Jorge Guajardo is a Mexican politician and diplomat who served as the country’s ambassador to the People’s Republic of China from 2007 to 2013. He was previously Mexico’s Consul General in Austin, Texas, and now works with McLarty Global Associates.
Guajardo, whose center-right National Action Party is currently in opposition in Mexico, spoke with The Politic’s Ciaran Hassan about relations between Mexico, China, and the U.S. This includes issues relating to trade agreements like the Trans-Pacific Partnership (TPP) and the North American Free Trade Agreement (NAFTA). Mexico is a participant in both, but President Trump has withdrawn the U.S. from the former and has pledged to renegotiate the latter.
The Politic: Many analysts have warned that President Trump’s escalating and sometimes volatile rhetoric with regards to the United States’ trade relations with China could lead to a trade war between the two nations. And even if a trade war doesn’t materialize, we could expect to see increased tariffs between the United States and China. What steps, if any, do you see the Mexican government’s taking to minimize the impact of a potential U.S.-China trade feud on Mexico’s economy and Mexican citizens?
Jorge Guajardo: Whatever happens tradewise between the United States and China is not necessarily a concern of Mexico. Inasmuch as—Mexico was displaced in the U.S. market when China joined the WTO [World Trade Organization], so Mexico, if anything, would stand to benefit from any trade wars between the U.S. and China. However—and this is an important however—that doesn’t mean Mexico wants a trade war between the U.S. and China. Mexico believes in free trade. We believe in the benefits of an organized trade system, and any threat to that is something that Mexico has to go against because we are, in essence, a free trading nation. I think we’re the country with the most free trading agreements in the world. We have free trade in our DNA. So any time any two countries go into a trade war, it threatens the international trade system, and that is something Mexico is against. But from that to Mexico actually doing something to stop China and the U.S. going to a trade war, I think that would not be our role.
In this geopolitical balance between the United States, China, Mexico, and many other nations, what do you primarily see Mexico’s role as?
So Mexico, again—back in the 1980s, Mexico was a raw materials exporting country. I think about 80% of our exports were oil, and because—I mean if you see most countries’ development models, we’ll concur that exporting raw materials is not the best way to develop, economically, a country. I mean, there might be some exceptions, but in general, it leads to authoritarian regimes, it leads to corruption, it leads to misallocation of resources. So Mexico began in the late 1980s, continuing all the way to the present, to switch from a raw materials exporting country to a manufactured goods exporting country. Right now, I believe about 85% of our exports are manufactured goods. In that sense, Mexico competes directly for markets with China. China too is an exporting country of manufactured goods, so we compete head-on. To put it in layman’s terms, China is Coke; we are Pepsi. We are competing for market access.
Before China joined the WTO in 2001, Mexico had a much higher share of the U.S. market than we do now. After China joined the WTO in 2001, Mexico lost a big share of its major exporting countries, so in that sense, Mexico and China compete. With regards to the United States which, if you will, is probably the gold standard in terms of markets—it’s the biggest market in the world—we believe that whatever situations they have with China—that if China is a problem—Mexico is a solution. And I’ll tell you why: out of every U.S. dollar [worth of goods] that China exports to the United States, five cents are of U.S. components. Out of every U.S. dollar that Mexico exports to the United States, 40 cents are of U.S. components—that is, things Mexico imported from the United States, reassembled, and re-exported to the United States. So they have a big U.S. component. What we’re providing is a solution for U.S. manufacturing firms to be competitive in the areas they want to be—which is innovation, technology, et cetera—and in cooperation, to be—what’s the word I’m looking for? —that we can help them by adding probably more affordable labor and making a product that can compete with Chinese products.
So that’s where Mexico is trying to complement the U.S., we want to be complementary partners with the U.S—that’s the word I was looking for. So that’s where Mexico is trying to insert itself with regards to the United States. Mexico, on the other hand, has free trade agreements also with the EU; we have free trade agreements with Japan; we have free trade agreements with the Pacific Alliance; so now that President Trump has, sort of, threatened the whole NAFTA existence, I think Mexico will be looking for other areas of opportunity, and we will be switching our views going forward.
That’s a great point, and it touches on the second question I was going to ask: now that President Trump has announced his administration’s views on NAFTA and pulled the United States out of the TPP, China will—particularly with regards to the [countries in the] TPP—have more leeway to exert economic influence through its own multilateral trade agreements. Do you thus see any opportunities for increased multilateral trade cooperation between China and Mexico?
I see none. Again, I will tell you, if you find a multilateral opportunity between Coke and Pepsi, maybe I’ll consider one between Mexico and China. In fact, we are competing countries: we both export manufactured goods. Mexico has a humongous trade deficit with China; nevertheless, we don’t question it, and we don’t try to blow up the whole trading system because we run a trade deficit. That’s just how it happens: we run a trade deficit with China, we try to look for other markets where we might run a surplus. But for the possibility that Mexico would be joining a free-trade alliance with China, I don’t see that happening. I don’t see what would be the benefits to Mexico of doing that.
That makes sense. How does the Mexican calculus change, then, maybe not with regards to China, but with regards to other nations if the United States pushes for renegotiation of NAFTA?
I’ll give you a very clear example. Mexico runs a huge deficit in food products imported from the United States. We import most of our wheat, soy, corn, meat—pork meat, beef—most everything we import from the United States. If NAFTA was no longer in effect, Mexico would probably go looking for that supply from other countries and, in the process, trying to open those countries to Mexican products. Two clear examples: Brazil and Argentina. They can easily replace everything we are currently importing from the United States. We can start importing from Argentina and Brazil, and open the Brazilian and Argentinean markets, which are currently closed to our manufactured goods—we could be exporting to them cars, we could be exporting to them machinery. That’s what I’m saying: we have to realign where we start seeking markets.
I don’t think China would be the one, but TPP-11 [the countries in the TPP, except the U.S.] might be. A TPP without the United States, maybe that would be another area where Mexico could find an opportunity. Currently, I believe 50% of Mexico’s exports to the United States are still under WTO rules that would still be in effect if NAFTA were scrapped, so 50% of our export market to the United States would remain untouched; what we would have to find a replacement for is the remaining 50%. So we don’t need markets as big as the United States, we just need markets that will absorb what we are redirecting and, in the process, we can start supplying from these countries…
As you mentioned earlier, China and Mexico are in competition economically—
China and Mexico compete directly. It doesn’t mean that we want to attack each other, but we compete with each other. I will go to the Coke and Pepsi example: both Coke and Pepsi benefit from there being supermarkets and convenience stores and where they can both sell their products. Mexico and China both benefit from an organized trading system: the WTO, a rules-based system. So we will cooperate in making sure it’s alive and healthy. But we do compete.
But surely there are ways China and Mexico can cooperate economically outside of ensuring the health of the WTO and of the trading system?
Yes, so I’ll give you an example. Traditionally—it was sort of unwritten, but it was a gentleman’s understanding—Mexico’s telecommunications sector was closed to the Chinese. And this was mostly done by pressure from the United States, because the United States feared that if we opened our telecommunications to the Chinese—that if the Chinese integrated the North American system in a way—that they would then have access to the U.S. system. So we were always sort of asked to forgo looking into Chinese products—Huawei, for example—for the Mexican telecommunications infrastructure.
With NAFTA gone, Mexico would probably start exploring the possibilities of bringing in Chinese telecommunications products—because they are better priced, and we have no issue with them. It was the U.S. that had an issue. It was not Mexico that had an issue. So what you will see is Mexico just opening its markets—to foreign competitors—that before were sort of reserved for U.S. suppliers: oil, energy exploration—which was sort of like an understanding that we would leave it mostly for North American partners, now you see that in the energy…grounds, the Chinese are starting to get a foothold. That’s Mexico sort of looking at other areas, not necessarily at the market, but just at strategic partners.
And what about cooperation outside of trade? Joint humanitarian efforts? Bilateral military exercises?
Mexico doesn’t play a big role militarily, and we want to keep it that way. We don’t run exercises, we are not a—we don’t have an expeditious army or military. They usually don’t leave our borders, so that would not be an area of cooperation. There are other areas of cooperation, but it’s marginal—it’s not really something that would be groundbreaking.
Touching on this, then, what do you think is the biggest impediment—the biggest roadblock outside of this direct economic competition you’ve mentioned—to stronger general relations between Mexico and China?
Traditionally, it was the fact that Mexico considered itself a partner with the United States, and the United States tended to consider China as an adversary. So inherently, we tended to be more guarded because we thought it was better to be on good terms with our partners and our friends. Now that that is no longer the case with President Trump, I think there aren’t going to be impediments for Mexico and China’s forming all sorts of strategic alliances.
And while we’re on the topic of the Trump administration: do you see any issues with President Trump’s treatment of DACA recipients? What I mean is—birth tourism is an increasingly common problem here in the United States, with people from countries like China coming to the United States for the sole purpose of giving birth and making their children American citizens by birthright. In fact, the Los Angeles Times ran a very extensive article on this a few months ago. Do you see any contradiction between how President Trump’s administration has treated recipients of DACA—who tend to be of Hispanic origin—and how his administration has failed to even mention the many Chinese Americans who are born to tourist parents, return to China, then later return to the United States to reap the benefits of an American citizenship?
Where to begin? So, I think President Trump’s repeal of DACA doesn’t stand for anything other than racism. I think he doesn’t like brown people. I think his base doesn’t like brown people, and that’s why he’s repealing DACA. I think it has nothing to do with immigration policy. It is related to racism. So the Chinese who are coming to the United States to give birth that you mentioned—I don’t think it’s in such numbers, and it doesn’t tend to be an issue as much because Asians don’t garner the same racist backlash that Hispanics do in the United States. I’m not saying that Asians are not subject to racism; I’m just saying that a lot of this racism is geared towards Hispanics in particular.
Moving away from the international stage and towards Mexico’s domestic landscape, ahead of Mexico’s upcoming elections next year, what does Mexico’s political landscape look like? Has the election of Donald Trump here in the United States unified or divided Mexican political parties? And other than Trump, other than this international issue, what are the other key issues on Mexican voters’ minds?
Let me rephrase that question because I don’t think Trump is an issue in the Mexican election. Every Mexican party is positioning itself as the anti-U.S. party, as the anti-Trump party, so there is no party trying to put forward an agenda that says, “I’m going to be the one bringing you closer to the United States.” I don’t think Mexicans will vote [on] Trump, I think Mexico has its own issues to worry about: corruption, security, unemployment. That’s what worries Mexicans; it’s not Trump. We will not go to the polls thinking of Donald Trump; we will go to the polls thinking of Mexico. And in that sense, I think the issues that parties or different candidates will be contending—probably number one will be corruption.
There is widespread corruption in Mexico, and the people are just sick and tired of it. Whereas before—I’ll take you back six, eight years—corruption would always be high in the polls as a concern, but it was conventional wisdom that people didn’t vote [on] corruption; that is to say, they saw it as a problem, but somehow they assumed that it was an endemic problem, there was nothing they could do, so they just didn’t vote on that as an issue. I think that has changed; I think the issue of corruption will be a driving force in this election. The issue of crime will be a driving force in this election, economic development will be a driving force in this election. In no way will Trump be important in this election because, again, nobody is coming forward and making a pro-Trump, pro-U.S. argument at this point.
So, President Trump’s election hasn’t had a significant effect on your domestic political landscape, but it’s surely had an effect on Mexicans’ perception of the United States at large. How has President Trump’s election changed Mexicans’ perception of the United States as a country, a polity, and of Americans as a people?
I don’t think there is a single country—I think Israel would be the exception—where they have a better perception of the United States than they did pre-Trump. I think what Trump changes in terms of electoral politics in Mexico is the narrative. Before, there was a pro-U.S. cooperation/pro-human rights/pro-free trade economic realization; I think that narrative changes now with Trump because the United States is not attuned to these values anymore.
So it’s sort of each party on its own; if you want to make a case for human rights, it’s not just to fit into an international world order, but rather for the merits of the local population. If you want to make a case for free trade, it’s again no longer as a form of fitting in; it’s more on the merits, and that becomes a more difficult narrative to sustain for political parties. So the temptation to appeal to populist solutions becomes widespread because populist solutions tend to be easy solutions to complex problems. And now that we don’t have the U.S. as an incentive to, you know, climb the difficult mountain, to reach a certain level—now it’s, “Let’s just go for the easy solution.” And that’s where the danger lies.
Do you see a populist shift in Mexico?
I don’t see it happening, but I’m saying that would be a factor. Polls don’t show that the populist candidate is leading, but that would be the temptation; I think, if a shift were to happen, that would be the underlying temptation. On the other hand, Mexicans—like a lot of countries around the world—have learned, from the U.S.’s experience, that populist, crazy candidates don’t change once they assume the presidency, that who you see is who they are. So that’s why you see a lot of right-wing candidates in Europe being defeated, because people have appreciated that these people don’t moderate in the presidency, and that gives them second thoughts. Which is another issue to consider: all these populist candidates and movements you’ve been seeing—whether it be Trump, Brexit, or other European elections—to be rightist. On the other hand, Latin American populist candidates tend to be leftist candidates, and leftist politicians have been on the losing end for quite a while.
Why do you think leftist politicians lose?
Because they tend to mismanage the economy. Look at Argentina under Kirchner, Ecuador under Correa, Venezuela under Maduro and Chávez, Bolivia under Morales, Brazil under Lula—leftists tend to mismanage the economy. And people get very fed up with that. I’m trying to draw a distinction between these populist candidates that have been threatening Europe, that they come from the right, and the populist candidates in Latin America that tend to come from the left. And the left is on the losing end lately, so they don’t have as high a probability of winning.
That is certainly an enlightening take on the state of leftist populism in Mexico. Well, we’ve gone through the more serious questions, so now these are the lighter, rapid-fire questions.
So, first off, which living person do you most admire, and why?
Carlos Prieto. He’s a Mexican cellist.
Do you play the cello?
No, I don’t, but he’s just the ultimate Renaissance man. He’s an engineer from MIT who speaks several languages, who is an economist, who also is a maestro with a cello—played together with Yo-Yo Ma; he’s a Mexican, he’s an ultimate gentleman, so I just admire him very much.
He sounds fascinating.
For me, he’s just—he’s the person I admire the most.
Alright, next question: what place in the world would you most like to visit that you haven’t yet visited?
[laughs] Oh, I’ve been to most places. I would probably go with Nigeria. I’d like to visit Nigeria. I’ve never been there.
Oh, I don’t know—I’d like to see another model, another big country that’s completely different from another continent. I don’t know much of Africa, and yet it’s a huge economy with all its issues, problems, and opportunities—I’d just like to go and see what’s going on there.
Alright, third question. What advice do you have for college students like myself?
Hustle above your weight. Don’t settle for whatever you’re given; you’ve gotta hustle, you’ve gotta hustle. As you join the workforce, hustle. Even in school, hustle. If there is somebody—a speaker—in town, hustle: try to meet him, try to take him out for dinner. Just hustle more. Don’t just attend: you’ve gotta hustle.
Speaking of, Ambassador, would you like to go get dinner sometime?
[laughs] With pleasure, with pleasure!
Great! On to the next question: where do you get your news?
My traditional news outlets, my mainstays, are The Wall Street Journal, The Economist, and The New Yorker. I do a lot of Twitter for peripheral vision.
All great sources. As I’m sure you’re aware, Twitter is now a presidential platform. Finally, in a movie about your life, which actor should play you?
Yes, I’ve always been told that I look like him, so I’ll go with him.
That’s a great choice, but Alan Rickman has unfortunately passed away. What about a living actor?
I’m terrible at actors; it’s always my wife who tells me the names. I’m terrible at actors. The second option, I’ll go with—who’s the lawyer who dies in The Good Wife? Will—I forget his name. I’m terrible at this.
Will Gardner’s the lawyer—
You got it. That’s the character I’m referring to; I forget the actor’s name—
There you go!
Yeah, he’s a phenomenal actor; I think he’d do a good job of playing you!
I think that concludes our interview! Thank you so much, Ambassador, for taking time out of your schedule for this.
With pleasure. Anytime! Thanks for reaching out!
This interview has been edited for concision and clarity.