Posted by on June 3, 2021 2:30 pm
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Categories: Latin America

 

 

By Manuel Molano, IMCO

 

Commerce, from time immemorial, has been the alternative to violence. Maybe before we were human, in the animal world cooperation is called symbiosis and is the alternative to predation. Trading we cooperate.

 

The reason we trade is because we want to buy things that we do not have, or do not produce. If we can specialize our household, or our group, in the production of tools, we have to sell those tools to those who produce food. In this way, they have what they need to work the land and we have what we want to eat. Modern agriculture would not be possible without many things that are produced outside the agricultural realm. Nor would the activity of an office worker be possible without many technologies that he does not master. The scientist who works in his laboratory depends on the knowledge and exchange of millions of people, from those who made the building he is in,  to the equipment and the substances he uses.

 

If any of us wanted to produce all that he requires to consume, he would plunge into the underdevelopment of past centuries. Beinhocker, in his book The Creation of Wealth, compares two communities: one of people from the Venezuelan Amazon, isolated from the world, and another tribe, a larger one, that of New York. The Amazonian people have access to only 240 goods… a better bowl for drinking water, a better roof for your house, a better blowpipe than your neighbor’s. In contrast, in the New York tribe, there are billions of consumer goods.

 

If as people we should not and cannot produce everything we consume, this is even more true in a modern economy built around knowledge. True, there are regions and countries that are so large that they can substitute domestic trade for international trade. Brazil is protectionist; some sectors of the economy of the United States and the European Union are closed to trade.

 

The Mexican economy has a GDP value very similar to that of the Florida economy. Mexico cannot afford to be protectionist. It is important to explain this to the Mexican governments, but especially to the current federal government. It does not seem possible that the same Mexican Senate that ratified the Free Trade Agreement between Mexico, Canada and the United States of America (TMEC), has endorsed legislation and government acts contrary to the spirit of the treaty, especially against national and foreign investment .

 

If we want the poorest Mexico to develop, it is essential that the southern states trade, at least with the rest of Mexico initially, and that they quickly join the global trade networks of which Mexico is a part. They are places where the legal framework is not compatible with the laws and regulations that have made other regions of the country competitive, where the infrastructure is not sufficient for manufacturing industries to establish themselves, and where there are chronic problems of economic competition, where great local powers just don’t want outside competition.

 

Mexico’s international trade shows increasing figures. The evidence is in a new trade monitor, put together by two brilliant IMCO colleagues, Óscar Ocampo and Diego Díaz. The data is at https://imco.org.mx/monitor/comercio-exterior/.

 

Due to the importance of Mexico’s foreign trade, IMCO will sponsor a series of weekend seminars, called “Virtual Seminar on the Challenges and Opportunities of the Mexico United States Canada Treaty (TMEC). On Friday, June 18, we will have a talk with Luis de la Calle, renowned economist, advisor of IMCO, and former undersecretary of international trade negotiations of Mexico. On Saturday, June 26, we will have the privilege of listening to Kenneth Smith, former head of the technical negotiation of the TMEC, and Juan Carlos Baker, former undersecretary of foreign trade. On July 3, we will talk with Mónica Lugo, who was Deputy Director General for Competitiveness and Innovation at the Mexican Foreign Ministry. In the seminar, trade will be discussed, from some of our extinct civilizations, such as the Maya, to the complexities of today’s global trade.

 


Manuel Molano is Chief Economist, IMCO – Mexican Institute for Competitiveness A.C.  https://imco.org.mx