GUADALAJARA, MEXICO – I’m in Mexico’s second-largest city for a few days this week as part of a trade delegation led by Phoenix Mayor Greg Stanton. Mayor Stanton has made forging stronger ties between the business communities of greater Phoenix and our state’s largest trading partner, Mexico, a top priority, with the goal of doubling exports to that country by 2025. Trade missions like these are great ways to get high level conversations going between business and governmental leaders.
Being in a bustling, modern metropolis like Guadalajara, which is known for its thriving high-tech and manufacturing sector and its higher education offerings as much as its tequila production and its legacy as the birthplace of mariachi music, gives you a great perspective on how international trade can help drive prosperity. Forty percent of the Guadalajara region’s manufactured goods, from electronics to footwear, are sold outside Mexico, mostly to the United States, helping to make the city one of Latin America’s top 10 markets for gross domestic product.
The U.S.-Mexico trading relationship has flourished under the now two-decade-old North American Free Trade Agreement, which constitutes the world’s largest free trade area. Mexico is a market of 100 million potential consumers of U.S. exports, and our southern neighbor is the number two destination for U.S. exports. Looking at imports, goods coming from Mexico often have U.S. content in them as U.S.-made component parts head south only to return in a finished product. Mexico is our country’s third largest supplier of imports.
Gov. Ducey and the Legislature recognized Mexico’s importance to Arizona when they wisely continued state funding of the Arizona State Trade and Investment Office in Mexico City as part of the fiscal year 2016 state budget. The city of Phoenix is a major funding partner in the office, which is managed by the Arizona Commerce Authority.
NAFTA is still an economic powerhouse, but a new trade deal under negotiation with several Asian countries could eliminate even more tariffs and barriers preventing U.S. goods and services from strengthening their foothold abroad.
Think of the 12-nation Trans-Pacific Partnership (TPP), which in addition to the U.S. includes our NAFTA partners Canada and Mexico, as the natural next step in the life of NAFTA. The TPP represents the largest goods and services export market for the U.S. In 2013, 44 percent of U.S. exports went to TPP countries, to the tune of nearly $700 billion.
If Congress and the president can reach agreement on the adoption and implementation of TPP, it will mean good news for Arizona. Our state is already seeing growing trade to TPP member countries, so further liberalization should only see expanded opportunities in the region.
Mexico and its advanced manufacturing hubs like Guadalajara also stand to gain from TPP implementation and the pact’s diversified export markets. In 2012 when Mexico was invited to join TPP negotiations, Mexican exports to TPP countries totaled nearly $300 billion. The deal will also help Mexico strengthen its position as a manufacturing launch point into the TPP.
Unfortunately, final adoption of the TPP in the U.S. has proven elusive. President Obama has correctly made this a priority for his administration. Secretary of Defense Ash Carter recently made a spirited case for the trade deal before an audience at Arizona State University. The president will need to put more muscle into this effort, as support among congressional Democrats remains weak.
But before Congress can act on TPP, it first needs to grant the president Trade Promotion Authority (TPA), also known as “fast track.” This would allow Congress to insist on certain negotiating objectives in the TPP, but would ultimately require an up or down vote on the agreement. A bipartisan bill to grant the administration TPA was introduced last week, a positive step on the road to final passage of the TPP.
Mayor Stanton has voiced support for both TPA and TPP because of the positive impact they’ll have on his city. The business leaders that are part of Mayor Stanton’s trade delegation are here to pursue new business opportunities, not to make a political statement. The desire to expand free trade and open up new markets to U.S. products shouldn’t come with a party label. The Trans-Pacific Partnership is good for the U.S., it’s good for Mexico and it’s good for Arizona. The deal and the accompanying Trade Promotion Authority deserve swift passage and the enthusiastic support of the entire Arizona congressional delegation.
Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce & Industry.
The Arizona Chamber of Commerce & Industry is committed to advancing Arizona’s competitive position in the global economy by advocating free-market policies that stimulate economic growth and prosperity for all Arizonans. http://www.azchamber.com/.