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This report contains a correction.

The United States and Mexico share far more than a 1,989-mile border.¹ The two countries share a deep, complex history. This history is marked by ups and downs; by war and cooperation; by competition and collaboration; by the movement—northbound and southbound—of millions of people across a shared border in search of a better future; by a trickle of trade and today’s flow of more than $1.5 billion of goods and services crossing the border every day.*

As the new U.S. administration transitions from rhetoric to reality and from campaigning to governing, it will inherit a U.S.-Mexico relationship in perhaps the best shape it has ever been. But it will also inherit a relationship threatened by President Donald Trump’s repeated vilification of Mexico and Mexicans.

If that vilification becomes official U.S. policy, it will harm the United States—at home, throughout the Americas, and around the globe—because of the profound transformations that have unfolded over the past 30 years in Mexico and in the bilateral relationship itself.

Today’s U.S.-Mexico economic relationship, for example, dwarfs where the relationship stood fewer than 25 years ago. U.S. exports to Mexico increased from $41 billion in 1993 to more than $240 billion in 2014, an increase of 478 percent. Imports from Mexico increased from $39.9 billion in 1993 to $294.2 billion in 2014, an increase of 637 percent.²

U.S. trade with Mexico is not just larger than its trade with all but two countries in the world—China and Canada—but it is also qualitatively different. Complex, cross-border supply chains have become the norm in a growing number of industries. More than 40 percent of the value added in Mexican exports to the United States is of U.S. origin, in stark contrast with the 24 percent in Canadian exports to the United States—second highest—and the less than 4 percent in Chinese exports to the United States.³ Mexico ranks second among U.S. export markets and is the third-leading supplier of U.S. imports. In 2015, total trade amounted to $531.1 billion.⁴

In addition, in 2015, the largest share of business travelers and tourists to the United States were Mexicans—around 27 percent of the total—at 20.4 million people; Canadians were second with 13.4 million visitors.⁵ Mexico accounts for more visits than the United Kingdom, Japan, Germany, Brazil, China, and France combined,⁶ making up a large share of a tourist industry that accounts for 1.1 million jobs and $28.4 billion in wages in the United States.⁷

During the past 30 years, migration between the United States and Mexico has similarly undergone a profound change. While the 1990s and the opening decade of this century saw record migration from Mexico to the United States,⁸ net migration from Mexico to the United States has been negative since 2009.⁹ At the same time, the number of Americans living in Mexico has steadily increased and now exceeds 1 million, making it the largest U.S. expatriate community in the world.¹⁰ In fact, there are fewer than 20 U.S. cities with populations larger than the number of Americans—700,000 individuals—who currently live in Mexico City.¹¹

This period of transformation has also witnessed a remarkable evolution in U.S.-Mexico security cooperation—an evolution that has clearly benefited U.S. national interests. For much of the 1980s and 1990s, U.S. and Mexican law enforcement officials viewed one another with deep suspicion, and cooperation was rare. The Mérida Initiative,¹² originally formulated by former U.S. President George W. Bush and former Mexican President Felipe Calderón, opened the door to a new era of security cooperation that deepened throughout former U.S. President Barack Obama’s eight years in office.¹³

During these past three decades, Mexico has also emerged to play an increasingly important role on the global stage as a bridge between developing and developed economies—a role that has helped advance U.S. and align hemispheric interests on issues as diverse as global financial and economic policy, climate change, and U.N. peacekeeping.

In short, the U.S.-Mexico relationship is a far cry from the simplistic caricature that often dominates public mentions of Mexico in the United States.

As the relationship passes through a critical crossroads with the change of administration in the United States—and with the 2018 Mexican presidential elections looming on the horizon—it is essential that policymakers in the Trump administration look beyond the caricature and pursue an agenda that advances U.S. interests by, among other things:

• Tackling migration jointly with Mexico
• Building productive border infrastructure, not walls, together
• Embracing Mexico’s global ambition

But the dynamism and complexity of the U.S.-Mexico relationship means that other actors beyond the new U.S. administration must also engage to preserve and deepen the relationship. Ties with Mexico are too vital and touch too many aspects of daily life in both countries to be left solely in the hands of the U.S. executive branch. Instead, the U.S. Congress, state and local elected officials, and civil society actors need to expand their engagement at this critical juncture by:

• Engaging with elected Mexican counterparts, particularly beyond national capitals
• Encouraging deeper understanding among younger Americans and their Mexicans peers
• Connecting civil society to advance transparency, accountability, and the rule of law in Mexico

The coming months will determine whether the basic arc of the U.S.-Mexico relationship toward greater cooperation and benefit for Americans and Mexicans will continue or if nativism and nationalism will drive a wedge between the United States and Mexico. Following the recommendations laid out below would help keep the relationship on a constructive trajectory for the benefit of hundreds of millions of people in the United States, Mexico, and beyond.

To not upend decades of progress, it is essential that the new U.S. administration immediately appreciate the real dynamics at the heart of the U.S.-Mexico relationship and embrace a cooperation-based agenda built on a recognition that people-to-people ties are the backbone of the most consequential U.S. bilateral relationship in the world.

To avoid cratering this important link, the Trump administration must, first and foremost, recognize that Mexico and Mexicans cannot be vilified or scapegoated as a substitute for broader public policy failures that have left too many U.S. workers exposed to the negative effects of globalization and automatization.¹⁴ Such vilification is entirely wrong. Instead, the United States needs to deepen its relationship with Mexico. Doing so would advance U.S. interests across the board.

Thankfully, the development of a constructive and interest-driven U.S.-Mexico agenda is not difficult so long as those shaping the conversation remember that actions by either country on any given topic have consequences across countless other issue areas. In short, it is hopelessly naive to believe that pursuing nativist-inspired policies on migration or border security will not blow apart the broader U.S.-Mexico relationship and wipe away its benefits from countless Americans and Mexicans.

Tackle migration together

The surest way to dismantle the positive U.S.-Mexico bilateral relationship would be to declare war on the 5.8 million unauthorized Mexican nationals living in the United States,¹⁵ many of whom are productive members of U.S. society and have been during more than two decades. No country could reasonably be expected to maintain a positive working relationship across a wide range of issues with another country that has set out to execute a policy of mass deportation targeting its nationals; it would be politically immature to think Mexico could or would be different.

It is thus essential that the United States engage on issues of migration in a responsible, thoughtful way with Mexico.

The United States and Mexico share a long, complex history in terms of migration and efforts to coordinate policy and action in this regard. Since the beginning of the 20th century, migration patterns between the United States and Mexico have gone through three main phases: limited migration flows before World War II; U.S.-Mexico-sponsored guest worker flows after World War II; and unauthorized flows of migration into the United States after 1965 until eight years ago.¹⁶ U.S. immigration policy responses within this time period notably included implementation of the Bracero Program from 1942 to 1964 and the legalization program of the Immigration Reform and Control Act, or IRCA, of 1986, as well as a significant ramp-up in border security infrastructure and personnel from the early 1990s to the present.¹⁷

The single-most important migration-related step that the Trump administration could take to positively affect the United States, Mexico, and the U.S.-Mexico relationship would be to bring the U.S. immigration system into the 21st century through enactment of comprehensive immigration reform. Although such action seems exceedingly unlikely given the vitriolic approach taken by President Trump toward Mexican migrants in the United States during his campaign, the United States and Mexico face a set of migration-related challenges that will neither wait for reform to take hold nor be wholly addressed by such reform.

Chief among these is migration through Mexico to the United States by refugees and migrants from elsewhere. Since 2009, net migration from Mexico to the United States has been negative—that is, more Mexicans have returned or been deported to Mexico from the United States than have entered the United States from Mexico.¹⁸ This is a marked departure from the 20 proceeding years that saw a significant influx of Mexicans to the United States.¹⁹ The reasons for the changed migration pattern are varied and include demographic changes in Mexico as its population rapidly ages,²⁰ as well as increased deportations from the United States.²¹

Despite these new migratory dynamics, Mexico remains the most critical partner on migration-related issues. During fiscal year 2014, the number of unauthorized non-Mexican migrants—especially from Asia and Central America—increased by 325,000, from 5 million people in 2009 to more than 5.3 million in 2014—mainly crossing illegally at the southwest border.²²

Migration from Central America, in particular, was driven by families and unaccompanied minors fleeing spiking violence in the countries of the Northern Triangle of Central America—El Salvador, Guatemala, and Honduras. In 2015, as Mexico fell short in addressing legitimate asylum claims from Central Americans, it turned back to countries of origin approximately 176,726 Central Americans who had entered Mexico without permission and absorbed another approximately 50,000 Central Americans.²³

Neither dynamic is sustainable over any extended period of time and must be addressed in a collaborative manner that addresses the root causes fueling migration from the Northern Triangle countries and preserves the rights of asylum seekers, builds up Mexico’s capacity to identify and care for bona fide refugees, and does not trample on the due process rights of individuals in the United States or elsewhere.

In addition to Central Americans seeking to enter the United States via Mexico, others from the region—most notably, Haitians and Cubans—similarly seek to use the U.S.-Mexico border as a point of entry. Since October 2015, more than 5,000 Haitians without visas have tried to cross the San Ysidro port of entry into San Diego.²⁴ In 2015, meanwhile, the majority of Cubans who entered the United States through irregular means—28,371—came through the U.S. Border Patrol’s Laredo Sector in Texas from Mexico.²⁵ Both Haitians and Cubans engage in arduous and dangerous journeys that often first take them to countries in South America—primarily Brazil in the case of Haitians and primarily Ecuador in the case of Cubans—before heading across land to and through Central America and Mexico. These flows have been a source of growing friction in and among countries along the journey north.²⁶

With continued flows of Central American refugees and the challenges presented by Haitian and Cuban migration, there is an urgent need for enhanced bilateral migration cooperation—cooperation that would serve the interests of both the United States and Mexico and do so in a way that is true to shared values and principles.

The kind of cooperation required to tackle a challenge of this magnitude, of course, is extremely unlikely to come unless the Trump administration accepts reality and radically departs from the tone and substance of statements made to date on border- and immigration-related policy. Mexico is highly unlikely to cooperate under threat of mass deportation of its nationals and the erection of a Berlin Wall-style construction project on its border.²⁷

To that end, the new administration should:

• Work with Congress to enact common-sense immigration reform that provides a pathway to citizenship for the current unauthorized population; places a premium on family reunification; and establishes a rational worker system which, among other things, would align the need for workers in the United States with the availability of legal visas for these workers to use.
• Partner with Mexico, whose participation is crucial for the effort’s hemispheric legitimacy, to launch a regional diplomatic effort to bring together countries of the Americas to address increasingly unsustainable migratory flows. Such an effort, among other actions, should aim to end visa-free travel policies in a number of South American countries that have become stopping points on a migratory chain that is putting increasing pressure on Mexico and countries in Central America.
• Work with the U.N. High Commissioner for Refugees to provide technical support to Mexico as it ramps up its ability to provide enhanced refugee processing and protection for those entering Mexico—particularly those from the Northern Triangle.²⁸
• Work with Mexico to help address the root causes of Central American migration, particularly migration flowing from the Northern Triangle countries, as a result of criminal violence and a lack of sustainable economic development.²⁹

Prioritize border infrastructure, not walls

Maintaining a positive, cooperative relationship with Mexico will also require the Trump administration to address border infrastructure—however, not in the way the Trump team has did during the presidential campaign, with its exclusive focus on the tragically misguided and insulting notion of building a “big, fat, beautiful wall” between the United States and Mexico.³⁰ Building such a wall would not only be a fiscal³¹ and environmental disaster,³² it would also be an affront to our core values as Americans, and it would make the United States less safe by undermining vital Mexican cooperation—starting with security and migration cooperation. Not only is Mexico not a threat to the United States, but it is also an essential ally in providing homeland security. Insisting on a border wall would change that dynamic.

Nevertheless, the United States should invest in infrastructure along its southwest border with Mexico. In fact, enhanced border infrastructure investment is long overdue and is vital to strengthening the U.S. relationship with Mexico. And it is something that should be done in cooperation with Mexico so that both countries pay for improvements to roads, bridges, and ports of entry, which can contribute to equitable economic growth and citizens’ security in both countries.

Since the early 1990s, legitimate transborder traffic between the United States and Mexico has increased dramatically. Today, more than $1.5 billion in bilateral trade crosses the U.S.-Mexico border on any given day, along with the legal crossings of approximately 1 million people.³³ Given the magnitude of daily transborder traffic along the border, people in the region who live a binational existence and commute for work, school, shopping, entertainment, medical treatments, and to visit friends and family experience significant wait times in both directions. It is not uncommon for people to wait more than an hour to travel a few miles across the border—mainly due to lack of infrastructure, technology, and border staffing.³⁴

Wait times are a symptom of deeper problems. Insufficient infrastructure undercuts the global competitiveness of products that the United States and Mexico build together. Insufficient border infrastructure also makes it harder to weed out illegal activity at the border by lumping together legitimate goods and travelers with those seeking to enter the United States without permission or to smuggle illegal goods into the United States.

Some progress has been made in recent years to improve border infrastructure. For example, the San Ysidro port of entry—the busiest land port in the Western Hemisphere—is currently undergoing a $741 million, multiyear expansion.³⁵ In December 2015, San Diego and Tijuana opened a privately funded pedestrian bridge that connects U.S. passengers directly to the Tijuana General Abelardo L. Rodriguez International Airport terminal.³⁶ And in 2016, the United States and Mexico opened the first new railway bridge between the two countries in 100 years at the Brownsville-Matamoros port of entry.³⁷

Progress has also been made in better coordinating border infrastructure projects through the U.S.-Mexico 21st Century Border Bilateral Executive Steering Committee, or ESC—the primary forum for U.S. senior policymakers to meet with their Mexican counterparts and devise strategies to coordinate border facilitation and security.³⁸ It is indispensable that coordination on border infrastructure programs include strong cooperation not only between the U.S. and Mexican federal governments but also among state and local governments, the business community, and private citizens who are the ultimate users of border infrastructure.

Building 21st century border infrastructure also requires adequate investment from federal, state, and private economic actors on both sides of the border. In addition to expressly incorporating border infrastructure projects into any national infrastructure initiative, there is at least one other potential funding mechanism—a reformed North American Development Bank, or NADBank—that would draw on funds from not just the United States, but also from Mexico and perhaps Canada. Originally focused on wastewater treatment projects along the border when it was first created in 1994, NADBank has expanded its efforts to support environmental infrastructure and sustainable economic development and transportation infrastructure.³⁹

NADBank’s 20-year presence in the border region has given it distinct advantages. Through its own capital, it can help lower the cost of financing for local and state governments; can provide technical assistance to help subnational governments structure and pool projects in ways that improve their access to financial markets; and is well-positioned to coordinate and lead the type of binational analysis of supply chain and vehicle traffic flows that could provide the framework for individual project analyses.⁴⁰

Because enhanced border infrastructure will go a long way toward ensuring that the U.S.-Mexico relationship remains a positive and constructive one benefiting hundreds of millions of people on both sides of our shared border, the new administration should:

• Abandon the reckless—and ultimately self-defeating—notion of building a border wall as the center piece of its bilateral agenda with Mexico
• Expressly incorporate and prioritize investment in border infrastructure—at both the southwestern and northern borders—in any national infrastructure proposal to enhance U.S. global competitiveness and homeland security
• Reform NADBank’s charter and, together with both Mexico and Canada, expand its capital base to allow it to catalyze additional private-sector investment in border infrastructure projects⁴¹
• Reaffirm the United States’ commitment to coordinating border infrastructure development with Mexico through the U.S.-Mexico 21st Century Bilateral ESC

Embrace a global Mexico

Cooperation on migration and border facilitation and security are essential steps in the path forward in the U.S.-Mexico relationship, but they are insufficient to maximize the opportunities present in the U.S.-Mexico relationship to advance core U.S. national interests.

To achieve the maximum benefits of the relationship, the United States must engage across the full policy spectrum with Mexico.

Throughout much of its postindependence history, Mexico was an inward-looking country and in many ways closed off from much of the rest of the world under its import substitution industrialization trade and economic policy. Recent decades have brought dramatic, accelerating change as Mexico has opened itself to the world, which provides real opportunities for both the United States and Mexico to pursue shared interests bilaterally, regionally, and globally—if, of course, the United States does not prompt a nationalist reaction from Mexico by pursuing misguided border, immigration, and trade-related policies.

During the past three decades, Mexico has opened itself economically, culturally, and politically. The North American Free Trade Agreement, or NAFTA, marked a significant opening of much, but not all, of the Mexican economy to international competition for the first time. It also marked the beginning of a more fundamental opening that has quickened in recent years. That acceleration saw Mexico formalize an additional 13 trade agreements⁴² and then unilaterally reduce tariffs to zero across a wide range of imported goods and services in January 2009.⁴³ As a result, today, Mexico—together with the United States and Canada—is deeply enmeshed in some of the world’s most integrated supply chains and industrial design and production platforms.

Mexico’s opening to the world has also seen it join the Pacific Alliance,⁴⁴ a trade-plus agreement among Mexico, Colombia, Chile, and Peru that since its 2012 inception has been the most innovative and effective commercial integration effort in the Americas in decades, if not ever. It has also seen Mexico open key holdout segments of its economy to both domestic and international competition—most notably, the energy and telecommunications sectors—through the historic, structural reforms achieved by current President Enrique Peña Nieto in the opening months of his presidency.⁴⁵

Mexico’s economic opening has also been accompanied by political openings with far-reaching implications for the U.S.-Mexico relationship.

At home, Mexico is today a consolidating democracy. The peaceful, democratic transfer of power across party lines has become the norm in Mexico at the local, state, and federal levels. This political pluralism is a critical element for Mexico’s long-term stability and prosperity even if Mexico still faces some very real pains in its democratic consolidation.

In the global arena, as Mexico has become more engaged, it has come to straddle a number of divides. Not only is Mexico part of both North America and Latin America—economically and politically—it occupies a unique space among the world’s developed and developing economies. It is a member of the Organisation for Economic Co-operation and Development, as well as a critical member of key international economic forums such as the G-20 and the Asia-Pacific Economic Cooperation forum, but it often approaches international economic and financial issues from a developing country perspective. During the 2008–2009 global financial crisis, for example, it was the first country to utilize the International Monetary Fund’s emergency standby mechanism to weather a severe economic slowdown.⁴⁶

Mexico has also become far more engaged on a wide range of global issues. For example, it has played a vital role in global climate negotiations. In 2014, in a major departure, it also declared its willingness to engage in U.N. peacekeeping operations,⁴⁷ something it had long resisted. It has actively participated in global nonproliferation activities, including working with the United States to safely replace Mexico’s research reactor with a new low-enriched uranium-fueled reactor in support of its nuclear energy development.⁴⁸ In addition, Mexico was a key participant in a September 2016 U.N. summit on the global refugee crisis.⁴⁹

Against this backdrop, a key element of building the kind of strategic partnership that befits the importance and intensity of the U.S.-Mexico relationship, the new administration should take a number of steps to affirmatively embrace Mexico’s growing global insertion and leverage it to advance shared interests.

To that end, the Trump administration should:

• Abandon its misguided rhetoric and policy proposals premised on the notion that Mexico