Since the North American Free Trade Agreement (NAFTA) was implemented in 1994, trade has increased dramatically among Canada, the United States and Mexico. While the deal isn’t perfect, the SMU1 Mission Foods Texas-Mexico Center believes it has been critical to encouraging integration in North America, especially between the U.S. and Mexico. The mission of this Center is to better understand the relationship between Texas and Mexico and to encourage collaboration and integration between the two neighbors; NAFTA is crucial to this mission.
Mexico’s opinion of the U.S. is at an all-time low, according to a Pew Research survey, but Texas hasn’t stopped working for a better relationship. As the second largest economy in the U.S., what happens in Texas matters to the rest of the country. The SMU Mission Foods Texas-Mexico Center (Texas-Mexico Center) believes Texas can lead the way to further integration with Mexico; it can be an example to expand and improve U.S.-Mexico relations.
“Our unique mission will influence policy questions and carry out the critical goals of engaging and mentoring our next generation of leaders,” said Luisa del Rosal, founder and executive director of the center.
The Texas-Mexico Center, part of Southern Methodist University, is a research policy center looking to understand and explore the dynamic political, cultural, economic and business relationship between Texas and Mexico.
“The Center will help shape important regional and national conversations on topics such as education, trade and energy—topics that impact our communities every day,” del Rosal said. “As a research policy center, it is a place not of rhetoric, but of facts and idea sharing.”
The Center’s research focuses around five key areas of interest: energy, migration, trade and investment, human capital and education, and border issues. One of the many areas of study and discussion that the Texas-Mexico Center treats within these five focuses is the undeniable economic impact of the North American Free Trade Agreement.
“The Texas-Mexico economic integration under NAFTA is one of the great global success stories of the past 20 years,” said Albert Niemi, former dean of SMU’s Cox School of Business, according to a press release.
U.S. trade with Mexico totaled $525 billion in 2016. NAFTA is critical to the success of the entire United States, but Texas stands to lose the most if the deal is scrapped. Texas is the top exporting state in the U.S. and Mexico is its main market. Texas has the most export-related jobs, with 382,000 dependent on trade with Mexico alone; two million jobs in Texas are trade-related.
The Federal Reserve Bank of Dallas estimated that NAFTA accounted for a quarter of Texas’ six-fold increase in exports to Mexico since 1994. Within Texas, the most vulnerable sector in a world without NAFTA would be manufacturing, since electrical equipment and appliances account for most of the exports from Texas to Mexico.
This center believes in trade and in a globalized world. Trade must be fair; there needs to be laws protecting laborers and consumers; however, it is also critical to understand that consumers everywhere benefit when products are manufactured and transported in the most efficient way. When a factory closes in a small town in Pennsylvania the costs are tangible and immediate. The everyday, constant benefits of affordable goods and services that are exchanged between the United States and Mexico are much harder to pinpoint but that does not mean they are less important. The costs of closing small town factories are much smaller than the immense advantages that free trade provides for all three partners.
“The average American doesn’t realize the impact a renegotiation of NAFTA could have on prices,” del Rosal said, adding, “They will care when the price of an avocado increases 35 percent. Texans will notice when their Ford trucks become unaffordable.”
