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Larry Summers blog March 24, 2017
by: Lawrence Summers |
I was in Mexico yesterday seeing the country’s president, foreign minister and finance minister and addressing a convention of bankers. The only subjects anyone is interested in are the future of Nafta and US-Mexican relations.
I came to Mexico from Beijing and so was able to report that there was no greater strategic gift the US could give China than to abrogate Nafta and rupture the North American community.
In narrow commercial terms right now, Mexican goods enter the US on a preferred basis relative to Asian goods. This preference would disappear with suspension of the free trade agreement. Furthermore, about 70 per cent of Mexican exports are of goods that are not finished but are inputs to further US production. Anything that hurts Mexico therefore also hurts us in global economic competition with China.
There is another, even more important, strategic dimension. As illustrated by the more than $60bn China has poured into Hugo Chavez’s Venezuela, Beijing would regard opportunities to ally with a hard left anti-American government as strategic windfalls. What better than a country of 130m people with a 2,000-mile border with the US? Every Mexican with whom I spoke said that the risk of their country electing a Chavez-like government had gone way up in recent months on account of American disrespect and truculence. https://www.ft.com/content/122b8051-9847-3a62-ba31-d94c5cdf9a06
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