Going back to plain vanilla trade, there is much afoot in Mexico as politicians there appear to be contemplating the end of NAFTA as we know it thanks to el loco del norte Donald Trump. There is now some weird shorthand emerging about the different strategies Mexico can pursue if NAFTA is scuttled. Sure, none of them are quite as attractive as trading with the world’s largest economy right on its doorstep on tariff-free terms, but hey, you have to make a living for your people somehow if that convenience falls through.
Plan B is, simply put, sign as many trade deals as possible with whomever is willing to do so:
The government of Enrique Pena Nieto might already be implementing a Plan B of sorts as it tries to sign as many trade deals as possible to replace the country that buys 80 per cent of its exports.
Plan C is to (unilaterally) eliminate all tariffs in Mexico in hopes of turning it into the Latin American Singapore. It’s far-fetched, yes, but you know what they say about desperate times:
An unlikely new right-left coalition has emerged to challenge the incumbent Institutional Revolutionary Party (PRI), and to stop left-wing firebrand Andres Manuel Lopez Obrador. Some of the coalition’s members are pushing a Plan C that would lead to the elimination of all tariffs in an effort to turn Mexico into a Latin Singapore.
Plan D is more “strategic” in the sense that Mexico can cotton up to the United States’ erstwhile geopolitical “rival” China:
Mexico sent its first shipment of blueberries to China last summer, as trade between the two countries continues to grow. But experts are skeptical the Chinese market can solve Mexico’s trade issues should the NAFTA talks fail.
“It’s become very sexy to talk about replacing trade with the U.S. with trade with China,” said Enrique Dussel Peters, an economist at the Universidad Nacional Autonoma de Mexico and co-ordinator of its Centre for Mexico-China Studies. “It’s as if one could simply start sending to China, automatically and massively, the same cars we now send to North America.
With Mexican politics in a similar state of flux with populist firebrand Obrador leading the polls, these are more suggestions than actual courses of action at present. Moreover, you do have to wonder if any combination of other assorted trade partners Mexico can legitimately “replace” the United States with as a key trade partner.
International Political Economy Zone