What Do Greece And North Macedonia Have To Do With The US And Mexico?
Trade between nations is a fundamental part of keeping alliances well-maintained, and enriching the quality of life for those within them.
An ongoing trade war between entities like China and the United States has the power to seriously upset many different world affairs. Since China put tariffs on United States soya beans, China has looked to Brazil to make up the deficit.
Brazil, eager to fill this economic void, will likely and has already ramped up soya production which has had the added effect of increasing deforestation of the Amazon rain forest. This tragic, possibly very tragic, side-effect of state interference in the market is just one example why healthy trade relationships are so important.
More recently, this week yielded two examples of why free market trade is so important, making headlines across North America and Europe in the process.
A Name and a Prayer
Alexis Tsipras, Prime Minister of Greece, ended a 28 year moan between Macedonia (Now North Macedonia) and Greece by paying a visit to his northern neighbor on Tuesday. In years past relations between these two countries were fairly poor, as Macedonia wanted the name of their ancient cultural heritage recognized by the international community.
Greece claimed that name as the title of their northern-most province, claiming similar ownership to the heritage of Alexander of Macedon, and so last year a deal was reached whereby the Former Yugoslavian Republic of Macedonia, would be recognized as the Republic of North Macedonia, agreeing to the simple geographic designation.
Both Zoran Zaev, Prime Minister of N. Macedonia, and Tsipras suffered politically from their settlement, receiving criticism from their respective nation’s nationalist parties for conceding too much. However, the result of ending the decades-long naming feud is a seemingly immediate flowering in trade between the two Mediterranean countries.
"The Republic of North Macedonia will have huge economic benefits from the deal that I believe will be seen in every area of the economy," Zaev said, adding later that “Greek companies have already promised to invest more than "500 million euros" ($560 million) in North Macedonia's energy sector, plus other investments in concrete and agriculture.”
Trouble Down South
Meanwhile, President Trump has again threatened a total closure of the Mexican border, adding that “we’ll keep it closed a long time,” if the Mexican government does not do something about illegal immigration and drug trafficking into the United States.
The North Atlantic Free Trade Agreement (NAFTA) is a vitally important piece in the economies of all parties involved.
According to the Office of the United States Trade Representative, Mexico is currently our 3rd largest goods trading partner with $557.6 billion in total (two way) goods trade during 2017. Goods exports totaled $243.3 billion; goods imports totaled $314.3 billion.
Trade in services with Mexico (exports and imports) totaled an estimated $58.4 billion in 2017. Services exports were $32.9 billion; services imports were $25.5 billion.
A 5-hour border closure last year in the city of San Ysirdo resulted in 5.3 million dollars of local economic loss alone. With roughly 667 million dollars of exports going across the border per day, a several month shutdown would spell billions of dollars in losses for companies all across North America.
With 84 billion dollars of Mexican automotive imports representing the largest importer of the United States’ automotive industry, a border closure could herald doom for that sector. Another situation that would arise is the loss of our largest importer of agricultural products, especially fresh fruit and vegetables.
A Tale of Two Cities
With re-election coming up, such a move might be President Trump putting pressure on both the US and Mexican governments to come up with a wall before his voting base has to choose between him and another candidate.
A wall along the southern border with Mexico was one of the foundations of Trump’s presidential campaign, and such a drastic and economically-unwise move could be his attempt to show the American people that he’s doing everything he can to fulfill his promise.
Meanwhile, the ornery affair between North Macedonia and Greece has not only ended, but serves to benefit both countries as lucrative trade opportunities open in an ethnically-similar region.
Minimally-regulated trade is a way for governments and nations around the globe to prosper, build positive relations, and prevent war.
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