Are the Tres Amigos Really Amigos?

This week the leaders of the three NAFTA nations are meeting in Mexico for an opportunity to tune up NAFTA and repair some points of political contention between “Los Tres Amigos.” Much of the media reporting on the meeting has taken a negative approach to the gathering, pointing out points of contention between the three friends. In reality, there are tensions, but not ones that would seriously affect the relationship between the three countries. The relationship between the U.S., Canada and Mexico are in the process of broaching issues that historically would have never been a consideration due to cultural limitations. The tensions that arise from opening up former policy approaches towards their North American neighbors makes the tensions seem like those that are common among any family, as opposed to those that could divide relations between three of the strongest trading partners globally.

The tough battle for immigration reform in the U.S. is an issue that has a significant amount of weight within Mexico. Mexican remittances, funds sent from relatives abroad to families living in Mexico, are one of the most important sources of funds for the Mexican economy. Most Mexicans have relatives in the United States or abroad, and many marriages exist with one partner in the U.S. supporting their family and children who reside in Mexico.

The immigration debate is one of the issues that both Republicans and Democrats have tried to push through, but have always been met with failure due to local political considerations in allowing an opening of not only the U.S. border, but also American identity. While President Pena Nieto will represent Mexicans locally and in the U.S., he is also keenly aware of the political sensitivity of trying to ensure equal measure for over ten million Mexican nationals in the United States who currently have no status but are being considered to become part of American society. Mexico will voice its concern and push for rights for Mexicans in the U.S,. but there is likely a realistic expectation from Mexican officials that the issue will resolve itself in due course, as internal political struggles in the U.S. cannot be resolved from abroad.

Canadian media have been reporting that tensions, great tensions, exist between Mexico and Canada due to a visa requirement being placed on Mexicans traveling to Canada. Previously, many Mexicans came to Canada to visit, study or work, as no visas were required and a semi-American experience could be had by visiting one of Canada’s major cities. Now, while there was no official visa requirement, the existence of many from Mexico coming to Canada and remaining in Canada without the proper documents created a situation where those who came to Canada for a simple vacation with innocent intentions were singled out by anxious border security officials in Canada and detained without proper justification. While the situation of negative intentions by visitors and unprofessional border officers is not the norm, it seemed easier at the time to apply a visa to Mexican travelers so that the process that might be confused at the border point could be resolved before any investment would be taken by the visitor to travel to Canada and be returned to Mexico.

The resolution that proper fences make for better neighborly relations was applied, but does it have a negative effect on travelers and commerce between the two counties? For travel to the U.S., Mexicans also require a visa. This does not hinder most investment between the two countries as there is an expectation that a secure border is needed due to the level of illegal immigration, and the expectation is that costs balance with the benefits. Business professionals under NAFTA can sometimes get a pass in order to travel between the three countries easier if visa requirements create a hindrance to doing business. Canadian business, especially those in the oil and gas industry will be very interested in the recent move by the Pena Nieto government to open PEMEX to foreign investment, an unpopular move within Mexico that required a change in the constitution of Mexico, but will draw in billions in investment from the U.S., Canada and abroad.

While visas can be a nuisance and will limit travel from Mexico to Canada, investment seems to be picking up with the growth and future prospects of Mexico as the next large developing economy, as the top of the MINT countries, Mexico is the engine of one of the new BRICS economies. Canadian officials see Mexico’s future growth as an opportunity, but visas are not the hindrance they claim it to be. The largest barrier is that the U.S. casts a long shadow between both nations, and it often simply does not put in the policy approaches to increase trade. Anomalies like Bombardier’s investment in Mexico and the Bimbo food company buying out one of Canada’s largest bread manufacturing companies for over $1 billion shows that if investment between the two countries are desired, they simply need to start the process. Making more efficient visas might be a first logical step to increasing trade, and a policy was announced recently to increase air travel between the two countries.

The opening of PEMEX and approval of Keystone XL may be the most significant issues for the U.S. in the meeting of the Tres Amigos. Mexico and the Pena Nieto government is bargaining Mexico’s national oil industry in order to keep up the healthy growth rates for a longer term and produce a carrot for foreign governments to invest in Mexico. His government has taken a massive hit in popularity in his move to open PEMEX to the U.S. and Canada, and it is up to the Obama administration to cultivate the relationship for oil and gas between the U.S., Mexico and Canada. Mexico and Canada have made themselves available in order to meet America’s needs, and expect that the U.S. will not alienate its neighbors when they try to wean the U.S. off oil from the Middle East and Venezuela, two regions that are often in conflict.

Canada has recently taken to pushing the Obama administration on Keystone XL, suggesting that while the U.S. dilly-dallies on making a decision to displace more of its conflict oil with Canadian oil, China may become the main customer of North American oil and become a large investor in oil in America’s backyard. While the Canadian government likely understands the limitations on the Obama administration from environmental groups and anti-oil sands activists, it has taken to openly pressure the Obama administration on Keystone XL. It has been announced that no movement on the issue will be taken by the U.S. government in the Tres Amigos Summit, but Mexican officials will likely take a page from the Canadians if the U.S. does not seek significant investment in PEMEX in the near future.

While issues abound between the three friends, the ever-present psychological shadow between Mexico and Canada and the limitations facing Obama from Congress and his supporters seems to be the root cause of many frustrations between the three countries. While there is an understanding that the U.S. must seek agreements internally for policies between the NAFTA nations, there is also an expectation by their Amigos that Canada and Mexico should be given deference over investments and countries outside of NAFTA, especially if those countries do not have America’s interests in mind.