It is an interesting journey to learn about the relationship history of the United States and Mexico. In a one-word description, ambivalent describes the history of these two friends. This is because for last two centuries or so, the two neighbours were not friends, associates, or allies. They were enemies. During the capture of current day California, Arizona, New Mexico, and Colorado by the United States troops, Mexico‘s territory was split into two. The outcome led to a retaliation by the Mexicans as they engaged in cross border raids, hence, forcing the United States military to penetrate deeper into their territory. These happening worsened the relationship between the two countries. According to John Coatsworth, a Columbian professor teaching international and public affairs history, the real relationship test between the two countries was in 1938 when Mexico decided to publicly own its oil industry as well as seize all the assets of all offshore companies within the countries (Villarreal, 2010). During this period, the United States administration was under constant pressure from a majority of interest groups, especially influential oil companies to send troops and close down the oil fields. However, the Roosevelt’s administration refused to participate in the aforementioned measures. This promoted hostilities and conflicts in the economic, political, and military operation within the two countries. The ongoing conflicts paralyzed particular activities of these countries, which prompted the Roosevelt’s administration to develop effective neighbour policy. For the first time in over three decades, the United States president met with the Mexican president, Avila Camacho. The paper will evaluate different aspects of trade between the United States and Mexico.
In 1942, the demand for agricultural workers was on the rise in the United States because a majority of potential farmers were off at war in Europe and Asia. Therefore, Mexico and the US signed a temporary worker program agreement (Bracero accord), which allowed for the immigration of Mexicans to offer labour. It is estimated that the number of Mexicans who relocated to the US were tens of thousands. A majority of Americans became hostile towards the Mexicans especially during the period of great depression. They felt that the Mexican were snatching away their jobs and creating harsh living conditions for them. The end of the Second World War saw the “neighbourly” ties wearing off. Since Mexicans received harsh treatments from the Americans, its government back home concentrated on industrializing its economies by utilizing its own resources. Besides, the government greatly limited, controlled, and regulated the flow of foreign capital into the country. This led to the closure of the Mexican border from any trade and investment by the United States. As a way of retaliation, the United States did the same to the Mexican labour. Automatically, this led to the termination of Bracero accord program and initiated the beginning of deportation of Mexicans back to their country. However, the persistent need for workers in different sectors of the American economy prompted desperate Mexican to cross the border illegally. In 1982, Mexicans faced the worst crisis in their economy due to the high oil prices as well as competition from Arab countries. At this point, Mexicans were left with no choice other than partnering with the United States. Finally, the integration of these economies formed a bilateral relationship, which was from a competition to partnership (Wilson, 2011).
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A majority of people have often thought of imports and exports to be commodities made by one country and bought by another. However, the case is different for United States and Mexico because they are more of production sharing. The manufacturers in Mexico and the United States often unite in the creation of products as well as regional supply chains across the two borders. Therefore, in many occasions, many imports and exports are of temporary nature during their production. The levels of trade between these two countries vary depending on the type of goods. For instance, the cars built in North America cross the borders of the United States at least eight times during production. This is because some of the materials and parts used for integration are developed in Mexico or Canada. This is not only limited to car manufacturing, other affected industries include electronics, appliances, and machinery, which rely on the expertise of and assistance of the Mexican manufacturers. According to Koopman et al., (2010), 40% of all the United States imports from Mexico are originally manufactured in the United States. This makes its likely that the local content in Mexican imports from the United States is also very high. Basically, this means that that regardless of the logo “Made in Mexico” A huge chunk of the money spent by United States consumers on Mexican imports often go to U.S industries and workers. In comparison, the same cannot be said for the Chinese products because they only contain around 4% of United States contents. Reports indicate that California, New Mexico, New Hampshire, Texas, and Arizona States highly depend on imports from Mexico. On the other hand, a majority of states in the United States have close economic ties with Mexico.
Mexican companies are regarded as the giant leaders of four major areas in the United States market. These include cement, breads and other baked products, tortillas, and milk and dairy products. On the other hand, the Mexican government has established major investments projects in the United States such as mining retail stores, beverages, and other sections of the economy. It might be surprising for the United States consumers to realize that the usual brands such as Borden Milk, Saks Fifth Avenue Stores, and Boboli Pizza Crust are sustained by the Mexican investments.
The relationship between Mexico and the United States is different from other countries because the two share production. Normally, when countries collaborate to produce goods, the depth of trade relations grow rapidly. The explanation behind this sentiment is that the same products will cross the national boundaries as much as possible. Since both the countries have multinational corporations located in the opposite countries, it means that the effects of tariff barriers are multiplied whenever vertical integrations are realized. Since the establishment of North American Free Trade Agreement (NAFTA), the foreign direct investment (FDI) has enhanced trade between the two countries (Martin, 1993). The establishments of these corporations have ensured the creation of high-level economic dialogue (HLED), which is a crucial factor in promoting trade. Besides, there has been an increase in positive competition and connectivity, establishment of economic growth and innovation, and improvement of global leadership.
It is with no doubt that, trade between these two countries has had impacts on the employees and their families in the selling country as well as the consumers and their families in the purchasing country including their citizenry. A majority of past researches indicated that many Mexicans migrated into the United States in search for greener pastures. This meant that many families had to break their social structure as breadwinners went out to look for jobs. In some case, some industrial workers decided to seek for citizenship due to flexibility. On the other hand, consumers in the purchasing countries have been forced to depend on the importing country. For example, studies indicate that Americans get a huge percentage of milk and dairy products from Mexico. This creates a form of dependency on the products. Moreover, it is highly likely that citizens of the purchasing country will benefit from job opportunities. Simply, employments are a major outcome for both the countries in play.
In cases where trading relationships would cease between Mexico and the United States, several factors would b affected. For instance, many foreign workers might lose their jobs due to downsizing. Secondly, there would be shortage of products leading to scarcity or high pricing. For instance, the United States will experience a shortage of milk or dairy products because the internal existing sources might not be able to sustain the entire population. Moreover, other countries will be affected in the process. For instance, Canada might or might not get contracts from the two countries to build materials and parts used in car manufacturing. Simply, the global market is likely to be negatively affected. Lastly, cessation of the trade relations might cause negative impacts on the economy.
International trading improves the stability of the global market because it stimulates growth in the formal economy, promotes greater market competition, enhances investments, and creates many opportunities for employment as well as innovations. On the other hand, cessation of international trading would slow down economic growth and promote instability because of lack of dependency channels. The current trends of trading relations and activities are characterized by new technologies in communications and infrastructures. As a result, the levels of trading have been upgraded and revolutionized making trading easier and of high quality (Rourke, 2010).
In conclusion, the competitive global market enables the United States to be stronger in partnership with the neighbours such as Mexico and Canada than be against them. The trade between these two countries is qualitatively different because 40% of Mexico’s imports are made in the United States. United States and Mexico do not simply trade good but they share in the production. Both the exports and the imports are a backbone for the U.S and Mexico’s industries and jobs.
References
Koopman, R., Powers, W., Wang, Z., & Wei, S. J. (2010). Give credit where credit is due: Tracing value added in global production chains (No. w16426). National Bureau of Economic Research.
Martin, P. L. (1993). Trade and migration: NAFTA and agriculture. Peterson Institute Press: All Books .
Rourke, J. T., & Boyer, M. A. (2010). International Politics on the World Stage, Brief . McGraw-Hill College.
Villarreal, M. A. (2010, March). US-Mexico Economic Relations: Trends, Issues, and Implications. Library of Congress Washington Dc Congressional Research Service.
Wilson, C. E. (2011). Working together: Economic ties between the United States and Mexico .
