(left to right) US Homeland Security chief John Kelly, US Secretary of State Rex Tillerson and Mexican Foreign Minister Luis Videgaray greet each other during a press conference at the Foreign Ministry building in Mexico City on February 23, 2017. Photo credit RONALDO SCHEMIDT/AFP/Getty Images
This article is drawn from a portion of a speech by Dr. Hamre delivered at the Peterson Institute for International Economics on July 17, 2017. The full prepared text can be found here. A video replay of the speech can be found here.
The North American Free Trade Agreement (NAFTA) fundamentally changed the framework of cooperation between the United States and Mexico. During the last 23 years, Mexico and the United States have developed deep and intimate structures of cooperation. NAFTA first transformed business ties between our two countries. Businesses adopted new techniques for managing the manufacturing process, depending extensively on outsourced subcomponent fabrication. A new term entered business lexicons—supply chain management. Manufacturing became distributed across our two countries in deep and complex ways.
NAFTA as an Exoskeleton for Cooperation
The implementation of NAFTA required both Mexico and the U.S. to transcend historic patterns of border management. Efficiency at the border became a priority for entrepreneurs and firms from both countries seeking to benefit from the better terms of trade now available. Consequently, customs and immigration services now needed to work side by side to keep up with the demand for exploding business opportunities. The trade agreement reinforced the benefits of cooperation and helped the parties to overcome long-held suspicions.
At the same time, the insatiable U.S. demand for illegal drugs led to security challenges in Mexico. The United States struggled to deal with the “war on drugs” but found it needed extensive cooperation with Mexican authorities to reach deeper into enemy territory. This led to extensive structures for collaboration and sharing of intelligence and even to joint operations.
Today, the United States has sophisticated and intimate security collaboration with Mexican counterparts. We jointly man intelligence centers. We actively collaborate to counter money laundering. U.S. security personnel join Mexican border control officers on both the northern and southern borders of Mexico. Counter-drug teams operate jointly to combat the menace posed by sophisticated drug cartels.
Virtuous Cycle of Mutual Respect and Economic Energies
U.S. security cooperation with Mexico is extensive, deep, and constant. But it is grounded on the mutual respect and economic energies created by NAFTA. When negotiations were launched, Mexico was a poor neighbor reeling from a “lost decade” of economic dislocation. Mexico’s leaders had just begun adopting international trade rules by joining the General Agreement on Tariffs and Trade (GATT), but they were seeking a way to deepen reform by deepening ties with their rich, rules-based neighbors to the north.
Gradually, Mexico’s economic performance improved behind the reform agenda. Alongside the NAFTA’s economic reforms came improvements in democratic institutions, leading to the election of President Vincente Fox in 2000—the first opposition party candidate to win the presidency since 1910, and the first to defeat a candidate from the Institutional Revolutionary Party in 71 years. Today, over two decades after NAFTA, Mexico is a member of the Organization for Economic Cooperation and Development (OECD) with a stable middle class as well as a multiparty democracy. Without question, this transformation has made for a vastly improved economic security situation for the United States.
Business and Security are Inextricably Linked
NAFTA created sophisticated and integrated business connections, and this led by necessity to creating integrated security operations. All of this is at risk if NAFTA were to collapse. Setting aside the damaging economic repercussions for the United States, a repeal of NAFTA would be a far more serious threat to U.S. homeland security. We would have to increase police and military forces dramatically along the southern border to compensate for the loss of Mexican cooperation. Our intelligence insights into drug cartels would drop dramatically, and since criminal networks also become the logistics backbone for terrorists, we could anticipate a far more dangerous environment in which to counter terrorism. Absent NAFTA, the U.S. would have to face a demonstrably worse security situation on our Southern border.
NAFTA is a highly beneficial security structure, helping the United States defend its borders in a far more modern and efficient way. Repealing NAFTA would threaten to reverse the clock to an earlier and less secure era.