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Japan's Ascendance in U.S. Economic Relations with Mexico
- SAIS Review
- Johns Hopkins University Press
- Volume 8, Number 1, Winter-Spring 1988
- pp. 171-188
- 10.1353/sais.1988.0005
- Article
- Additional Information
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JAPAN'S ASCENDANCE IN U.S. ECONOMIC RELATIONS WITH MEXICO Gabriel Székely and Donald Wyman Xn November 1986, while U.S. officials separately decriedJapanese trade practices and Mexican corruption, Mexican President Miguel de la Madrid quietly flew to Tokyo to sign a $1 billion deal. Half of these funds would be used to expand Mexico's capacity to export crude oil and petroleum products to Asia. One quarter would be invested in a joint Mexican-Japanese steel mill (located in the western Mexican state Michoacán) to manufacture products for export to the United States and other countries in the Western Hemisphere. The other quarter would support the expansion of Mexico's non-oil exports. To be sure, Japan and Mexico have several different reasons for expanding bilateral economic relations. Yet the two share at least one important goal: to gain leverage with and reduce their dependence on their largest trading partner , the United States. In the 1980s Mexico has emerged as an arena of both cooperation and competition between Japan and the United States. A strategically important neighbor to the United States, Mexico has also been a key source of raw materials and of cheap labor for the U.S. economy. In turn the United States has provided capital, technology, and market access for most of Mexico's foreign trade, as well as a safe haven for the fleeing capital resources of Mexican entrepreneurial classes alienated from their government. The flow of capital and goods between Mexico and Japan is only a recent phenomenon. Yet todayJapan is Mexico's second largest trading Gabriel Székely is associate director of the Center for U.S. -Mexican Studies at the University of California, San Diego. Donald Wyman, formerly associate dean of the Graduate School of International Relations and Pacific Studies at the university, regrettably passed away in March 1987. 171 172 SAIS REVIEW partner, lender, and foreign investor, due to rapid expansion in these areas. A decade ago Mexican-Japanese trade flows totaled $400 million, and accumulated Japanese investments in Mexico totaled $237 million. In 1985 trade between the two countries amounted to $2.8 billion, while in early 1987 Japanese accumulated investments in Mexico totaled $1.3 billion. These exchanges still pale in comparison with those between Mexico and the United States—which were $22 billion and $10 billion, respectively—or, for that matter, to U.S.-Japanese trade flows, which totaled $85 billion in 1985. Yet seldom has Japan committed itself so strongly to a developing country not on the Asian continent.1 From the perspective of the robustJapanese economy, the value of these transactions is still limited, but it is increasingly salient for Mexico. If current trends persist, the Mexican-Japanese relationship may become very solid indeed. Why hasJapan become so eager to expand economic relations with Mexico ? What characteristics of the budding economic relationship withJapan do the Mexicans perceive as significant to their economic and development goals? What impact will this relatively new trend in Mexico's economic strategy have on U.S.-Mexican and U.S.-Japanese economic and political relations? The alternating waves of hope and dismay generated in the United States by Mexico's oil boom in the 1970s and its economic crash in the early 1980s are being replaced by the traditional U.S. attitude of relative indifference toward the Mexican economy. Such complacency threatens to prevent the United States from appreciating Mexico's economic developments today and in the 1990s. The emerging triangular relationship involving Mexico, Japan, and the United States is a prime example of how Mexico is quickly learning to reduce its economic dependence on the United States and to benefit from growing integration into the world economy. It is also an example of how two of the United States' closest trading partners can compel the United States to reevaluate its traditional position in the face of new opportunities and new challenges. The early stages of Mexican-Japanese economic relations developed chiefly because of Tokyo's desire to secure oil imports from a reliable source. Japanese financial institutions identified Mexico as a promising prospect for their investments. However, current and projectedJapanese investments in Mexico would not be expanding so...