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For Biden, Mexico's endless allure

By Duncan Wood and Christopher Wilson

Vice President Joe Biden recently canceled the Panama leg of his trip to Latin America, citing the need to be in Washington, focusing on Syria. He did not, however, cancel his visit to Mexico.

Biden arrived in Mexico late Thursday night and is due to meet with President Enrique Peña Nieto, and kick off the U.S.-Mexico High Level Economic Dialogue (HLED). There were plenty of reasons for the vice president to stay home — including the brewing budget battle, and the shootings in Washington's Navy Yard — in addition to Syria. So it is worth asking why he didn't.

Biden had both political and economic reasons to visit Mexico. On the political front, he is seeking to strengthen his credibility with the businesses that can benefit from strengthened trade and investment with Mexico. But perhaps Biden's most important reason is the power of Latino voters. The 2012 election made it clear that any viable Republican presidential candidate would need to win the support of close to 40 percent of Latino voters. President George W. Bush did this in 2004; Mitt Romney got 27 percent last year.

The corollary, of course, is that a Democrat needs around 60 percent of the Latino vote to win the White House. Should Biden decide to run in 2016, his credibility with Latino voters is likely to be strengthened by a focus on relations with Latin America in general and Mexico in particular — given that 63 percent of U.S. Latinos are either originally from Mexico or their families are. This is, in fact, the vice president's second trip to Mexico, and third trip to Latin America, in a year.

On the economic front, Mexico's new president has generated significant momentum with a flurry of reforms that promise to boost growth in the years ahead — and create opportunities for U.S. companies operating in the United States and Mexico. Even before taking office, President-elect Peña Nieto partnered with the party he ousted, the PAN, to pass a major labor law reform. This added flexibility to the labor market, making it easier for companies to hire and fire. Its provisions are also expected to improve productivity and worker protections.

Once in office, Peña Nieto tackled the thorny issue of education. He managed to garner support from all major parties to take on the teachers' union, the largest in Latin America, which has often proved a major obstacle to needed reform. Then he pushed through passage of telecommunications reform, and introduced financial, fiscal and energy reforms. The last three are still being negotiated in Congress — but that so much has happened within the new administration's first year is almost stunning.

Of course, none of this means that Mexico's many economic and social problems have been solved and it is on the fast track to join the first world. Teachers, upset with their loss of control over education policy, and opponents of the proposed energy reform have taken to the streets in Mexico City. Organized crime continues to present serious challenges, especially in states like Michoacán and Tamaulipas.

The strength of the Pact for Mexico, an agreement among the three main political parties, is now being seriously tested due to disagreements on the fiscal and energy reforms. The latest release of economic data shows a slowdown, because of weak global demand and a lull in government infrastructure spending.

Yet even as these forces that have long held Mexico back again rear up, there are at least two reasons to be optimistic. First, Peña Nieto and his administration have proven politically astute. They have already achieved victories in areas where the two previous PAN governments could not. The energy and fiscal reforms will still require complicated political negotiations, but if anyone can forge a deal, it looks like the PRI can.

But not only the ruling party has changed — so has Mexico. The country's growing middle class is a strong force for progress and reform. The public is investing in its children's education and health, and is seeking good government practices and a stronger economy. They are looking not for a handout from the old paternalistic system but a stable and level playing field to build a better life for their families.

The goal is to boost Mexico's domestic economy. But because of deep inter-industry ties across the border, growth in Mexico can also stimulate manufacturing in the United States and create opportunities for U.S. companies operating in Mexico. With the proper policy attention, the United States stands to gain a good deal from Mexico's reforms.

Since the North American Free Trade Agreement was passed, the pace of progress on U.S.-Mexico economic relations has generally slowed, and, in a few sectors, even regressed. The strengthened border security after the September 11, 2001 terrorist attacks, for example, has led to long lines at the border for legitimate commerce and travelers.

Initiatives and forums do exist to address border and other issues, but U.S.-Mexico relations are notoriously difficult because of the mix of domestic and foreign policy issues in play. In addition, a wide array of federal agencies, and even state and local governments, are involved.

The High Level Economic Dialogue will be focused on three main pillars: competitiveness and connectivity; productivity and innovation, and cooperation on regional and global issues. Initiatives are being developed in each category and are likely to be discussed on the trip. But just as important as the specific projects is the role of the vice president.

The vice president's office is not often credited with major policy initiatives. But in this case, a great deal could depend on Biden. Solutions to many issues will require coordinating responses from various federal agencies and probably Congress — a big task. A job of this magnitude requires a champion — preferably from the White House — and U.S.-Mexico relations may have just found one.

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