, lost 2.4 million jobs to China over a roughly similar period. Per capita this represents 11 of every 1,000 workers in Mexico, and 14 per 1,000 workers in the United States... View full text of article, originally published in Americas Quarterly.

The first round of NAFTA negotiations now concluded, the three nations will take a two week breather before reconvening in Mexico City on September 1. While the policy differences should be surmountable, in Why NAFTA Needs More Than a Few Tweaks for Fortune, I argue that the biggest threat to NAFTA is Trump. Thinking about the broader U.S.-Mexico relationship in the September/October 2017 issue of Foreign Affairs, The Mexican Standoff: Trump and the Art of the Workaround, I argue that despite the frequent animosity coming from the White House, Mexico has a historic opportunity to ambitiously lead its northern neighbor to a stronger North America. To do so, it needs to draw on the latent support from the farms, companies, and industries, as well as towns, cities, and states that benefit from these now indelible bilateral ties. The other overriding foreign policy challenge in the hemisphere comes from the worsening economic, political, and humanitarian catastrophe in Venezuela. In this piece for CNN, Venezuelan Sanctions Without Diplomacy Will Fail, I argue that unilateral sanctions, much less the military action President Trump has intimated, will be counterproductive to U.S. goals of regime change. Only concerted diplomacy, uniting governments in the region and around the world, can pressure those in Caracas.

Last Thursday, I had the pleasure of joining David Gura and Francine Lacqua on Bloomberg Surveillance to discuss Venezuela and Mexico. You can watch the full show here, with the Venezuela portion from 1:52:30-1:57:00 and Mexico from 1:58:30-2:04:30.

August has brought a number of depressing reversals in the United States’ relation with Latin America: President Trump’s seemingly offhand statement on the possibility of military intervention in Venezuela, which sucked all the oxygen out of Vice President Pence’s much anticipated tour of the region; the cancellation of the Central American Minors (CAM) Parole program, a decisive step in the administration’s broader nativist turn on immigration; and the beginning of NAFTA renegotiation, where the U.S.’ opening gambit was to complain about trade deficits. The foolishness of these moves is remarkable. The call for military intervention was a beautifully wrapped, sumptuous gift to dictator Nicolás Maduro, who has had few foils on which to blame that country’s devastating crisis. Maduro did not waste a minute in harking back to old shibboleths about the evil Empire that is seeking to subvert the Venezuelan people, and has seized upon those accusations to further discredit the peaceful opposition. The Department of Homeland Security’s decision on the CAM Parole program is simply cruel: the program was tiny, benefiting fewer than 3,000, and now children of parents legally in the United States who had benefited from the program have lost a safe and legal way to be with their families. As for trade deficits, one of the basic lessons of introductory economics is that deficits are not in and of themselves a bad thing. While there are good reasons to renegotiate NAFTA, attempting to eliminate trade deficits is not one of them. Perhaps the focus on deficits is merely rhetorical, but the bluster and bombast of this negotiating position will only throw sand in the gears of a complex three-party negotiation on an extraordinarily intricate set of issues. Not surprisingly, Trump’s presidency has led to a cratering of Latin American perceptions of the United States. In the seven largest nations in the region, a global Pew Research poll shows that perceptions of the U.S. have declined by 19 percent on average under Trump. Among those seven countries, median levels of confidence in President Trump to “do the right thing regarding world affairs” are at 14 percent, the lowest of any region in the world. In the face of the onslaught of poorly considered U.S. moves toward the region, one possible reaction for Latin American foreign ministers would be to duck and cover, and hope to go unnoticed by the bullying twitterer-in-chief for the next three years. This strategy is a nonstarter, though, because for many Latin countries the bilateral relationship is too big and too important, or because they know that regional cooperation is needed, as in the effort to address the Venezuelan crisis. A second response would be to mount an anti-yanqui crusade, full of bluster about the return of gunboat diplomacy and imperialism, a la Maduro. Thankfully, only a few of the usual suspects have gone down this path. To their credit, most of Latin America has instead chosen a third route: giving the United States a lesson in grown-up diplomacy. All of the major Latin leaders forcefully rejected Trump’s calls for military intervention, while nonetheless calling out the Maduro dictatorship’s fraudulent Constituent Assembly. The largest Latin countries have worked to generate a consensus on a peaceful approach to isolate Venezuela: the Lima Declaration by twelve regional powers rejected the Constituent Assembly, and Mercosul has invoked its democratic clause against the country.  In the face of Trump’s decision to pull out of the Trans-Pacific Partnership (TPP) and renegotiate NAFTA, Latin America is doubling down on trade: Mercosul is pushing hard to finalize a deal with the EU; countries involved in the original TPP are discussing a new deal; and investment agreements with China continue to multiply. In sum, Latin American leaders are offering a lesson in a type of foreign policy that many in Washington long considered hallmarks of American diplomacy: democracy, trade, and consensus-building within international organizations. For this, perhaps Trump should be thanked. This is my last blog post for Latin America’s Moment. After a rewarding stint at CFR, I am returning to my research at American University, where I hope we can stay in touch.  

The North American Free Trade Agreement was the first in U.S. history to slash trade barriers between a wealthy country and a much poorer one. This week, the NAFTA will mark another first when officials from Mexico, Canada, and the United States sit down in Washington to begin renegotiating the deal. The two milestones are not unconnected—NAFTA was the most controversial trade deal ever negotiated by the United States, in part because of the incentives it created for companies to relocate to Mexico to take advantage of lower wages. The success or failure of the coming negotiations will largely determine whether U.S. trade policy can find a firmer footing for the future or continue to be handcuffed by a lack of political and popular support. Here’s the challenge in a nutshell: how to take a two-decade old agreement that President Trump has called “the worst trade deal ever negotiated,” and somehow alter it sufficiently that the president becomes its champion if and when it goes to Congress for ratification. Trump has many times called himself a great negotiator, and NAFTA will be the acid test of that boast. Here are the four challenges that must be overcome for a successful NAFTA renegotiation: 1)    Putting America first: Trump’s biggest objection to NAFTA is that it was a one-sided deal, pointing to the large increase in the U.S. trade deficit with Mexico since its enactment and the loss of manufacturing jobs to Mexico. Whether the economic benefits of NAFTA to the United States have outweighed those costs—my colleagues James McBride and Mohammed Aly Sergie have a good backgrounder weighing the arguments—is beside the point. Trump needs to show that he has changed the agreement not just in ways that may benefit all three countries, but in ways that will help the United States relative to Canada and Mexico. That is a much harder task. The “America first” issues in the U.S. negotiating objectives include eliminating the special dispute settlement provisions under Chapter 19 of NAFTA, strengthening “Buy America” and other procurement rules that benefit American companies, and tightening so-called “rules of origin” to encourage sourcing in the United States and North America. Each issue is fraught for different reasons. Canada will fight to its last breath to retain the Chapter 19 rules, which allow it to challenge U.S. antidumping and countervailing duty orders before a NAFTA tribunal rather than in U.S. courts. With the ongoing fight over softwood lumber, and a new case that could block sales of Bombardier aircraft in the United States, the issue is still a vital one for Canada. Both Canada and Mexico will object to restrictions on their access to government procurement in the United States, but may be willing to live with this concession. Rules of origin—which is largely an issue for the automotive industry—is a wild card. If they are renegotiated to require more “North American” content, then Mexico will cheer; indeed, it is the U.S. car companies that would object. But if the Trump administration tries to introduce an “American” content requirement, this would clearly violate the spirit of the deal. Of course, Trump could try out a more traditional “pro-America” argument for trade—that strengthening NAFTA rules for digital commerce, for intellectual property, for labor and environmental standards, would all help U.S. companies and the workers they employ. But since the U.S. negotiating proposals on these issues are borrowed almost entirely from the Trans-Pacific Partnership (TPP) agreement that Trump tore up on his first day in the Oval Office, this seems unlikely. 2)    Dealing without deadlines: All three countries are saying that they want to move quickly on the renegotiation to reduce uncertainty for investors in North America. The coming Mexican election next year, which could bring the populist Andrés Manuel López Obrador to power, is seen as an especially strong motivation to get the deal done early. But modern trade negotiations are difficult and complex. The TPP took nearly a decade to negotiate. The Trans-Atlantic Trade and Investment Partnership (TTIP) with Europe was supposed to be concluded last year and has barely made it past the preliminary issues. Mexico’s economy minister Ildefonso Guajardo said last week he sees a “60 percent chance” of the deal being done by the end of the year, which is another way of saying it likely won’t happen. The bigger problem for Trump is that Mexico and Canada have strong incentives to delay. The longer the talks drag out, the wearier the president is likely to become of the whole exercise, and the more likely he becomes to accept modest changes and try to call it victory. Or, more worrisome, it could force Trump to trigger the NAFTA withdrawal provisions that he came so close to invoking in April, which would be highly disruptive but would have the negotiating advantage of setting a hard, six-month deadline for the talks to succeed or fail. 3)    Holding back the wolves: American business and American farmers really like NAFTA. Except the trucking industry, which wants permission for foreign drivers to “reposition” empty trucks within the United States. And the textile industry, which wants to revisit the “tariff preference levels” agreed to under NAFTA that allow for foreign fabrics to be used in some clothing. And the California wine industry, which objects to the special treatment given to domestic wines in Canadian retail outlets. And the dairy industry, which has long chafed at Canada’s protectionist regime for milk and cheese.  In the testimony in June to the International Trade Commission, U.S. companies that were by and large supportive of NAFTA nonetheless raised dozens of issues they would like to see addressed in the negotiations. But the more issues that are thrown on to the negotiating table, the more difficult it will be to reach a deal in any sort of timely fashion. To get the agreement done, the Trump administration is going to have to get very good at saying no to a host of special interests, each of whom comes armed with influential political allies in Congress. 4)    Dealing with Democrats: Many congressional Democrats, who were frustrated with President Obama’s embrace of the TPP and Hillary Clinton’s lukewarm rejection of the deal, have been chomping at the bit to re-establish themselves as the anti-NAFTA, trade-skeptic party. Senate Democratic leader Charles Schumer (D-NY) earlier this month released the party’s “better deal” agenda, which tries to out-Trump Trump in its criticisms of U.S. trade deals. It can be said with confidence that whatever deal Trump can extract from Canada and Mexico will immediately be denounced as a sell-out and a give-away by the congressional Democrats. That will put the president is a position he would surely prefer to avoid—arguing the merits of NAFTA against vociferous opposition from Democrats, and needing pro-trade Republicans like Speaker Paul Ryan (R-WI) and House Ways and Means Committee Chairman Kevin Brady (R-TX) to carry the load for him in Congress. NAFTA was the beginning of an era, the first great experiment in freeing trade between high wage and low-wage countries. It set the basic template for many deals that followed, including the CAFTA with Central America and the Dominican Republic, and China’s entry into the World Trade Organization. None of those deals has become more popular with age. A successful renegotiation of NAFTA would be another milestone, demonstrating such deals can be living agreements that can be updated, improved, and continue to work in the interests of both wealthier and poorer countries. A failure, however, would continue to erode the already fading public confidence in trade.

Ford announced this week that instead of building its new Focus – the best-selling car in the world – in a new $1.6 billion dollar Mexico-based plant, it will ship cars for North American customers from China. Ford has promised that its decision won’t reduce its workforce. Yet even if that is true, American workers will lose. Today the compact Focus uses steel from Wisconsin, axles from Oregon, seatbelts from Indiana, grills from Michigan, tire pressure sensors from Tennessee, front-side shafts from North Carolina and Ohio, and the list goes on. With the shift, these raw materials, parts and components will be sourced and put together in Asia, eliminating dozens of U.S. based suppliers, and likely costing many of their employees their jobs. While assembly was scheduled to move from Michigan to Mexico, that would have ensured ongoing American employment – as over 40 percent of the value of vehicles “made in Mexico” comes from U.S. factory floors and U.S. offices. For products imported from China – as the new Ford Focus will be starting in 2019 – this number is a negligible 4 percent. Ford made the decision first and foremost for market reasons. China’s 28 million vehicle market is the largest in the world. And while U.S. demand for smaller cars has faltered, in China it is growing at a robust 4 percent annually. Already nearly half of the million Ford Focus models sold each year go to Chinese buyers. Importing vehicles isn’t an option as the United States doesn’t have a free trade agreement with China, so cars coming from abroad face a stifling 25 percent tariff. View full text of article, originally published in Americas Quarterly.

While tweets and speeches may continue to cause consternation in Mexico and Canada, the existential threat to NAFTA seems to have passed. President Donald Trump is now talking about giving “renegotiation a good, strong shot” rather than rescinding the free trade agreement entirely. On the docket will be intellectual property, labor rights, e-commerce, rules of origin and the environment – issues Canada and Mexico are happy to upgrade, the outlines already defined within the ill-fated Trans-Pacific Partnership. More contentious issues could include “Buy American” clauses, border customs processes, sanitary measures, and import licenses, as well as specific grievances around the Canadian dairy and soft lumber industries, and regarding Mexican sugar imports. The process will undoubtedly be drawn out; the negotiations won’t begin in earnest until three months after the White House informs a still-waiting Congress. But for Mexico, there is another huge challenge to its economic future: U.S. tax reform. The most obvious and widely noticed threat is a border adjustment tax (BAT). As laid out in Speaker Paul Ryan’s tax reform “blueprint,” it would charge a 20 percent levy on all goods and services brought into the United States, and exempt U.S.-made exports from being taxed at all. Its proponents claim the dollar would appreciate the 25 percent necessary to call it an economic wash; others believe Mexico and other exporting nations would suffer. This pseudo-value added tax (VAT) is looking less and less likely, as it is opposed by Wal-Mart, Target and nearly every other major retailer, as well as by oil companies, car makers and others that depend on products from elsewhere to run their factories and businesses here. Even if it passes, it will face legal challenges in the World Trade Organization (WTO) for its non-VAT qualities, in particular allowing companies to deduct wages when calculating their BAT tax burden. A corporate tax cut is more likely to succeed, and could be as damaging for Mexico. Republicans across the board have long favored a reduction, and with the U.S.' current 35 percent tax rate ranking highest among OECD nations, they have an argument for it. Ryan talks of lowering the corporate rate to 20 percent, bringing the United States in line with the United Kingdom and Luxemburg. Trump’s more drastic 15 percent proposal would put the United States in the bottom 20 percent of chargers, beating out Germany and closing in on the “corporate tax haven” of Ireland. If the U.S. rate plummets, Mexico will be forced to follow suit. View full text of article, originally published in Americas Quarterly.

This afternoon, I joined Randal C. Archibold, Arturo Sarukhan, and José W. Fernández to speak about the domestic politics of Mexico, the impact of corruption, and Mexico’s bilateral strategy with the United States following disagreements over immigration, border walls, and the North American Free Trade Agreement. You can watch the conversation here.

Brazil is in the midst of a grand debate on its future in the global economy. The debate has been happening behind the scenes, obfuscated by the fireworks of the Lava Jato corruption scandal, overshadowed by the flashier discussions of political reform and the Temer administration’s fiscal reforms, and hidden from view by explosive scandals, such as the recent meat-packing disaster that threatens one of Brazil’s key export markets. But as a recent paper by David Trubek, Fabio Morosini, and Michelle Sanchez-Badin highlights, policy elites in Brazil have been rethinking the country’s place in the global economy. The debate takes place against a dramatic domestic recession and political crisis, but also against a highly uncertain international backdrop, which has fueled questions about development strategy, export markets, and Brazil’s foreign policy preferences. Trubek and his co-authors argue that three schools of thought have emerged, with different feelings about the role of the state in the economy and the priorities for market expansion and global alignment: The most deeply embedded of these schools of thought is the so-called “developmentalist” school, which has endured since the 1930s, and historically has had support from both left and right sides of the political spectrum. Developmentalists support a strong role for the state in the economy, and downplay the need for closer ties with developed economies, for fear of being shoehorned into neoliberal economic policies or constrained by restrictive trade agreements that might limit national options. Developmentalism has been knocked down but not beaten by the combined drama of the Lava Jato investigation that originated at state-owned behemoth Petrobras and the impeachment of President Dilma Rousseff. Developmentalism’s continued influence pushes Brazil away from alignment with the United States and toward South-South relations, including with both Latin America and the BRICS. A second school is the pro-opening group of free traders and open economy advocates that Trubek et al. label the “aberturistas.” They advocate a radical rollback of heterodox economic policies and state intervention, and seek free trade and greater integration into global value chains, from which Brazil is largely absent. They are eager to turn toward the United States and the European Union, and more importantly, to shift the dominant economic paradigm toward greater global integration. But historically, they have been few and far between; their influence in some academic institutions has not been matched by real power, save for a few rare appointments in the Treasury and Central Bank. Somewhere in the middle lies the “nationalist developmentalist” group ascendant in the Temer administration. Trubek and his coauthors describe this group as “chastened” developmentalists, seeking to preserve policy space and promote developmental policies, while “reining in” some of the most interventionist policies adopted by the Lula and Rousseff administrations. Foreign Minister José Serra was an exponent of this perspective, seeking accommodation with the United States and increased access to Northern markets without unduly constraining policy flexibility. His departure from the Temer administration last month is a loss to the nationalist developmentalist cause, but that group continues to have strong support within the government, not least because Temer is a pragmatist who is not hellbent on reforming the status quo beyond the changes immediately required by markets and ratings agencies. The authors are quick to note that Brazil may have concretely fewer options than the largely academic debate between the three schools suggests. The United States has withdrawn from the Trans-Pacific Partnership (TPP) and become far less interested in even discussing a bilateral agreement. Mercosur negotiations with Europe continue at their usual glacial pace. China is a treacherous trading partner, given that its exports compete directly with Brazil’s weakened manufacturing sector. As a consequence, “the idea that trade policy can easily be used to leverage major changes” in the developmental model seems “far-fetched.” More importantly, the authors note that alignment with many of the global trading agreements would require major changes to Brazilian industrial policies, to its state-owned enterprises, and to the regulation of foreign direct investment. None of these—with the partial exception of regulation—seem to be in the works. Nonetheless, the debate over trade may soon be pushed into the political arena. In the wake of the United States’ withdrawal from TPP, trade negotiations in the hemisphere are shifting in a more Latin America-centric, Asia-focused direction. In mid-March, ministers from Latin America and Asia met in Viña del Mar to discuss paths forward. It is telling that while neither China nor Brazil was a party to the original TPP, the Viña del Mar meeting included China, but not Brazil. The train toward Asia-Pacific integration is already picking up steam, with the Pacific Alliance countries – Chile, Colombia, Mexico, and Peru – energetically shoveling coal. As Trubek and his coauthors note, the Temer administration does not have a stable or strong mandate to undertake trade reform, nor does the administration seem inclined to move beyond its “nationalist developmentalist” posture. But this need not mean total immobility: Mercosur partner Argentina is increasingly demonstrating interest in inter-bloc negotiations, bilateral agreements remain a possibility, and the sensation of missing the trade train just as it stops in Latin America enroute to Asia could yet change the calculus of key economic players as Brazil heads into its momentous 2018 presidential campaign.

The new administration has emphasized the need to curb security threats from Latin America: bad hombres, rapist Mexicans, and the wall are among the wrenching rhetorical symbols that President Trump has used to signal his goals. Five data points highlight the challenges the administration will face as it moves to secure the southern border. Crime directly consumes 3.55 percent of GDP in Latin America, on average. This is about twice the average cost in developed nations, and exceeds the annual income of the bottom 30 percent of the regional population. Corruption may consume an additional 3 percent of GDP, on average, with illicit financial outflows in some countries suggesting even higher costs. Impunity reigns. Latin American nations are near the top of a global impunity index, with Mexico, Colombia, Nicaragua, Honduras and El Salvador among the world’s worst performers. The practical implications are significant: 9 out of 10 murders go unresolved in a region that is among the world’s most violent. Astounding levels of violence drive migration. A survey of Central American migrants conducted last year by the Inter-American Dialogue found that violence was the second major reason given for the decision to migrate. No wonder, when Latin American homicide rates are four times higher than the global average. The most common trigger for migration, the search for economic opportunities, may also be influenced by the brake crime puts on local economies. In 2014, the U.S. had 55 million self-identified Hispanics or Latinos (about 17 percent of the population). Of these, just over a third – 19.4 million – were immigrants. Latin American remittances surpassed $70 billion in 2016, continuing an upward trend in which remittances to Latin America have more than doubled over the past fifteen years. According to a study of last year’s remittances, “[t]he growth in remittances to Central America…is mostly associated with continued insecurity in the region that is driving people out.” These five data points suggest that untangling the U.S. from Latin America will be fraught with difficulty. The push factors that drive migratory flows – crime, corruption, violence, and impunity – are tangled up with the pull factors that attract them to the U.S.– family ties and economic opportunity – in ways that are not easily undone. The five data points further suggest a strictly hardline approach at the border will be self-defeating. Crime and corruption together consume roughly 6.5 percent of Latin American GDP, driven in no small part by U.S. demand for narcotics and its various knock-on effects: organized crime, violence, and a weak rule of law. The fact that the costs of crime and corruption exceed remittances in most countries in the region suggests that an effective policy set to tackle threats from the southern border must at the very least include rule of law development assistance, aimed at tackling local “push” factors that drive violence and incentivize migration. If, as a consequence of administration policies, remittances were to decline and hundreds of thousands of migrants were blocked or sent home, the economic conditions in much of Latin America – and particularly in those countries closest to the U.S. southern border – would worsen considerably, deepening the “push” factors that drive migration. Both remittances and migratory flows would be driven underground: literally, through border tunnels, and figuratively, through illicit money laundering and organized migrant smuggling. The implications for border security would be profound.

Much is made of the perils of ending NAFTA for Mexico, and rightly so. The 23-year-old agreement has helped the nation not only boost trade but also transform its economy, moving from a commodity to an advanced manufacturing exporter. With 80 percent of its exports headed north, even the threat of change has hurt Mexico’s currency, limited its ability to attract foreign direct investment, and cut the country’s current and future economic growth. Largely overshadowed in all the tough renegotiation talk is what might happen to the U.S. companies that sell into Mexico’s $1 trillion dollar economy and to its 120 million consumers. With NAFTA’s zero tariffs and legal guarantees, the U.S.’ southern neighbor has become a top export market, buying over 15 percent of everything made in America and then sold abroad, topping $230 billion in 2016. Best known and most tweeted about are the industrial behemoths – Caterpillar, Ford, General Motors, and Medtronic – as a part of their tens of billions of dollars in market capitalization are backed by sales of machines, cars and medical equipment to Mexico. More vulnerable are thousands of small and medium-sized American businesses, which are more likely to export to Mexico than anywhere else in the world. All told, these companies big and small employ some 5 million Americans, and help support hundreds of communities across dozens of states. This could all change if NAFTA ends. Tariffs on U.S. exports would rise to an average 7 percent; on some crops and apparel fees would jump to double digits. These new charges would make corn, soy, beef, or pork from far away Argentina and Brazil more economically, not to mention politically, attractive. The tariffs would also enable EU made helicopters, generators, engines and other car parts to edge out American producers, gaining market share. All told, U.S. companies would be at a disadvantage vis-à-vis the past and vis-à-vis the 45 other nations that have free trade agreements with Mexico, and the end of NAFTA would level the playing field for those still without a preferred arrangement. By far the biggest winner will be China. Even with tariffs, Chinese goods already flood the Mexican market, selling billions in cellphones, computers, TV parts, and innumerable tchotchkes. The Asian giant has been stealing market share from U.S. makers since they entered the WTO in 2001, cutting U.S. sales to Mexico from 4 out of every 5 dollars of imports to less than 1 in 2. View full text of article, originally published in Americas Quarterly