Mexico’s pervasive political corruption will be front and center when U.S. officials meet with Mexican counterparts on Wednesday to negotiate an update to a major trade agreement.
President Donald Trump has repeatedly hammered America’s southern neighbor for what he sees as unfair trade practices under NAFTA, but many U.S. companies that do business in Mexico are equally dismayed with its culture of corruption. Their concern is so high that U.S. trade negotiators insisted that anti-corruption measures be included on the agenda for NAFTA renegotiation meetings in Washington and Mexico City, reports the Dallas Morning News.
Long an accepted feature of public life in Mexico, corruption is nonetheless widely seen as one of the main impediments to the country’s economic success. Political graft costs the Mexican economy about $51 billion a year in lost output, according to the Mexican Institute for Competitiveness. Analysts with the World Bank have estimated that corruption reduces Mexico’s official GDP by as much as 9 percent by forcing commerce into the underground economy.
Chris Wilson, deputy director of the Mexico Institute at the Woodrow Wilson International Center for Scholars, says trade negotiators are right to address the corruption issue in the NAFTA talks, especially in light of the fact that nearly 5 million U.S. jobs are dependent on legitimate trade with Mexico.
“U.S. companies feel at a disadvantage when domestic competitors are using bribes or other practices to facilitate doing business,” he told the Morning News. “Mexico’s corruption problem creates a bad image for the country, so it’s important that Mexico be seen on the international stage supporting strong anti-corruption accords.”
Mexico has taken steps to address corruption in recent years, with mixed results. A sweeping national anti-corruption law took effect last month, creating a judicial system for investigating corruption and allowing prosecutors to freeze the assets of public officials and companies that violate anti-graft laws.
However, Mexican legislators recently missed a deadline to name a national anti-corruption prosecutor, and several states have not yet passed local legislation required by the federal law.
Despite legislative reform, the payment of bribes to public officials continues unabated. Mexican businesses paid nearly $90 million worth of bribes in 2016, according to an anonymous survey conducted by Mexico’s national office of statistics.
In the same survey, 65 percent of respondents said bribing public officials was necessary to expedite business permits, and 30 percent said it was necessary to avoid fines.
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