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Mexico: Background and U.S. Relations

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Contents

Summary

Congress has maintained significant interest in neighboring Mexico, a close ally and top trade partner.
Mexico: Background and U.S. Relations Clare Ribando Seelke Specialist in Latin American Affairs January 2, 2015 Congressional Research Service 7-5700 www.crs.gov R42917 Mexico: Background and U.S. Relations Summary Congress has maintained significant interest in neighboring Mexico, a close ally and top trade partner whose political and economic situation has significant ramifications for the United States. President Enrique Peña Nieto of the centrist Institutional Revolutionary Party (PRI) assumed the Mexican presidency on December 1, 2012, after 12 years of rule by the conservative National Action Party (PAN). Peña Nieto has enacted structural reforms and bolstered economic relations with the United States, but observers maintain he has mishandled recent high-profile human rights cases and allegations of a conflict of interest between his wife and a government contractor. President Peña Nieto’s first two years in office have brought mixed results for Mexico. During 2013, Peña Nieto’s “Pact for Mexico” agreement with the PAN and leftist Party of the Democratic Revolution (PRD) facilitated the passage of significant financial, education, telecommunications, and energy reforms. Still, the economy faltered (GDP growth fell from 3.7% in 2012 to 1.2% in 2013) and some types of violent crime—including kidnapping and extortion— increased. Implementation of the reforms began in 2014, but has been overshadowed by the government’s inability to resolve a case involving 43 students who were forcibly abducted from Guerrero in September. Local and state officials’ alleged complicity in the forced disappearance— and likely murder—of the students, as well as federal mishandling of the investigation, have been widely criticized and sparked ongoing protests. U.S. Policy As Mexico has experienced a presidential transition from a PAN to a PRI government, U.S.Mexican relations have also evolved. President Obama has embraced Peña Nieto’s desire to bolster economic ties and focus on issues beyond security, including education and trade facilitation. Those issues figured prominently during President Obama’s participation in the February 2014 North American Leaders’ Summit and are likely to be discussed at a bilateral meeting between Presidents Obama and Peña Nieto on January 6. Now that Mexico has implemented historic energy reforms, energy cooperation has accelerated. U.S.-Mexican security cooperation has continued under the Mérida Initiative framework; its focus is on justice sector reform and securing Mexico’s southern border. Mexico has stepped up efforts to combat illegal Central American migration. However, some U.S. stakeholders remain frustrated at Mexico’s failure to fully and predictably make water deliveries in the Rio Grande Valley, as per a 1944 water sharing treaty. The Mexican government has welcomed President Obama’s recent executive order on immigration, which may impact 3 million unauthorized Mexicans in the United States. Legislative Action A range of issues affecting Mexico received congressional attention during the 113th Congress and may again be considered during the 114th Congress. The Senate passed S. 744 in June 2013, a comprehensive immigration reform bill that would have provided additional funding for border security. In December 2013, Congress approved the U.S.-Mexico Transboundary Hydrocarbons Agreement to facilitate joint development of oil and natural gas in part of the Gulf of Mexico (P.L. 113-67). Congress continued oversight of the Mérida Initiative and provided $194 million in Mérida assistance to Mexico in the FY2014 Consolidated Appropriations Act, P.L. 113-76, subject to human rights conditions. The Obama Administration asked for $115 million for Mérida in its FY2015 budget request. Congress provided $194 million in Mérida Initiative aid for Mexico in the FY2015 Consolidated and Further Continuing Appropriations Act (H.R. 83/P.L. 113-235), Congressional Research Service Mexico: Background and U.S. Relations with $79 million in funds above the Administration’s request to support efforts to secure Mexico’s southern border and strengthen its justice system. The recent energy reforms that Mexico has enacted have generated congressional interest, as has Mexico’s participation in the Trans-Pacific Partnership (TPP) negotiations. Further Reading CRS Report R41349, U.S.-Mexican Security Cooperation: The Mérida Initiative and Beyond, by Clare Ribando Seelke and Kristin Finklea. CRS Report R43001, Supporting Criminal Justice System Reform in Mexico: The U.S. Role, by Clare Ribando Seelke. CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications, by M. Angeles Villarreal. CRS Report R43313, Mexico’s Oil and Gas Sector: Background, Reform Efforts, and Implications for the United States, coordinated by Clare Ribando Seelke. CRS Report R43312, U.S.-Mexico Water Sharing: Background and Recent Developments, by Nicole T. Carter, Clare Ribando Seelke, and Daniel T. Shedd. CRS Report R43320, Immigration Legislation and Issues in the 113th Congress, coordinated by Andorra Bruno. CRS Report R43798, The Obama Administration’s November 2014 Immigration Initiatives: Questions and Answers, by Kate M. Manuel. Congressional Research Service Mexico: Background and U.S. Relations Contents Introduction...................................................................................................................................... 1 Political Situation............................................................................................................................. 1 July 1, 2012, Elections: Return of PRI Dominance ................................................................... 3 Structure and Leadership in the Pena Nieto Administration...................................................... 4 The Pact for Mexico and Structural Reform.............................................................................. 5 Security and Institutional Reform: Responding to Events in Iguala, Guerrero ......................... 7 2015 Mid-Term Elections ........................................................................................................ 10 Foreign Policy ......................................................................................................................... 11 Economic and Social Conditions ................................................................................................... 11 Growth: Will Reforms Bring Faster GDP Growth?................................................................. 12 Combating Poverty .................................................................................................................. 13 U.S. Relations and Issues for Congress ......................................................................................... 14 Security and U.S. Assistance through the Mérida Initiative .................................................... 15 Human Rights and Judicial Reform......................................................................................... 17 Trade, NAFTA, and the Trans-Pacific Partnership (TPP) ....................................................... 19 Migration and Border Issues ................................................................................................... 21 Mexico-U.S. Immigration Issues ...................................................................................... 21 Dealing with Central American Migration, Including Unaccompanied Children ............. 23 Modernizing the U.S.-Mexico Border............................................................................... 23 Mexico’s Energy Reforms ....................................................................................................... 25 Water Sharing .......................................................................................................................... 27 Colorado River .................................................................................................................. 27 Rio Grande ........................................................................................................................ 28 Outlook .......................................................................................................................................... 29 Figures Figure 1. Mexico at a Glance ........................................................................................................... 2 Figure 2. Composition of the Mexican Congress ............................................................................ 3 Figure 3. Snapshot of the U.S.-Mexico Border ............................................................................. 24 Tables Table 1. Key Reforms Enacted During 2013-2014 .......................................................................... 6 Table 2. FY2008–FY2015 Mérida Funding for Mexico ................................................................ 16 Contacts Author Contact Information........................................................................................................... 30 Acknowledgments ......................................................................................................................... 30 Congressional Research Service Mexico: Background and U.S. Relations Key Policy Staff ............................................................................................................................. 30 Congressional Research Service Mexico: Background and U.S. Relations Introduction Congress has maintained a strong interest in Mexico, a top trade partner and energy supplier, with which the United States shares a nearly 2,000 mile border and strong cultural and historical ties. Economically, the United States and Mexico are heavily interdependent, and the U.S. economy could benefit if Mexico is able to boost its economic growth rates by successfully implementing the historic reforms its Congress enacted in 2013. Similarly, security conditions in Mexico affect U.S. national security, particularly along the U.S.-Mexico border. Mexico’s apparent inability to effectively combat corruption and strengthen the rule of law has implications for U.S. economic and strategic interests in the country and underscores the need for continued cooperation on those issues. Maintaining strong bilateral cooperation, while also protecting U.S. interests, has been a key concern for Congress. Institutional Revolutionary Party (PRI) President Enrique Peña Nieto, former governor of the state of Mexico, took office on December 1, 2012, pledging to significantly reduce violent crime and bolster economic growth. Despite shepherding significant structural reforms through the Mexican Congress (see Table 1), he has struggled to fulfill his inaugural pledges. Organized crime-related violence has continued to trend downward as it has since 2012; nevertheless, it has reportedly resulted in more than 18,400 deaths.1 Extortions and kidnappings have increased in some states.2 Military involvement in extrajudicial killings in Tlatlaya, Mexico in June 2014 and local officials’ roles in the forced disappearances and apparent murders of 43 university students in Iguala, Guerrero in September have galvanized protests against corruption and impunity (see Tlatlaya and Iguala below). Economic growth dropped to 1.3% in 2013 and 2.1% in 2014; falling oil prices have prompted some concerns for 2015.3 Peña Nieto posted a lower first year approval rating (49.7%) than his two predecessors and his second year approval rating fell to 39%.4 This report provides an overview of political and economic conditions in Mexico followed by assessments of some key issues of congressional interest in Mexico: security, human rights, trade, migration, energy, and water issues. The report summarizes legislative action that occurred related to these topics during the 113th Congress and refers to other CRS products and experts that can be consulted for further information. It will be updated to address major developments in Mexico and in Mexican-U.S. relations that are of interest to the 114th Congress. Political Situation Over the past two decades, Mexico has transitioned from a centralized political system dominated by the Institutional Revolutionary Party (PRI) to a true multiparty democracy. Since the PRI last governed in the 1990s, presidential power has become increasingly constrained by Mexico’s 1 Rafael López y Jafet Tirado, “Número de homicidios baja 10% en noviembre,” Milenio, December 1, 2014. Kimberly Heinle, Octavio Rodríguez Ferreira, and David Shirk, Drug Violence in Mexico; Data and Analysis Through 2013, Justice in Mexico Project, University of San Diego, April 2014, available at: http://justiceinmexico.files.wordpress.com/2014/04/140415-dvm-2014-releasered1.pdf. Hereinafter Shirk, April 2014. 3 “Mexico: Country Report,” Economist Intelligence Unit, December 30, 2014. 4 Roy Campos, México: Evaluación de Gobierno de Enrique Peña Nieto: Primer Año, Consulta Mitofsky, December 2013; Anthony Harrup, “Mexican President’s Approval Ratings Slump,” Wall Street Journal, December 1, 2014. 2 Congressional Research Service 1 Mexico: Background and U.S. Relations Congress, Supreme Court, and increasingly powerful governors.5 Partially as a result of those constraints, two successive National Action Party (PAN) administrations struggled to enact the structural reforms needed to boost Mexico’s economic competitiveness and effectively address the country’s security challenges. Figure 1. Mexico at a Glance 5 For background, see Andrew Selee and Jacqueline Peschard eds., Mexico’s Democratic Challenges: Politics, Government, and Society (Stanford, CA: Stanford University Press, 2010). Congressional Research Service 2 Mexico: Background and U.S. Relations The PAN government of Felipe Calderón (2006-2012) pursued an aggressive anticrime strategy and increased security cooperation with the United States. Those efforts helped Mexico arrest or kill record numbers of drug kingpins, but some 60,000 people may have died as a result of organized crime-related violence during the Calderón Administration. Mexico’s security challenges overshadowed some of the government’s achievements, including its economic stewardship during and after the global financial crisis and expansion of access to health care.6 July 1, 2012, Elections: Return of PRI Dominance7 The July 1, 2012, elections occurred at a time when Mexico was experiencing modest economic growth after a downturn in 2009 caused by the global financial crisis and a growing security crisis under two successive PAN administrations. As a result, economic and security issues figured as top concerns among the Mexican electorate. Voters appeared to believe that the PRI would be best equipped to restore order and hasten economic growth, despite uncertainty about how the party’s return might impact Mexican democracy given its past reputation for corruption and undemocratic practices.8 Twelve years after losing the presidency for the first time in 71 years, the PRI won the presidential election, a plurality of seats in the Senate and Chamber of Deputies, and three of six gubernatorial elections held on July 1, 2012. Despite those victories, PRI/Green Ecological Party (PVEM) candidate Enrique Peña Nieto won by a relatively narrow margin (6.6% of the vote) over Andrés Manuel López Obrador of the leftist Party of the Democratic Revolution (PRD) and the PRI/PVEM failed to capture a majority in either legislative chamber (see Figure 2 below). However, unlike his predecessor, President Enrique Peña Nieto took office with his party controlling 20 of 32 governorships. The composition of Congress and the country’s governorships is likely to change after the June 2015 elections (see “2015 Mid-Term Elections”). Figure 2. Composition of the Mexican Congress Source: Mexican Congress as adapted by CRS graphics. 6 See CRS Report RL32724, Mexico and the 112th Congress, by Clare Ribando Seelke. 7 See CRS Report R42548, Mexico’s 2012 Elections, by Clare Ribando Seelke. 8 Dave Graham, “Mexico’s Old Rulers Bounce Back as New Start Beckons,” Reuters, June 19, 2012. Congressional Research Service 3 Mexico: Background and U.S. Relations Notes: PRI= Institutional Revolutionary Party, PAN= National Action Party. PRD= Party of the Democratic Revolution, PVEM= Green Ecological Party, PT= Worker’s Party, PANAL= National Alliance Party, and MC= Citizen’s Movement Party. The MC and the PT are part of the PRD coalition. Structure and Leadership in the Pena Nieto Administration Mexico’s presidential transitions are characterized not only by a high level of turnover in government agencies, but often by a complete overhaul of governmental structures and organizational patterns. For example, President Peña Nieto has returned much of the power to the Interior Ministry that it had before the PAN took office. With congressional approval, he placed the Secretariat of Public Security (SSP, including the Federal Police9) and intelligence functions under the authority of the Interior Ministry. That ministry, rather than the SSP, now coordinates security efforts with the military and state and municipal authorities. The Interior Ministry also commands the new militarized police entity within the Federal Police, the National Gendarmerie.10 The Attorney General’s Office (PGR) is being revamped and modernized, potentially to serve as a counterweight to the increased power of the Interior Ministry. The PGR’s budget increased much less during the Felipe Calderón Administration (2006-2012) than those of the SSP or the military. Per reforms enacted by the Mexican Congress in December 2013, the PGR is to be replaced by an independent Prosecutor General’s Office that could potentially focus more on combating official corruption and prioritizing high-level criminal cases. While many of Peña Nieto’s government reform efforts have advanced, some have stalled. President Peña Nieto originally sought a constitutional reform to dissolve the Ministry of Public Administration or SFP (Mexico’s anti-corruption authority) and replace it with an anti-corruption commission that would reside within the Treasury Department and have the power to issue administrative sanctions for corruption. The Mexican Senate approved legislation to establish the autonomous anti-corruption commission in December 2013, but that legislation did not pass through the Chamber of Deputies. For different reasons, all three major parties in Congress are under pressure to respond to Peña Nieto’s November 27, 2014, proposals to address corruption and rule of law challenges in the wake of 43 students’ disappearance in Iguala, Guerrero.11 Key positions in the Peña Nieto government are filled by the President’s close confidantes and transition team leaders. Peña Nieto’s appointments reflect his desire to reestablish a strong presidency backed by a few key advisers: the Ministers of Finance and the Interior. Luis Videgaray Caso, who served as the Transition Team’s General Coordinator, is the Minister of Finance, a post which he also held in the state of Mexico during Peña Nieto’s governorship. Miguel Angel Osorio Chong, the Transition Team’s General Coordinator for Political and 9 Recent Mexican presidents have also sought to create new or revamped federal police entities. The Peña Nieto government is reforming, rather than dismantling, the Federal Police that were recruited, trained, and equipped by former President Calderón with significant U.S. assistance. 10 The size of the Gendarmerie has been significantly scaled back from the government’s original proposal to create a 40,000-member militarized police. After several delays, the force of roughly 5,000 officers—now focused on helping reestablish security in states facing high-levels of violence—became operational in August 2014. 11 The PAN launched the aggressive attack on criminal groups that led to dramatic increases in violence in Mexico. The PRD is the party of the mayor of Iguala who has been accused of involvement in ordering the abduction of the students and the governor of Guerrero who resigned following the abduction. Dave Graham, “Mired in Crisis, Mexican President Aided by Discredited Opposition,” Reuters, November 24, 2014. Congressional Research Service 4 Mexico: Background and U.S. Relations Security Issues, is head of the powerful Interior Ministry. Osorio Chong served as governor of Hidalgo, which borders the state of Mexico, when Peña Nieto governed. Those ministers, as well as the President’s Chief of Staff, Aurelio Nuño Mayer, all may have presidential aspirations. The remainder of the Cabinet consists of a combination of younger PRI leaders with technical expertise and postgraduate education abroad; senior PRI politicians, many of whom served as governors; and a few individuals from outside the party.12 Most of the technocratic leaders are in the economic ministries. However, the Secretary of Foreign Affairs José Antonio Meade, former Finance Minister for President Calderón, is one exception. Peña Nieto’s government has avoided the public infighting that occurred among some of former President Calderón’s ministers, but has recently struggled to manage public relations effectively amidst a growing political crisis. Until recent months, the government had tightly controlled the message it sought to project, which has emphasized its commitment to implementing structural reforms and attracting investment, rather than focusing on its efforts against organized crime (as Calderón did). In December 2013, the Economist Intelligence Unit reported that Peña Nieto’s government has “essentially taken its eyes off … crime and corruption to concentrate on structural reform.”13 At first, that strategy successfully improved Mexico’s image abroad, particularly among foreign investors. More recently, however, prominent pro-business news outlets that once praised the Peña Nieto government’s reformist zeal have criticized its handling of government officials’ alleged involvement in extrajudicial killings and forced disappearances.14 Mexican and international observers have also criticized the way President Peña Nieto has not responded directly to reports of a conflict of interest involving a luxury home bought by his wife from a firm that has received government contracts.15 The Pact for Mexico and Structural Reform Upon his inauguration, President Peña Nieto announced a reform agenda with specific proposals under five broad pillars: (1) reducing violence; (2) combating poverty; (3) boosting economic growth; (4) reforming education; and (5) fostering social responsibility. On December 2, 2012, leaders of the conservative PAN and leftist PRD surprised many analysts by signing on to President Peña Nieto’s “Pact for Mexico,” which contained 95 agreements on key issues facing the country. Those agreements provided a baseline for the parties to debate legislative proposals. While some opposition legislators later balked at their leaders’ decisions to endorse the PRI-led pact, the Congress approved education and telecommunications reform legislation, two measures that Peña Nieto had identified as short-term priorities, as well as a long-stalled crime victim’s law during its first session (February-April 2013).16 Until recently, investors and analysts had widely praised President Peña Nieto and his advisors for focusing their attention and political capital on shepherding structural reforms through the 12 “Mexico’s New Government: With a Little Help From My Friends,” The Economist, December 8, 2012. “Enrique Peña Nieto’s First Year: A Mixed Picture,” Economist Intelligence Unit (EIU), December 2, 2013. 14 Mary O’Grady, “Mexico’s Rule of Law Crisis,” Wall Street Journal, November 17, 2014. 15 David Luhnow, “Mexico Leader’s Woes Follow Him to China,” Wall Street Journal, November 10, 2014. 16 The victim’s law provides for government assistance to crime victims and their families. President Peña Nieto’s legislative priorities, along with executive actions that have been given precedence, are summarized in Spanish at México, Presidencia de la República, “Decisiones Presidenciales Anunciadas el 1º de Diciembre,” Press Release, December 1, 2012, http://www.presidencia.gob.mx/decisiones-presidenciales-anunciadas-el-1o-de-diciembre/. 13 Congressional Research Service 5 Mexico: Background and U.S. Relations Mexican Congress in 2013-2014 (see Table 1). Many of the reforms that Peña Nieto has prioritized have long been recommended by the Organization for Economic Cooperation and Development (OECD) and others as crucial for boosting Mexico’s competitiveness. As discussed below, Peña Nieto has proven much more adept at engaging in the type of multi-party negotiations needed to enact legislation when lacking a congressional majority than former Presidents Ernesto Zedillo, Vicente Fox, or Felipe Calderón. The reforms were enacted despite large-scale protests from interest groups whom they will affect, namely Mexican teachers’ unions and oligopolies. Table 1. Key Reforms Enacted During 2013-2014 • Energy Reform: creates several different types of contracts, including production-sharing and licensing; allows companies to post reserves for accounting purposes; gives Petroleos Mexicanos (Pemex) budget autonomy; establishes a sovereign wealth fund; creates new regulators; and removes the union from the Pemex board. • Antitrust Reform: creates an autonomous Federal Economic Competition Commission to regulate all sectors except telecommunications and energy. The Commission is given the power to oversee mergers, regulate industries, and sanction monopolistic practices. • Telecommunications Reform: increases consumers’ access to more affordable and reliable TV, radio, Internet, and mobile phone services; increases privacy protections for consumers; and creates an independent entity, the Federal Institute of Telecommunications (IFETEL), to regulate radio, television, and telecommunications companies. • Financial Reform: increases access to credit, particularly for small-and medium-sized businesses (SMEs) and creates more competition in the banking sector. • Fiscal Reform: raises additional revenue by increasing income taxes for upper income earners, upping the value added tax (VAT) to16% in northern border states (where it had been 11% before), and creating new taxes on stock market profits, as well as sugary beverages and other snack foods. • Education Reform: gives the government, rather than the union, control over hiring and firing teachers; creates a new entity to evaluate teachers; and, increases funding for education, including full-day schooling. • enacted structural reforms during his first year in office but has struggled to address human rights abuses, corruption, and impunity. His government's security record has been turbulent; it has included the capture, escape, and subsequent recapture of Joaquín "El Chapo" Guzmán—head of the powerful Sinaloa criminal organization.

President Peña Nieto's first three years in office brought mixed results for Mexico. During 2013, Peña Nieto's "Pact for Mexico" agreement with the PAN and the leftist Party of the Democratic Revolution (PRD) facilitated the passage of education, telecommunications, and energy reforms. Implementation of the aforementioned reforms has occurred over the course of the past two years, but low oil prices have caused Mexico's state oil company to record huge losses, prompted currency depreciation, and necessitated steep budget cuts. Advances in implementing a new criminal justice system have been overshadowed by an increase in homicides in 2015 and the government's inability to resolve emblematic cases, such as the 43 students who were forcibly abducted—and likely murdered—in Guerrero in September 2014.

U.S. Policy

U.S.-Mexican relations have remained strong despite periodic tensions. President Obama has embraced Peña Nieto's desire to bolster economic ties and focus on issues such as trade facilitation and education. Those issues figured prominently during a January 2015 bilateral meeting between the presidents and during Vice President Biden's participation in the third High-Level Economic Dialogue in February 2016. U.S.-Mexican rule-of-law cooperation has continued under the Mérida Initiative, which focuses on justice sector reform and securing Mexico's southern border. The governments are in the process of developing a bilateral plan to combat increasing heroin production and trafficking in Mexico. Energy cooperation has accelerated, particularly in the hydrocarbons sector. In January 2016, Mexico repaid its water debt from the 2010-2015 delivery cycle as per a 1944 Rio Grande water-sharing treaty, easing a source of bilateral tension.

Legislative Action

The 114th Congress has considered legislation affecting U.S.-Mexican trade and security cooperation. Congress enacted legislation giving President Obama trade promotion authority (P.L. 114-26), which likely helped to advance negotiations for a Trans-Pacific Partnership (TPP) trade agreement signed in February 2016 that would alter the provisions governing bilateral trade. The FY2016 Consolidated Appropriations Act (P.L. 114-113) ended the U.S. crude oil export ban, which could enhance bilateral energy trade. In response to Mexico and Canada's threats to impose retaliatory tariffs for U.S. country-of-origin labeling on meat products, P.L. 114-113 ended the labeling requirements.

Congress has continued oversight of the Mérida Initiative, a bilateral security effort for which it appropriated nearly $2.5 billion from FY2008 through FY2015. P.L. 114-113 provided at least $147.5 million for Mexico in FY2016, including $139 million in accounts that have funded the Mérida Initiative. The final amount destined for the Mérida Initiative is as yet unclear, however. The act carried forward reporting requirements from P.L. 113-235 related to the adequacy of Mexico's water deliveries in the Rio Grande Valley. Congress is now considering President Obama's FY2017 aid request for Mexico, which totaled $133.5 million, including $129 million for the Mérida Initiative.

Along with this action on some issues of bilateral interest, the Senate continues consideration of the Obama Administration's nominee for U.S. Ambassador to Mexico.

Further Reading

CRS Report R41349, U.S.-Mexican Security Cooperation: The Mérida Initiative and Beyond, by [author name scrubbed] and [author name scrubbed].

CRS Report R41576, Mexico: Organized Crime and Drug Trafficking Organizations, by [author name scrubbed].

CRS In Focus IF10215, Mexico's Recent Immigration Enforcement Efforts, by [author name scrubbed]

CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications, by [author name scrubbed].

CRS Report RS22955, Country-of-Origin Labeling for Foods and the WTO Trade Dispute on Meat Labeling, by [author name scrubbed].

CRS Report R43313, Mexico's Oil and Gas Sector: Background, Reform Efforts, and Implications for the United States, coordinated by [author name scrubbed].

CRS Report R43312, U.S.-Mexico Water Sharing: Background and Recent Developments, by [author name scrubbed], [author name scrubbed], and [author name scrubbed].

Mexico: Background and U.S. Relations

Introduction

Congress has maintained interest in Mexico, a top trade partner and energy supplier with which the United States shares a nearly 2,000-mile border and strong cultural and historical ties. Economically, the United States and Mexico are heavily interdependent, and the U.S. economy could benefit if Mexico is able to boost its economic growth rates by successfully implementing the reforms its legislature enacted in 2013.1 Similarly, security conditions in Mexico affect U.S. national security, particularly along the U.S.-Mexico border. Mexico's apparent inability to effectively combat corruption and strengthen the rule of law has underscored the need for continued cooperation on those issues.

President Enrique Peña Nieto, former governor of the state of Mexico, is in the fourth year of his six-year term. During 2013, President Peña Nieto shepherded significant structural reforms through a fragmented Congress by forming a "Pact for Mexico" agreement with his Institutional Revolutionary Party (PRI), the conservative National Action Party (PAN), and the leftist Party of the Democratic Revolution (PRD). The reforms addressed a range of issues, including education, telecommunications, politics, and energy (see Table 1).

President Peña Nieto's approval rating has remained low since 2014 (it was 32% in March 2016) as he has struggled to respond to the September 2014 enforced disappearance and likely murder of 43 students in Iguala, Guerrero, conflict-of-interest scandals, and security challenges. Additionally, despite the reforms, Mexico's economic growth rates have been moderate (2.1% in 2014 and 2.5% in 2015) and the country's poverty rate has slightly increased (to 46.2% in 2014).2 Despite these challenges, the PRI and its allies captured a majority in the chamber of deputies in the 2015 midterm elections and are predicted to perform well in upcoming gubernatorial elections due, in part, to problems within the PAN and PRD.3 After the June 2016 gubernatorial elections, attention will increasingly turn to the 2018 presidential contest; discontent with the three major parties could lead voters to support a populist candidate, such as Andrés Manuel López Obrador.4

This report provides an overview of political and economic conditions in Mexico, followed by assessments of some key issues of congressional interest in Mexico: security and foreign aid, extraditions, human rights, trade, migration, energy, education, and water issues.

Political Situation

Over the past two decades, Mexico has transitioned from a centralized political system dominated by the PRI to a true multiparty democracy. Since the PRI last governed in the 1990s, presidential power has become more constrained by Mexico's Congress, Supreme Court, and increasingly powerful governors.5 Partially as a result of those constraints, two successive PAN administrations struggled to enact the structural reforms needed to boost Mexico's economic competitiveness and address the country's security challenges.

Figure 1. Mexico at a Glance

Sources: Graphic created by the Congressional Research Service (CRS). Map files from Map Resources. Trade Data from Global Trade Atlas. Unless otherwise noted, other data are from CIA, The World Fact Book, updated February 2016.

The PAN government of Felipe Calderón (2006-2012) pursued an aggressive anticrime strategy and increased security cooperation with the United States. Those efforts helped Mexico arrest or kill record numbers of drug kingpins, but some 60,000 people died as a result of organized crime-related violence. Mexico's security challenges overshadowed some of the government's achievements, including its economic stewardship during and after the global financial crisis and expansion of access to health care.

Twelve years after losing the presidency for the first time in 71 years, the PRI won the presidential election, a plurality of seats in the Congress, and three of six gubernatorial contests in July 2012. Voters appeared to view the PRI as the party best equipped to reduce violence and hasten economic growth despite concerns about its past reputation for corruption. Enrique Peña Nieto won by a narrow margin (6.6% of the vote) over López Obrador of the leftist PRD. Peña Nieto took office with his party controlling 20 of 32 governorships, but his PRI/Green Ecological Party (PVEM) coalition lacked a majority in either legislative chamber.

Following June 2015 midterm elections,6 the PRI-PVEM-New Alliance (AN) coalition garnered a majority in Mexico's chamber of deputies. That coalition is the largest voting bloc in the senate, but the PAN and PRD have a significant presence in that chamber as well. The deputies are to serve for three-year terms, and the newly elected senators are to serve for six years.

Figure 2. Composition of Mexico's 2015-2018 Congress by Party Affiliation

Source: Mexico's Chamber of Deputies and Senate; prepared by CRS graphics.

Notes: PRI = Institutional Revolutionary Party; PVEM = Green Party; NA = New Alliance Party; PAN = National Action Party; PRD = Party of the Democratic Revolution; MORENA = National Regeneration Movement; MC = Citizen's Movement Party; PT =Worker's Party; PES = Social Encounter Party.

The PRI controls 18 of 32 governorships, but 12 gubernatorial elections are scheduled to take place on June 5, 2016. Nine of these elections are in states now controlled by the PRI.7 The PAN and PRD have formed alliances in at least four states to challenge PRI candidates, but the prospects for those candidates remain unclear given the PRI's formidable state and local machinery. Violence could pose problems for the electoral process in states such as Sinaloa, Tamaulipas, and Veracruz. The 2015 victory of independent candidate Jaime Rodríguez in Nuevo León could give hope to other outsiders or candidates from small parties.

As the 2018 presidential elections approach, President Peña Nieto and the PRI are seeking to convince voters that the reforms they enacted have been beneficial, but concerns about corruption, combined with security and economic challenges, could prove difficult to overcome.

Leadership in the Peña Nieto Administration

Mexico's presidential transitions are characterized by a high level of turnover in government agencies that is often accompanied by large overhauls in governmental structures and organizational patterns. President Peña Nieto returned to the interior ministry (SEGOB) much of the power that the ministry had before the PAN took office. With congressional approval, he placed the secretariat of public security (including the federal police)8 and intelligence functions under the authority of the interior ministry. That ministry now coordinates security efforts with the military and state and municipal authorities. It also commands the new militarized police entity within the federal police, the national gendarmerie.9

Some have criticized Peña Nieto's structural and budgetary priorities. SEGOB has gotten larger and more powerful, while the attorney general's office has remained comparatively weak and underfunded. In 2015, the National Institute of Migration (INM) within SEGOB had a larger budget than the intelligence service or the foreign ministry.10

Key positions in the government are filled by the president's close confidantes. Luis Videgaray Caso is the minister of finance, a post he held in the state of Mexico during Peña Nieto's governorship. Miguel Angel Osorio Chong is minister of the interior. Osorio Chong served as governor of Hidalgo, which borders the state of Mexico, when Peña Nieto governed. Both Videgaray and Osorio Chong reportedly have presidential aspirations but have been criticized for their performance. Osorio Chong came under heavy criticism after Joaquín "El Chapo" Guzmán's prison escape.11 Videgaray's reputation has been marred by Mexico's middling economic performance and by allegations of a conflict-of-interest scandal.12

The remainder of the Cabinet consists of a combination of PRI technocrats with postgraduate education abroad, senior PRI politicians, and a few outsiders. Most of the technocratic leaders are in the economic ministries. The current secretary of social development and former foreign minister, José Antonio Meade, served as finance minister for former President Calderón.

Peña Nieto's government has avoided the public infighting that occurred among former President Calderón's ministers, but it struggled to manage public relations effectively in 2014 amid a political crisis. By mid-2014, many prominent news outlets that once praised the Peña Nieto government's reformist zeal had begun to criticize its handling of government officials' alleged involvement in extrajudicial killings and forced disappearances. After months of domestic and international criticism, President Peña Nieto replaced his attorney general with Arely Gomez, a former senator more amenable to cooperating with U.S. officials than her predecessor.13

The Pact for Mexico and Structural Reform

Upon his inauguration, President Peña Nieto announced a reform agenda with specific proposals under five broad pillars: (1) reducing violence; (2) combating poverty; (3) boosting economic growth; (4) reforming education; and (5) fostering social responsibility. Leaders of the conservative PAN and leftist PRD surprised many analysts by signing President Peña Nieto's Pact for Mexico, which contained 95 agreements on key issues facing the country. Those agreements provided a baseline for the parties to debate legislative proposals. Although some opposition legislators later balked at their leaders' decisions to endorse the pact, during its first session the Congress approved education and telecommunications reform legislation, two measures that Peña Nieto had identified as short-term priorities, as well as a crime victim's' law.

Investors and analysts initially praised President Peña Nieto and his advisers for focusing their attention and political capital on shepherding structural reforms through the Mexican Congress in 2013-2014 (see Table 1). Many of the reforms that Peña Nieto prioritized have long been recommended by the Organization for Economic Cooperation and Development (OECD) and others as crucial for boosting Mexico's competitiveness. These reforms were enacted despite large-scale protests from interest groups, such as Mexican teachers' unions.

Many of the 2013-2014 reforms were constitutional reforms requiring two-thirds votes of both chambers of Congress and the approval of a majority of state legislatures. The PRI had to garner support from other parties to pass those reforms. The fiscal reform, passed with PRD support, increased taxes on corporations and high-wage earners rather than applying the value-added tax to food and medicines. A PRI-PAN alliance enabled the December 2013 approval of constitutional reforms on energy but led the PRD to leave the Pact for Mexico. The energy reform created more avenues for private participation in the energy sector than the PRI had originally proposed (per the PAN's pressure). In August 2014, secondary laws to implement those reforms officially opened Mexico's oil, natural gas, and power sectors to private investment.14 Despite the challenges posed by low oil prices, Mexico's National Hydrocarbons Commission has conducted the first rounds of public bidding in a relatively transparent fashion and modified the terms offered to make them more attractive to international companies.15 Since the dissolution of the Pact for Mexico, the pace of reforms has slowed considerably.

Table 1. Key Reforms Enacted During 2013-2015
  • Energy Reform: creates several different types of contracts, including production-sharing and licensing; allows companies to post reserves for accounting purposes; gives Petroleos Mexicanos (Pemex) budget autonomy; establishes a sovereign wealth fund; creates new regulators; and removes the union from the Pemex board.
  • Antitrust Reform: creates an autonomous Federal Economic Competition Commission to regulate all sectors except telecommunications and energy and gives the commission the power to oversee mergers, regulate industries, and sanction monopolistic practices.
  • Telecommunications Reform: increases consumers' access to more affordable and reliable television, radio, Internet, and mobile phone services; increases privacy protections for consumers; and creates an independent entity, the Federal Institute of Telecommunications (IFETEL), to regulate radio, television, and telecommunications companies.
  • Financial Reform: increases access to credit, particularly for small-and medium-sized businesses (SMEs), and creates more competition in the banking sector.
  • Fiscal Reform: raises additional revenue by increasing income taxes for upper income earners, upping the value added tax (VAT) to 16% from 11% in northern border states, and creating new taxes on stock market profits, as well as sugary beverages and other snack foods.
  • Education Reform: gives the government, rather than the union, control over hiring and firing teachers; creates a new entity to evaluate teachers; and increases funding for education, including full-day schooling. In June 2015, Mexico's Supreme Court upheld the constitutionality of removing teachers who fail evaluation exams from instructional positions.
  • Unified Code of Criminal Procedure (CPC): replaces the procedural rules that existed in the country so that the same general rules apply forto all states and the federal government; reduces the margin for impunity as crimes will be punished by the same penalties; facilitates coordination between authorities; and aims to improve the efficiency of investigations. As a result of the unified code, all states will have oral, adversarial trials with the presumption of innocence and the use of alternative dispute mechanisms as required by constitutional reforms enacted in 2008. Political Reform: provides for the re-electionreelection of federal deputies for up to four terms beginning in 2015 and of senators for up to two terms beginning in 2018,; provides for the reelection of mayors, and local legislators; replaces the current Attorney General’s Officeattorney general's office with an independent Prosecutor General’s Officeprosecutor general's office; creates a new national electoral institute,; and calls for the annulment of an election if there is evidence that a party engaged in “systematic” "systematic" violations of campaign finance restrictions. Transparency Reform: : extends the rights of citizens to seek information from all levels of government, unions, and political parties and strengthens the entity charged with managing access to information (the Federal Institute of Access to Information and Data Protection). Source: For information on the reforms, see: http://reformas.gob.mx/en/reforms. During his first year, Peña Nieto benefitted from the fact that the PAN and the PRI agreed on many of the economic reforms that needed to be enacted.17 Some of the reforms passed with 17 Another key reform touted by the Peña Nieto government that was enacted late in the Calderón Administration is labor reform. As enacted, the labor reform package makes hiring and firing workers easier, regulates subcontracting (continued...) Congressional Research Service 6 Mexico: Background and U.S. Relations PAN-PRI support, such as the energy reforms, were similar to efforts that PAN Presidents had put forth in the past only to have them blocked by the PRI. Prospects for reform brightened after no party dominated the July 7, 2013, state and municipal elections. Many of the 2013-2014 reforms were constitutional reforms requiring two thirds votes of both chambers of Congress and the approval of a majority of state legislatures. The PRI had to garner support from other parties to pass those reforms. The fiscal reform, passed with PRD support, increased taxes on corporations and high-wage earners rather than applying the value added tax to food and medicines. A PRI-PAN alliance enabled the December 2013 approval of constitutional reforms on energy, but led the PRD to leave the Pact for Mexico. The energy reform created more avenues for private participation in the energy sector than the PRI had originally proposed (per the PAN’s pressure). On August 11, 2014, secondary laws to implement those reforms officially opened Mexico’s oil, natural gas, and power sectors to private investment.18 Security and Institutional Reform: Responding to Events in Iguala, Guerrero On December 17, 2012, President Peña Nieto outlined a state security policy that involved binding commitments from all levels of government and civic participation. The six pillars of the strategy include (1) planning; (2) prevention; (3) protection and respect of human rights; (4) coordination; (5) institutional transformation; and (6) monitoring and evaluation. President Peña Nieto said that although his government would not abandon the fight against organized crime, the primary goal of his security strategy would be to reduce violent crime. Two priority proposals Peña Nieto sought to achieve in the security realm that have been accomplished include launching a national crime prevention plan19 and establishing a unified code of criminal procedures to cover judicial procedures for the federal government and the states. Other key proposals—creating a large National Gendarmerie (militarized police) and a centralized intelligence agency—have either been delayed or significantly watered down.20 Two years into his Administration, criticism is mounting concerning Peña Nieto’s security strategy. Many argue that Peña Nieto has struggled to define his security priorities and how they will be achieved. Others assert that Peña Nieto maintained Calderón’s reactive approach of deploying federal forces—including the military—to areas where crime surges rather than engaging in a proactive effort aimed at strengthening institutions to deter crime and violence (until forced to following events in Guerrero).21 High-value targeting of top criminal leaders has (...continued) and outsourcing, strengthens safeguards against child labor, and protects working women. 18 CRS Report R43313, Mexico’s Oil and Gas Sector: Background, Reform Efforts, and Implications for the United States, coordinated by Clare Ribando Seelke. 19 The program has been criticized, however, for lacking a rigorous methodology for selecting and evaluating the communities and interventions that it is funding. México Evalua, Prevención del Delito en México: Dónde Quedó la Evidencia?, January 2014. 20 Vanda Felbab-Brown, Changing the Game or Dropping the Ball? Mexico’s Security and Anti-Crime Strategy Under President Enrique Peña Nieto, Brookings Institution, November 2014, available at, http://www.brookings.edu/~/media/research/files/papers/2014/11/mexico%20security%20anti%20crime%20nieto%20f elbabbrown/mexico%20security%20anti%20crime%20nieto%20v1%20felbabbrown.pdf. 21 Ibid. Alfredo Méndez, “Peña Nieto Mantiene el Errático Plan de Seguridad de Calderón, Dicen Juristas, July 30, 2013. Congressional Research Service 7 Mexico: Background and U.S. Relations also continued. Indeed, despite restrictions placed on U.S. security agencies working in Mexico, U.S. intelligence reportedly helped Mexican marines successfully track and arrest Miguel Angel Treviño Morales (“Z-40”), the leader of Los Zetas (one of the most violent criminal groups), in July 2013 and Joaquin “El Chapo” Guzmán, head of the Sinaloa organization, in February 2014.22 In September 2014, President Peña Nieto asserted that 84 of 122 high-value targets identified by his government had been detained.23 While impressive, this strategy has contributed to crime groups splintering, proliferating, and diversifying their activities from drug trafficking into other types of crime. Organized crime-related homicides continued to decline in 2013 as they had during the last year of the Calderón government, yet serious security challenges remain in many parts of Mexico. President Peña Nieto has said that organized-crime violence declined by 30% in 2013.24 Since the government is no longer publicly releasing information on trends in organized crime-related killings as opposed to all homicides, it is difficult to analyze the security situation with precision. According to Mexican government figures, all homicides fell by 16.5% in 2013 as compared to 2012.25 Nevertheless, kidnappings increased in 2013, with police among those accused of carrying them out.26 Violence has declined in some parts of northern Mexico (except for Tamaulipas), but has spiked in the interior of the country and along the Pacific Coast, particularly in Michoacán. The failures of past federal efforts to quell violence and reestablish state presence there have led to the development of armed civilian “self-defense groups” there that have clashed with crime groups. Recent events, including discoveries of mass graves, have laid bare the dire security situation in Guerrero. Reforming Mexico’s criminal justice system is widely regarded as a crucial step toward combating criminality, strengthening the rule of law, and better protecting citizen security and human rights in the country. Prior to the Tlatlaya and Guerrero incidents discussed below, the Peña Nieto government had taken some steps to accelerate implementation of judicial reform, establish national police standards, and investigate cases of forced disappearances. Human rights groups and security analysts had asserted, however, that much more needed to be done to bolster institutional reform, anticorruption efforts, and respect for human rights.27 22 “No Shots Fired: Leader of Mexico’s Zetas Cartel Captured in Precision Operation, with U.S. Help,” Associated Press, July 16, 2013; Damien Cave, “How a Kingpin Above the Law Fell, Incredibly, Without a Shot,” New York Times, February 23, 2014. For background, see: CRS Report R41576, Mexico’s Drug Trafficking Organizations: Source and Scope of the Violence, by June S. Beittel. 23 Lally Weymouth, “An Interview with Mexican President Enrique Peña Nieto,” Washington Post, September 25, 2014. 24 “Mexico Poised to Take-Off, Peña Nieto Tells Davos,” Latin News Daily, January 24, 2014. 25 Rafael Cabrera, “Menos Homicidios y más Secuestros Durante 2013: SNSP,” Animal Político, January 24, 2014. 26 Tim Johnson, “Kidnappings Soar in Mexico, with Police Often Among the Perpetrators,” McClatchyDC, October 31, 2013. 27 Maureen Meyer and Clay Boggs, One Year into Mexican President Enrique Peña Nieto’s Administration: Little Progress has Been Made on Security or Human Rights, Washington Office on Latin America (WOLA), November 27, 2013. Congressional Research Service 8 Mexico: Background and U.S. Relations Tlatlaya and Guerrero: Extrajudicial Killings and Forced Disappearances For years, human rights groups and annual State Department human rights reports have chronicled cases of Mexican security officials’ involvement in extrajudicial killings.28 On July 1, 2014, Mexico’s Secretrary of Defense (SEDENA) initially confirmed that 22 criminals and one Mexican soldier had died after an armed confrontation near a warehouse in Tlatlaya, state of Mexico. Evidence contradicting that claim indicating that some of those who died appeared to have been shot at close range near a wall, as well as eyewitness testimony corroborating that evidence prompted Mexico’s National Human Rights Commission (CNDH) to investigate SEDENA’s account of the incident even though the state of Mexico’s Attorney General had declared in July that there was no sign of a massacre,29 CNDH issued a report in October asserting that at least 15 of the 22 people killed in Tlatlaya were executed by soldiers after already having surrendered and that the crime scene had been altered. CNDH recommended that those soldiers be tried and the victims’ families compensated. It also issued a recommendation criticizing how the case had been handled by state and federal prosecutors (who did not intervene to carry out their own investigations).30 SEDENA accepted CNDH’s findings and while at least seven soldiers and one officer are in custody, no higher level officials appear to have been accused of trying to cover up the crime.31 On September 26, 2014, 43 students from the ‘Raúl Isidro Burgos’ rural teaching school near Ayotzinapa, Guerrero stopped in Iguala, Mexico on their way to participate in protests in Mexico City to commemorate student killings that occurred in 1968. Municipal police mistakenly thought the students aimed to disrupt a political speech by the mayor’s wife. On orders from Luis Abarca (then-mayor of Iguala) and his wife María de los Angeles Pineda—PRD officials thought to have ties to organized crime—municipal police confronted the students. During the confrontation, six people died and 43 students went missing. The students were then transferred to individuals from the Guerreros Unidos criminal organization.32 According to several confessions by members of that crime group to the federal Attorney General’s office, the students were taken to a site near Cocula, Guerrero where they were killed, their bodies were incinerated, and their remains were disposed of in a river. Families of the students have vigorously rejected the assertion that their children—some of the roughly 23,00033 who have disappeared since 2007—were likely murdered. However, the first remains that were sent by the Mexican government to Austria to be examined have been confirmed to match a missing student’s DNA.34 The disappearance of the students in Iguala has prompted massive protests throughout Mexico, particularly since President Peña Nieto decided to attend an economic summit in China in mid-November rather than staying in Mexico to oversee federal efforts to respond to the crisis. Protests have been generally peaceful, but have, at times, turned violent. Critics have decried the federal government’s failure to get involved in the case until 10 days after the crime took place (during which time state officials handled the investigation) and the length of time it took to find the alleged bodies and perpetrators (during which time some 18 mass graves have been recovered). The federal government has responded by maintaining that 80 people have been arrested thus far (including mayor Abarca and his wife), 10,000 people have been involved in the investigation, and federal efforts have been supported since midNovember by the Inter-American Commission of Human Rights. They have also explained that Mexico’s federal system is designed in such a way that state prosecutors investigate murder cases unless they show a clear nexus to organized crime, and that federal forces that were in the area at the time of the crime could not have intervened unless the local authorities, who, in that case were acting against civilians, requested their support.35 28 See, for example: U.S. Department of State, Country Report on Human Rights Practices for 2013: Mexico, March 2014, http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm?year=2013&dlid=220457. 29 Mark Stevenson, “In Mexico, Lopsided Death Tolls Draw Suspicion,” AP, July 8, 2014. 30 “La CNDH ve 15 Ejecuciones en Tlatlaya y Emite Recomendación a Autoridades,” CNN México, October 21, 2014. 31 Bernardino Hernandez, “Mexican Soldiers Face Charges, But not Officials who Tried to Hide Massacre,” AP, November 13, 2014. 32 Embassy of Mexico in Washington, DC, “Fact Sheet: Regarding the Disappearance of 43 Students in Iguala, Guerrero and Security in Mexico,” November 12, 2014. 33 Paris Martinez, “2014, el año con más casos de desapariciones en México: van 5 mil 98 víctimas,” Animal Politico, November 19, 2014. 34 Paulina Villegas and Randal C. Archibold, “Rage and Sorrow Flow as Student in Mexico Is Declared Dead,” New York Times, December 8, 2014. 35 Embassy of Mexico in Washington, DC, “Fact Sheet: Regarding the Disappearance of 43 Students in Iguala, Guerrero and Security in Mexico,” November 12, 2014. Congressional Research Service 9 Mexico: Background and U.S. Relations Corruption has been, and remains, a major obstacle to reform efforts. Mexico is ranked 103 of 175 countries in Transparency International’s 2014 Corruption Perception Index. President Peña Nieto has portrayed corruption as mainly a local level issue present in some parts of Mexico, but experts have pointed to evidence of corruption at all levels of government.36 Allegations that President Peña Nieto has personally benefitted from ties to a firm that has won lucrative government contracts have further tarnished the image of his government.37 Finance Minister Videgaray also purchased property from that contractor.38 On November 27, 2014, President Peña Nieto proposed ten initiatives to strengthen the rule of law and human rights in a national address aimed at responding to the ongoing nationwide protests about Iguala and similar incidents.39 The proposals included constitutional reforms to allow federal forces to take over security functions in municipalities that have been overcome by organized crime and to clarify roles of federal, state, and municipal authorities in combating crime. They also involve creating a national emergency hotline, a unique identification number for each citizen, special federal operations in Guerrero and surrounding states, and a variety of human rights and judicial reforms. These justice sector proposals have been accompanied by the proposal to create special zones of economic development in southern Mexico. Some have welcomed the proposals.40 Others remain skeptical, asserting that some of the main proposals such as having municipal police forces absorbed by state police forces - have been proposed and rejected in the past because corruption is pervasive in many state forces and governors’ offices as well.41 Still other critics have lamented the lack of a focus on human rights within the proposals and a failure to mention the negative impacts of Mexico’s military-led public security strategy.42 The Mexican Congress did not enact Peña Nieto’s proposals before its session ended on December 15, 2014. It next session begins in February 2015. 2015 Mid-Term Elections Mexico is scheduled to convene legislative and state elections on June 7, 2015. These elections are the first elections being handled by Mexico’s new electoral agency, the National Electoral Institute, which was created as part of the political and electoral reforms described in Table 1. Its predecessor, the Federal Electoral Institute, only conducted presidential and legislative elections. All 500 seats in the Chamber of Deputies are up for election, with 300 selected by direct election and 200 chosen by proportional representation. Gubernatorial elections are being held in nine of the 17 states holding state and municipal elections on that day. 36 Viridiana Ríos, “Time for Mexico to Accept Responsibility for the Violence,” New York Times, December 2, 2014. David Luhnow and Santiago Pérez, “Mexico Digs Into Ties Between Leader, Builder,” Wall Street Journal, December 4, 2014. 38 Juan Montes, “New Ties Emerge Between Mexico Government and Builder,” Wall Street Journal, December 11, 2014. 39 Embassy of Mexico in Washington, DC, “10 Measures to Strengthen Security, Justice, and the Rule of Law,” press release, December 4, 2014. 40 Duncan Wood, “Mexico and the U.S. Should Work Together to Combat Violence,” New York Times, December 2, 2014. 41 “Analistas Consideran que Plan de Peña Nieto es Insuficiente en México,” El Universal, November 28, 2014; Patrick Corcoran, “Peña Nieto's Mexico Police Reform Proposal Fails to Convince,” Insight Crime, December 1, 2014. 42 INSYDE, Pronunciamiento y Exhorto en torno a la Iniciativa Presidencial de Reforma Constitucional Enviada al Senado el 1° de Diciembre, December 8, 2014. 37 Congressional Research Service 10 Mexico: Background and U.S. Relations Despite the current challenges facing President Peña Nieto and the PRI, the party’s formidable state and local networks and divisions within the PRD and PAN have combined to improve its chances of performing well in the June elections. The PAN faced divisive internal elections in the spring of 2014, while Cuauhtémoc Cárdenas, the founder of the PRD, recently resigned from the party due to his dissatisfaction with the way current party leaders were handling the response to events in Iguala, Guerrero. According to a November 2014 poll, 30% of voters favored the PRI, 16% the PAN, and 10% the PRD. Despite that, some 55% of those surveyed would prefer the PRI not capture a majority in the Chamber of Deputies.43 Foreign Policy President Peña Nieto has prioritized promoting trade and investment in Mexico as a core goal of his Administration’s foreign policy, but also signaled Mexico’s willingness to participate in U.N. peacekeeping efforts, a major step for a country with a history of non-intervention. President Peña Nieto and Secretary of Foreign Affairs Joe Antonio Meade have not only reoriented U.S.Mexican relations to focus on economic issues, but sought to create closer trade ties with Europe, Asia, and the rest of Latin America, including Cuba. President Peña Nieto has hosted Chinese Premier Xi Jinping for a state visit to Mexico and visited China twice thus far. His government is actively involved in negotiations for a proposed Trans Pacific Partnership44 trade agreement with other Asia Pacific countries, as well as economic integration efforts with the pro-trade Pacific Alliance countries of Chile, Colombia, and Peru.45 Promoting investment opportunities that have been created by Mexico’s recent energy reforms may figure prominently in Mexico’s foreign policy as well. Not only is Mexico seeking foreign investment, but it is also investing in Central American energy projects, most notably in Guatemala. Economic and Social Conditions Over the last 25 years, Mexico has transitioned from a closed, state-led economy to an open market economy. While the transition began in the late 1980s, it accelerated after Mexico entered into the North American Free Trade Agreement (NAFTA) with the United States and Canada in 1994. Since NAFTA, the Mexican economy has increasingly become a manufacturing-for-export nation, with exports representing some 32% of Mexico’s GDP, up from 10% twenty years ago. Mexico remains a major U.S. crude oil supplier, but its top exports to the United States have diversified to include automobiles and auto parts, television receivers, and other manufactured goods. Mexico has entered into 12 free trade agreements (FTAs) involving 44 other countries.46 Despite attempts to diversify its economic ties and build its domestic economy, Mexico continues to remain heavily dependent on the United States as an export market (roughly 80% of Mexico’s exports in 2013 were U.S.-bound), and as a source of tourism revenues, remittances, and investment. Economic conditions in Mexico tend to follow economic patterns in the United 43 “PRI Leads in Poll Taken Ahead of the Legislative Elections,” EIU, November 27, 2014. See CRS Report R42694, The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress, coordinated by Ian F. Fergusson. 45 CRS Report R43748, The Pacific Alliance: A Trade Integration Initiative in Latin America, by M. Angeles Villarreal. 46 CRS Report R40784, Mexico’s Free Trade Agreements, by M. Angeles Villarreal. 44 Congressional Research Service 11 Mexico: Background and U.S. Relations States. When the U.S. economy is expanding, the Mexican economy tends to grow as well. However, when the U.S. economy stagnates or is in decline, the Mexican economy tends to decline as well, often to a greater degree. In 2009, for example, GDP growth in the United States fell by 2.5% and Mexico’s GDP declined by 6.5%.47 Many economists praised the sound fiscal policies of the past two PAN administrations, but faulted them for failing to address some of the structural issues that have constrained the country’s growth potential. The Calderón government maintained macroeconomic stability in the face of the 2008 global economic crisis and U.S. recession, a 2009 H1N1 swine flu epidemic that damaged the tourism industry, and declining oil production.48 With careful economic planning, the Mexican economy recovered from the 2009 crisis, with growth rates averaging 4.4% from 2010-2012. Despite that recovery, economists criticized the PAN’s failure to address Mexico’s low tax base and over-reliance on declining oil revenues, weak education system, and lack of competition in some sectors.49 Growth: Will Reforms Bring Faster GDP Growth? Enrique Peña Nieto and his top advisors have long stressed the importance of passing structural reforms to make the Mexican economy more competitive. During the 2012 campaign, Peña Nieto acknowledged that the PAN had maintained a stable economy, but criticized the past two Administrations for failing to spur rapid economic growth. He identified several reasons why Mexico’s economic growth had lagged: low productivity, insufficient access to credit, deficient investment in infrastructure, monopolies, a large and expanding informal sector, and a continued over-reliance on the U.S. market. To counter these deficiencies, Peña Nieto advocated a 10-point economic plan that included, among other measures, implementing legislation to counter monopolistic practices, passing a fiscal reform, opening up the oil sector to private investment, making farmers more productive, and doubling infrastructure investments. Peña Nieto also endorsed an active international trade policy aimed at increasing Mexico’s trade with Asia, South America, and other markets. During his first two years in office, President Peña Nieto shepherded historic economic reforms through the Mexican Congress (see Table 1), but failed to maintain the economic growth rates that Mexico had posted for the last three years of the Calderón government. Economists blamed the government’s failure to promote investment, natural gas shortages, weak external demand, and a slowdown in Mexico’s construction industry for the country’s 1.2% growth rate in 2013.50 Economic growth picked up in 2014 to an estimated 2.1%; however, that rate is not as high as had been expected. Mexican business leaders have faulted tax increases that came into effect in January for dragging down the domestic economy; the Peña Nieto government has since promised not to seek further tax hikes. Business leaders have also criticized the government for failing to increase infrastructure investments outside of funds dedicated to the energy sector and to a massive Mexico City airport project that was recently announced. 47 CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications , by M. Angeles Villarreal. 48 Duncan Wood, “Mexico’s Elections and the Economy—Voters Face a Tough Decision,” Center for Strategic & International Studies, May 2012. 49 Francisco Gonzalez, “Drug Violence Isn’t Mexico’s Only Problem,” Current History, February 2011; Organization for Economic Cooperation and Development (OECD), OECD Economic Surveys: Mexico, May 2011. 50 “Mexico: Country Report,” EIU, December 2013. Congressional Research Service 12 Mexico: Background and U.S. Relations Analysts have estimated that the package of reforms that was approved in 2013 could increase annual economic growth rates by 1.0-1.5 percentage points.51 They predict that growth in Mexico could average 3.8% per year over the coming years as the impact of the reforms begins to be felt.52 The Peña Nieto government maintains that the recently-enacted energy reforms will result in lower energy prices, create 500,000 new jobs, and boost GDP growth by 1 percentage point by the end of his term in 2018. JP Morgan has estimated that the energy reforms may increase annual growth rates in Mexico by up to 0.8% and foreign direct investment (FDI) in Mexico by $20 billion per year by 2016 or 2017.53 Although it is difficult to predict how increasing private participation in Mexico’s oil and gas sectors will affect the country’s economic development, skeptics see reason to doubt the government’s positive predictions, warning of the potential for corruption and waste. Other analysts warn that declines in global oil prices could hinder the success of the reforms.54 In addition to bringing in more investment, a key goal of the reforms that were enacted in 201314 is to boost formal sector employment and productivity, particularly among the small and medium-sized enterprises (SMEs) that together employ some 60% of Mexican workers, often in the informal sector. While productivity in Mexico’s large companies (many of which produce internationally traded goods and have benefitted from NAFTA) increased by 5.8% per year between 1999 and 2009, productivity in small businesses fell by 6.5% per year.55 To address that discrepancy, the financial reform aimed to increase access to credit for SMEs and the fiscal reform sought to incentivize their participation in the formal (tax-paying) economy by offering insurance, retirement savings accounts, and home loans to those who register with the national tax agency.56 Economists maintain that reducing informality is crucial for addressing income inequality and poverty, while at the same time expanding Mexico’s low tax base. Combating Poverty President Peña Nieto sought to boost tax revenues in order to establish a universal social safety net with social security and unemployment insurance that builds upon the last two governments’ provision of nearly universal access to health care. Mexico has long had relatively high poverty rates for its level of economic development (45.5% in 2012),57 particularly in rural regions and among indigenous populations. Traditionally, those employed in subsistence agriculture and/or small, informal businesses tend to be among the poorest citizens. Some assert that conditions in indigenous communities have not measurably improved in the twenty years since the Zapatistas ( Institute of Access to Information and Data Protection).
  • Anticorruption Reform: a constitutional reform that establishes a national anticorruption system with a special prosecutor to handle cases of corruption. The law also gives more power to the existing federal audit office and the public administration ministry.
  • Source: For information on the reforms, see Government of Mexico, "Reforms in Action," at http://reformas.gob.mx/en/reforms.

    Note: The only major reform passed in 2015 was the anticorruption reform.

    Security, Institutional Reform, and Human Rights

    Upon taking office, President Peña Nieto made violence reduction one of his priorities. The six pillars of his security strategy are (1) planning, (2) prevention, (3) protection and respect of human rights, (4) coordination, (5) institutional transformation, and (6) monitoring and evaluation. Peña Nieto has taken action on two priority proposals on security: launching a national crime prevention plan16 and establishing a unified code of criminal procedures to cover judicial procedures for the federal government and the states. Other key proposals—creating a large national gendarmerie (militarized police) and a strong central intelligence agency—have been either delayed or significantly watered down.17

    In addition to enacting a unified code of criminal procedure, the Peña Nieto government has allocated additional funds to support implementation of judicial reforms enacted in 2008. As per those constitutional reforms, Mexico has until June 2016 to replace its trial procedures, moving from a closed-door process based on written arguments presented to a judge to an adversarial system with oral arguments and the presumption of innocence. These changes are expected to make the system more transparent and impartial. Through alternative dispute resolution, the system aims for flexibility and efficiency. Significant work remains to be done, as only six states have fully implemented the system. Eight other states have been identified as far behind.18

    Criticism of Peña Nieto's security strategy has mounted since mid-2014. Many argue that Peña Nieto has struggled to define his security priorities and how they will be achieved. Others assert that he has maintained Calderón's reactive approach of deploying federal forces—including the military—to areas in which crime surges rather than engaging in a proactive effort aimed at strengthening institutions to deter crime and violence. High-value targeting of top criminal leaders has continued; at least 96 of 122 high-value targets identified by the government have been detained.19 That figure includes "El Chapo" Guzmán, who was recaptured in January 2016 after escaping from Mexico's highest-security prison in July 2015. High-value targeting has contributed to crime groups splintering and diversifying their illicit activities into kidnapping, alien smuggling, and oil theft. Organized crime-related deaths trended downward in 2013 and 2014; nevertheless, homicides increased in 2015 for the first time since 2011.20

    Criminal groups, sometimes in collusion with public officials, as well as state actors (military, police, state prosecutors, and migration officials) have continued to commit incidents of serious human rights violations. The vast majority of those abuses have gone unpunished.21 In December 2014, the U.N. Special Rapporteur on Torture published a report asserting that the use of torture by security forces in Mexico is widespread and is primarily employed to gather coerced statements. The attorney general's office (PGR) has secured 15 convictions for torture. The U.N. Committee on Enforced Disappearances has described a "context of generalized disappearances in a large part of Mexican territory, many of which could be described as forced disappearances." The PGR has secured six convictions for enforced disappearances since the mid-1970s.

    Extrajudicial Killings, Torture, and Enforced Disappearances

    For years, human rights groups and annual State Department human rights reports have chronicled cases of Mexican security officials' involvement in extrajudicial killings, torture, and enforced disappearances.22

    Tlatlaya, State of Mexico. In October 2014, Mexico's National Human Rights Commission (CNDH) issued a report concluding that at least 15 people had been killed execution-style by the Mexican military in Tlatlaya on July 1, 2014. The military originally claimed that the victims were criminals killed in a confrontation. The CNDH also documented claims of the torture of two witnesses to the killings by the military and prosecutors from the state of Mexico. Three soldiers remain in custody for killing 11 people on that day; four have been released. No higher-level officials have been accused of involvement in the killings or in trying to cover them up.23 Mexico has pledged to give some $3.3 million to the Tlatlaya victims' families (as required by a 2011victims' law), but it is unclear whether that funding has been distributed.

    Iguala, Guerrero. The unresolved case of 43 missing students who disappeared in Iguala, Guerrero, in September 2014—which allegedly involved the local police and authorities—galvanized large protests in Mexico and around the world. Remains sent by the Mexican government to Austria to be examined have been confirmed to match one missing student's DNA. The government's investigation has been widely criticized, and aspects of it have been disproven by a group of experts from the Inter-American Commission on Human Rights (IACHR). The government has been working with those experts to reinvestigate the case but has denied their requests to interview soldiers who were in the area of the incident. The mandate of the experts expires in April 2016 and is not being renewed.24

    Incidents such as these galvanized protests against impunity in Mexico. On average, fewer than 20% of homicides have been successfully prosecuted, suggesting high levels of impunity.25 Prosecution rates are often even lower for other crimes. Overall, few crimes—perhaps 10%—are reported, and, on average, more than 90% of all reported crimes go unpunished.26

    In response to criticisms of these incidents, Mexican President Enrique Peña Nieto proposed 10 actions to improve the rule of law in November 2014. One of those actions was the mando único (unified command)—a constitutional reform that would require states to remove the command of police forces from municipalities and to place it at the state level. This plan aims to reduce police corruption and improve coordination with federal forces. Some experts question the notion that state forces are any less corrupt and maintain that this change will not prevent abuses or strengthen accountability.27 No reform has been passed, but a revised mando único reform is expected to be enacted soon. The revised reform will likely include institutional certification for police forces at all levels, the creation of an autonomous police oversight body, and improved benefits for police (PRD and PAN proposals).28 Mexico's Congress is also considering laws against torture and enforced disappearances that President Peña Nieto introduced in December 2015.

    In addition, Mexico's Congress is debating secondary legislation to fully implement the anticorruption system created by a constitutional reform in April 2015. Some analysts praised the reform as a step forward for efforts aimed at combating official corruption, whereas others cast doubt on its provisions and the likelihood that it would be implemented effectively. Leaders from all major parties have backed aspects of a proposal submitted by civil society that would give more investigatory and prosecutorial power to anticorruption entities and require public disclosure of assets and potential conflicts of interest by public officials and candidates for office.29

    Corruption remains a major obstacle to reform efforts. Mexico ranked 95 of 175 countries in Transparency International's 2015 Corruption Perception Index. President Peña Nieto has portrayed corruption as mainly a local-level issue present in some parts of Mexico, but many experts have cited corruption at all levels of government. Although President Peña Nieto and his wife, as well as finance minister Videgaray, have been cleared of misconduct by a government auditor, allegations of how they benefitted from ties to a firm that has won lucrative government contracts tarnished the government's image.30 The PGR's inability to prosecute Humberto Moreira, the former head of the PRI who was arrested in Spain on money-laundering charges committed when he was governor of Coahuila, have added to popular frustration.31 Foreign Policy

    President Peña Nieto has prioritized promoting trade and investment in Mexico as a core goal of his Administration's foreign policy, and he has signaled Mexico's willingness to participate in U.N. peacekeeping efforts, a departure for a country with a history of nonintervention. President Peña Nieto has reoriented U.S.-Mexican relations to focus on economic issues but also sought to create closer trade ties with Europe, Asia, and the rest of Latin America. President Peña Nieto has hosted Chinese Premier Xi Jinping for a state visit to Mexico and visited China twice. His government negotiated and signed the Trans-Pacific Partnership (TPP)32 trade agreement with other Asia Pacific countries and prioritized economic integration efforts with the pro-trade Pacific Alliance countries of Chile, Colombia, and Peru.33 Mexico is investing in Central American energy integration projects, most notably in Guatemala, and supporting the "northern triangle" (Guatemala, El Salvador, and Honduras) governments' "Alliance for Prosperity" proposal to promote development in that subregion.34

    Economic and Social Conditions

    Over the last 25 years, Mexico has transitioned from a closed, state-led economy to an open market economy.35 The transition began in the late 1980s, and it accelerated after Mexico entered into the North American Free Trade Agreement (NAFTA) with the United States and Canada in 1994. Since NAFTA, Mexico has increasingly become an export-oriented economy, with the value of exports equaling more than 30% of Mexico's gross domestic product (GDP), up from 10% of GDP 20 years ago. Mexico remains a major U.S. crude oil supplier, but its top exports to the United States include automobiles and auto parts, television receivers, and other manufactured goods. States in central Mexico (Querétaro, Aguascalientes, and Guanajuato) with automotive and aerospace production hubs experienced rapid economic growth rates of 7% or more in 2014, as compared to the country's overall growth rate of 2.1%.36 Mexico has entered into free trade agreements (FTAs) with at least 47 countries.

    Despite attempts to diversify its economic ties and build its domestic economy, Mexico continues to remain heavily dependent on the United States as an export market (roughly 80% of Mexico's exports in 2015 were U.S.-bound) and as a source of tourism revenues, remittances, and investment. Economic conditions in Mexico tend to follow economic patterns in the United States. When the U.S. economy is expanding, the Mexican economy tends to grow as well. However, when the U.S. economy stagnates or contracts, the Mexican economy also tends to contract, often to a greater degree. In 2009, for example, GDP growth in the United States fell by 2.5% and Mexico's GDP contracted by 6.5%.

    Many economists praised the sound fiscal policies of the past two PAN administrations but faulted the administrations for failing to address some of the structural issues that have constrained the country's growth potential. With prudent economic policies, the Mexican economy recovered from the 2009 crisis, with growth rates averaging 4.4% from 2010 to 2012. Despite that recovery, economists criticized the PAN's failure to address Mexico's low tax base and overreliance on declining oil revenues, weak education system, and lack of competition in some sectors.

    Will Reforms Improve Economic Conditions? Over the past 30 years, Mexico has recorded a somewhat low average economic growth rate of 2.6%. Some factors—such as plentiful natural resources, a young labor force, and proximity to markets in the United States—are being counted on to help Mexico's economy grow faster in the future. Those factors should be bolstered by implementation of some of the reforms described in Table 1. However, continued insecurity and corruption, a weak regulatory framework, and a substandard education system may hinder Mexico's future industrial competitiveness. Corruption reportedly costs Mexico as much as $53 billion a year (5% of GDP).37 A lack of transparency in government spending and procurement has caused waste38 that has likely discouraged investment.

    Another factor affecting the economy is the price of oil. Low oil prices and the depreciation of the peso have dampened Mexico's economic prospects. Oil revenues make up almost one-third of the country's budget. The Mexican government put mitigation strategies in place for 2015 and adopted an austere 2016 budget, but it recently had to cut spending by an additional $7 billion (0.7% of GDP). The finance ministry is reportedly preparing to transfer capital and/or lower the tax burden of Pemex (the state oil company), which recorded record losses in 2015 and—like many state oil companies in Latin America—has struggled to pay its dollar-denominated debts.39 Although private investors are still interested in Mexico's oil and gas industry, particularly its deepwater fields in the Gulf of Mexico, the aforementioned energy reforms took effect at an inauspicious time (see "Energy" section).

    In addition to bringing in more investment, a key goal of the reforms that were enacted in 2013-2014 is to boost formal-sector employment and productivity, particularly among the small- and medium-sized enterprises (SMEs) that together employ some 60% of Mexican workers. Most of those workers are in the informal sector. Although productivity in Mexico's large companies (many of which produce internationally traded goods and have benefitted from NAFTA) increased by 5.8% per year between 1999 and 2009, productivity in small businesses fell by 6.5% per year.40 To address that discrepancy, the financial reform aimed to increase access to credit for SMEs and the fiscal reform sought to incentivize SMEs' participation in the formal (tax-paying) economy by offering insurance, retirement savings accounts, and home loans to those who register with the national tax agency.41 Economists maintain that reducing informality is crucial for addressing income inequality and poverty, while at the same time expanding Mexico's low tax base.

    Many analysts predict that Mexico will have to combine efforts to implement its economic reforms with other actions in order to boost growth. Should the government successfully attract investment and overcome opposition to the implementation of reform from teachers' unions and other entrenched interest groups, many analysts estimate that the reforms could add more than one percentage point to annual GDP growth. A 2015 OECD report suggests that Mexico will need to enact complementary reforms to address issues such as corruption, weak administrative governance, and lack of judicial enforcement to achieve its economic growth potential.42

    Combating Poverty and Inequality Mexico has long had relatively high poverty rates for its level of economic development (45.5% in 2012 and 46% in 2014),43 particularly in rural regions and among indigenous populations. Traditionally, those employed in subsistence agriculture and/or small, informal businesses tend to be among the poorest citizens. Some assert that conditions in indigenous communities have not measurably improved in the 20 years since the Zapatistas (
    Ejército Zapatista de Liberación Nacional), a leftist revolutionary group based in Chiapas, launched an uprising for indigenous rights in 1994.44 The same could be said about neighboring Guerrero as well. A bill to establish special economic zones to promote development in those states, as well as in Oaxaca, has been approved by Mexico's Chamber of Deputies and is under consideration in its Senate.

    Mexico also experiences high income inequality. According to the 2014 Global Wealth Report published by Credit Suisse, 64% of Mexico's wealth is concentrated in 10% of the population. Mexico is among the 25 most unequal countries in the world included in the Standardized World Income Inequality Database. According to a 2015 report by Oxfam Mexico, this inequality is due in part to the country's regressive tax system, oligopolies that have been permitted to dominate particular industries, wage policies that have kept the minimum wage too low, and a lack of targeting in some social programs.45

    Upon taking office, the Peña Nieto Administration expanded access to federal pensions, started a national anti-hunger program (that benefits 7 million people), and increased funding for the country's conditional cash transfer program.46 Peña Nieto renamed that program Prospera (Prosperity) and redesigned it to encourage its beneficiaries to engage in productive projects. Despite recent budget austerity, funding for these programs has been largely protected, but some have been criticized for a lack of efficacy. For example, the anti-hunger program has been criticized for insufficient targeting and for its dependence on the willingness of state and local governments to collaborate.47

    U.S. Relations and Issues for Congress

    U.S.-Mexican relations are strong, but there has been periodic friction in the bilateral relationship. President Obama and Vice President Biden initially embraced President Peña Nieto's desire to bolster economic ties and focus on issues beyond security, including education, energy, and border trade facilitation. Those issues have figured prominently during several of their visits to Mexico, including Vice President Biden's participation in the third High-Level Economic Dialogue held between the two governments in February 2016. Although some analysts assert that the Senate's handling of the Obama Administration's nominee to be Ambassador to Mexico "undermines U.S. interests in Mexico," Mexico's Ambassador to the United States has recently characterized bilateral relations as "excellent."48

    President Peña Nieto initially preferred to focus on the U.S.-Mexican economic relationship as opposed to security cooperation; however, by 2014 it had become apparent that his economic agenda could not be successful without addressing Mexico's rule-of-law challenges. Since then, the Peña Nieto government has renewed Mexico's commitment to the Mérida Initiative, approved more than 100 bilateral projects worth more than $600 million, and agreed to extradite some high-level drug traffickers to the United States. Some observers predict that bilateral security cooperation may advance further during the remaining years of the Peña Nieto government than was originally predicted.49 The Peña Nieto government has already been working with U.S. officials to prevent Central American migrants from crossing Mexican territory.

    Security and U.S. Assistance Through the Mérida Initiative50

    U.S.-Mexican cooperation to improve security and the rule of law in Mexico has increased significantly as a result of the development and implementation of the Mérida Initiative, a bilateral partnership developed by the Bush and Calderón governments. As part of the Mérida Initiative's emphasis on shared responsibility, the U.S. government pledged to address domestic drug demand and the illicit trafficking of firearms and bulk currency to Mexico. The Mexican government pledged to tackle crime and corruption. Both governments have struggled to fulfill some of those commitments.51

    Between FY2008 and FY2015, Congress appropriated almost $2.5 billion for Mérida Initiative programs in Mexico. (See Table 2 for recent Mérida Initiative aid figures and Table 3 for overall assistance figures). More than $1.5 billion worth of training, equipment, and technical assistance had been provided to Mexico as of December 2015. Mexico, for its part, has invested some $84 billion of its own resources on national security and public safety, including roughly $15.4 billion in 2016.52

    Figure 3. Pillars of the Mérida Initiative

    Source: CRS graphics.

    Whereas U.S. assistance initially focused on training and equipping Mexican counterdrug forces, it now places more emphasis on addressing the weak institutions and underlying societal problems that have allowed the drug trade to flourish in Mexico. The strategy now focuses more on institution building than on technology transfers and broadens the scope of bilateral efforts to include economic development and community-based social programs. It also includes increased funding at the subnational level for Mexican states and municipalities.

    For most of 2013, delays in implementation occurred largely due to the fact that the Peña Nieto government was still honing its security strategy and determining the amount and type of U.S. assistance it needed. Nevertheless, Mexican law enforcement agencies continued intelligence sharing and coordination with their U.S. counterparts, capturing top drug-trafficking leaders, including "El Chapo" Guzmán. The U.S. and Mexican governments eventually agreed to focus on justice sector reform, money laundering, police and corrections professionalization at the federal and state levels, border security (both north and south), and piloting approaches to address root causes of violence. After initial delays, more than $600 million in new projects have been approved since Peña Nieto took office. The U.S. and Mexican governments held the third Security Cooperation Group meeting during the Peña Nieto government in Mexico City in October 2015 to oversee the Mérida Initiative and broader security cooperation efforts. Issues such as how to combat drug trafficking—including opium poppy production—were addressed.53

    The 114th Congress has held hearings54 examining how the Mérida Initiative and related Department of Defense (DOD) assistance have been used, including the extent to which this assistance has prioritized heroin interdiction and strengthening immigration enforcement in Mexico. Congressional consultation would be needed should the State Department look to reprogram some of the funding in the pipeline for Mérida or seek new funding to align with new priorities that may emerge. Congress also may seek to reexamine how the Mérida Initiative could be leveraged to encourage Mexican officials to take increasing steps to root out official corruption.

    The Consolidated Appropriations Act, 2016 (P.L. 114-113), provided at least $147.5 million for Mexico, including $139 million in accounts that have funded the Mérida Initiative (International Narcotics Control and Law Enforcement [INCLE] and Economic Support Fund [ESF]). The final amount destined for the Mérida Initiative is as yet unclear. The act did not condition Mérida Initiative funding on human rights reporting requirements.

    President Obama's FY2017 budget request includes $129 million for the Mérida Initiative. According to the State Department's Congressional Budget Justification for Foreign Operations, INCLE funds requested would support initiatives under all four pillars of the initiative, with a priority on training and equipping federal and state criminal justice sector institutions. ESF funds for the Mérida Initiative would support justice-sector reform, human rights programs, and community-level prevention efforts.

    Table 2. FY2012–FY2017 Mérida Funding for Mexico

    ($ in millions)

    Account

    FY2012

    FY2013

    FY2014

    FY2015

    FY2016 Request

    FY2016 (est.)

    FY2017 Request

    ESF

    33.3

    32.1

    35.0a

    33.6b

    39.0

    39.0

    49.0

    INCLE

    248.5

    195.1

    148.1

    110.0

    80.0

    100.0

    80.0

    Total

    281.8

    227.2

    194.2

    143.6

    119.0

    139.0

    $129.0
    Sources:
    ), a leftist revolutionary group based in Chiapas, 51 Ibid. “Mexico: Country Outlook,” IHS Global Insight, December 19, 2013. 53 “Mexico: Positive Surprises in Mexico Energy Reform and Implications for Fixed Income Markets,” J. P. Morgan, December 16, 2013. 54 Shannon K. O’Neil, Spillovers From Falling Oil Prices: Risks to Mexico and the United States, Council on Foreign Relations, December12, 2014. 55 McKinsey Global Institute, A Tale of Two Mexicos: Growth and Prosperity in a Two-Speed Economy, March 2014. 56 “Mexico: Peña Nieto Wants 30 Million Mexicans to Join the Formal Economy,” Latin News Daily Briefing, September 9, 2014. 57 This figure is from Mexico’s National Council for the Evaluation of Social Development Policy (CONEVAL) in a study that is available at http://www.coneval.gob.mx/Paginas/principal-EN.aspx. According to CONEVAL, Mexico’s poverty rate increased by 2.9 percentage points between 2006 and 2012, although it did decline 0.6 percentage points from 2010 to 2012 as the country recovered from the effects of the 2008-9 global financial crisis and U.S. recession. 52 Congressional Research Service 13 Mexico: Background and U.S. Relations launched an uprising for indigenous rights in 1994.58 The same could be said about neighboring Guerrero as well. Finance Minister Videgaray has acknowledged the contributions that social programs have made to preventing Mexicans from falling into poverty in times of crisis (including the 2009 recession), but maintained that boosting GDP growth and job creation is needed to reduce poverty rates. President Peña Nieto has expanded access to federal pensions, created a new life insurance program for female heads of household and a national anti-hunger program (that benefits 7 million people), and increased funding for the Oportunidades (Opportunities) conditional cash transfer program.59 Oportunidades has been renamed Prospera (Prosperity) and redesigned to encourage its beneficiaries to engage in productive projects. U.S. Relations and Issues for Congress As Mexico has experienced a presidential transition from a PAN government focused on security issues to a PRI government that prioritizes economic reforms, U.S.-Mexican relations have also evolved. President Obama and Vice President Biden have embraced President Peña Nieto’s desire to bolster economic ties and focus on issues beyond security, including education and border trade facilitation. Those issues have figured prominently during several recent visits to Mexico, including President Obama’s participation in the February 2014 North American Leaders’ Summit. Now that Mexico has implemented historic energy reforms, bilateral cooperation on energy has also moved to the forefront of the bilateral relationship. Vice President Biden is expected to discuss energy and other economic matters when he chairs the second meeting of the U.S.-Mexico High-Level Economic Dialogue (HLED) in Washington, DC on January 5-6. Outside the economic realm, U.S.-Mexican relations span a wide range of issues, including security and migration, two issues that analysts predict will be addressed during President Peña Nieto’s first official visit to Washington D.C. on January 6.60 U.S.-Mexican security cooperation has continued under the Mérida Initiative framework, with emphasis on judicial reform, violence prevention, and securing Mexico’s southern border. These efforts have taken on more urgency in recent months as Mexico has struggled to investigate and punish those responsible for several high-profile cases involving allegations of serious human rights abuses perpetrated by security forces. The Peña Nieto government is working with U.S. and Central American officials to address the surge in Central American child migrants crossing through its territory, but has urged U.S. policy makers not to militarize the U.S.-Mexico border. The U.S. Congress has maintained long-standing interest in a broad range of issues dealing with Mexico, a country with whom the United States shares a nearly 2,000-mile border and more than $500 billion in annual trade. Security issues had generally overtaken migration and trade matters since 2008 as a result of Mexico receiving U.S. foreign assistance through the Mérida Initiative, but in 2014 migration and security again moved to the top of the bilateral agenda. Relations received a boost in October 2014 with the release of U.S. marine Sergeant Andrew Tahmooressi, 58 Tania L. Montalvo, “A 20 Años del EZLN, Indígenas Siguen en la Pobreza,” Animal Politico, January 2, 2014. Prospera is Mexico’s main antipoverty program. It provides cash transfers to 6.5 million families in poverty who demonstrate that they regularly attend medical appointments and can certify that their children attend school. 60 Alfredo Corchado, “Mexican Leader Could Use a Political Boost on Visit to D.C.,” Dallas Morning News, December 29, 2014. 59 Congressional Research Service 14 Mexico: Background and U.S. Relations whom Mexico had charged with weapons possession in April, prompting U.S. congressional action.61 The potential for greater energy cooperation with Mexico has emerged as a new issue of interest, while water disputes in the Rio Grande Valley of Texas have remained an area of contention. Some U.S. policy makers have been frustrated at Mexico’s failure to predictably and fully make its target annual water deliveries in the Rio Grande Valley, as agreed upon in a 1944 U.S.-Mexico treaty.62 Some bilateral issues may require immediate congressional action in order to advance, while others may lend themselves more to long-term oversight. For example, migration and border security cooperation could be substantially overhauled should Congress enact comprehensive immigration reform. Congress continues to weigh in on current trade and water disputes. At the same time, Congress is considering continued funding for the Mérida Initiative and related domestic initiatives aimed at combating transnational crime and strengthening the rule of law in Mexico that are well underway. Congressional concerns about improving human rights conditions and the rule of law in Mexico lend themselves to long-term oversight, but have also taken on some urgency given recent events. Security and U.S. Assistance through the Mérida Initiative63 U.S.-Mexican security cooperation increased significantly during the Felipe Calderón Administration (2006-2012) as a result of the Mérida Initiative, a counterdrug and anticrime assistance package for Mexico and Central America first funded in FY2008. Whereas U.S. assistance, which totaled some $2.5 billion between FY2008 and FY2015, initially focused on training and equipping Mexican counterdrug forces, it now places more emphasis on addressing the weak institutions and underlying societal problems that have allowed the drug trade to flourish in Mexico. The Mérida strategy now focuses on (1) disrupting organized criminal groups, (2) institutionalizing the rule of law, (3) creating a 21st century border, and (4) building strong and resilient communities. As of October 2014, some $1.3 billion in Mérida assistance had been delivered to Mexico. While the U.S. government initially struggled to deliver equipment in a timely fashion, both governments have continued to struggle to fulfill their domestic pledges under the Mérida Initiative. The U.S. government promised to combat weapons trafficking, money laundering, and drug demand; Mexico promised to combat corruption. 61 Miriam Dominguez, “Se Triplica Cifra de Niños Migrantes Asegurados,” El Universal, October 15, 2014. Members of Congress visited Mr. Tahmooressi, wrote letters to the U.S. and Mexican governments on his behalf, and held a hearing urging his release. See: House Committee on Foreign Affairs, Subcommittee on the Western Hemisphere, Sergeant Andrew Tahmooressi: Our Marine in Mexican Custody, 113th Cong., 2nd sess., Oct. 1, 2014. 62 See: CRS Report R43312, U.S.-Mexico Water Sharing: Background and Recent Developments, by Nicole T. Carter, Clare Ribando Seelke, and Daniel T. Shedd. 63 For further information, see CRS Report R41349, U.S.-Mexican Security Cooperation: The Mérida Initiative and Beyond. 61 Congressional Research Service 15 Mexico: Background and U.S. Relations Table 2. FY2008–FY2015 Mérida Funding for Mexico ($ in millions) Account FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 (est.) FY2015 (est.) Account Totals ESF 20.0 15.0 15.0a 18.0 33.3 32.1 46.1 46.0 225.5 INCLE 263.5 406.0 365.0 117.0 248.5 195.1 148.1 148.1 1,891.3 FMF 116.5 299.0 5.3 8.0 N/Ab N/A N/A N/A 428.8 Total 400.0 720.0 385.3 143.0 281.8 227.2 194.2 194.0 2,545.6 Sources: U.S. Department of State, Congressional Budget Justification for Foreign Operations FY2013-FY2017. Notes: ESF = Economic Support Fund; INCLE = Foreign Operations FY2008-FY2015. Notes: ESF=Economic Support Fund; FMF=Foreign Military Financing; INCLE=International Narcotics Control and Law Enforcement. a. $6 million was later reprogrammed for global climate change efforts by the State Department. b. Beginning in FY2012, FMF assistance is not included as part of the Mérida Initiative. During President Obama’s trip to Mexico in May 2013, he and President Peña Nieto reaffirmed their commitments to the Mérida Initiative’s four pillar strategy. In August 2013, the U.S. and Mexican governments then agreed to focus on justice sector reform; efforts against money laundering; police and corrections professionalization at the federal and state level; border security, both northern (see: “Modernizing the U.S.-Mexico Border”) and southern (see: “Dealing with Central American Migration, Including Unaccompanied Children”) and piloting approaches to address root causes of violence. Mexico’s Interior Ministry is now the primary entity through which Mérida Initiative training and equipment requests are coordinated and intelligence is channeled. After initial delays in 2013, more than $468 million in new Mérida Initiative-funded projects have been approved since Peña Nieto took office. The Mexican government has requested increased assistance for judicial reform, border security, and prevention efforts, but limited U.S. involvement in some law enforcement and intelligence operations. As previously mentioned, although Peña Nieto has adopted a more low-profile public relations approach to his security policies than Calderón, his government’s operational approach has remained similar. Mexico has continued to arrest top and mid-level leaders of criminal organizations and to share intelligence with the United States. U.S. intelligence and efforts under pillar one of the Mérida Initiative have helped Mexico develop the capacity to track and detain a series of high-profile criminal leaders, including leaders from the Gulf, Júarez, and Beltrán Leyva organizations in October 2014. The challenge now for both governments is to ensure that those criminals are brought to justice. As a result of recent high-profile human rights cases, the Peña Nieto government has been faulted for failing to advance state and municipal-level police reforms and for not investigating and punishing human rights abuses committed by government officials. Some have urged the U.S. government to stop funding Mexico’s military-led approach to public security.64 Others recommend increasing U.S. support for judicial and police reform (particularly accountability and anti-corruption programs) under pillar two of the Mérida Initiative.65 Many others recommend 64 Christy Thornton, “Stop Arms Sales to Pressure Mexico,” New York Times, December 2, 2014. Maureen Meyer and Jenny Johnson, The Disappearance of 43 Mexican Students: WOLA & LAWG Analysis, (continued...) 65 Congressional Research Service 16 Mexico: Background and U.S. Relations working with the private sector and nongovernmental organizations to strengthen communities under pillar four as has been done in Monterey, Ciudad Juárez, and Tijuana. The 113th Congress held hearings66 examining how the Mérida Initiative has been adjusted to align with the Peña Nieto government’s priorities. Congressional consultation will be needed should the State Department seek to reprogram some of the funding in the pipeline for Mérida, or seek new funding to align with new priorities that may emerge. Congress provided $79 million above the Administration’s request for efforts to secure Mexico’s southern border and other judicial sector programs in the FY2015 Consolidated and Further Continuing Appropriations Act (H.R. 83/P.L. 113-235). This is likely to heighten the Mérida Initiative’s focus on those areas. There is also funding in P.L. 113-235 for additional forensics aid to Mexico. Possible areas for oversight may include the results of the Mérida Initiative thus far, how the State Department is measuring the efficacy of Mérida programs, and how coordination is advancing with the Peña Nieto government. Human Rights and Judicial Reform67 Congress has expressed ongoing concerns about human rights conditions in Mexico. These concerns have intensified as U.S. security assistance to Mexico has increased under the Mérida Initiative. Congress has continued monitoring adherence to the “Leahy” vetting requirements that must be met under the Foreign Assistance Act (FAA) of 1961 as amended (22 U.S.C. 2378d)68 and annual Department of Defense (DOD) appropriations69 in order for Mexican security forces70 to receive U.S. support.71 Congress has also conditioned U.S. assistance to the Mexican military and police on compliance with certain human rights standards, while simultaneously providing funding to support human rights training for security forces and to protect groups vulnerable to human rights abuses (such as the press and human rights defenders). Congress has periodically withheld aid pending concerns about human rights and other issues.72 The primary goal of these (...continued) Washington Office on Latin America and Latin America Working Group, December 4, 2014. 66 See, for example, U.S. Congress, Senate Foreign Relations, Subcommittee on Western Hemisphere and Global Narcotics Affairs, Security Cooperation with Mexico: Examining the Next Steps in the U.S.-Mexico Security Relationship, 113th Cong., 1st sess., June 18, 2013. 67 See: CRS Report R43001, Supporting Criminal Justice System Reform in Mexico: The U.S. Role, by Clare Ribando Seelke. 68 The codified Leahy law (22 U.S.C. 2378d) prohibits the furnishing of assistance authorized by the FAA and the Arms Export Control Act, as amended, (AECA) to any foreign security force unit that is credibly believed to have committed a gross violation of human rights. 69 A provision in the annual DOD appropriations legislation prohibits the use of DOD funds to support any training program involving a unit of a foreign security or police force if the unit has committed a gross violation of human rights. P.L. 113-76 expands that prohibition to cover DOD equipment assistance programs as well. 70 There is no FAA definition for the term “security force.” DOD defines the term as “duly constituted military, paramilitary, police, and constabulary forces of a state.” (DOD Dictionary of Military and Associated Terms, DOD Joint Publication 1-02, http://www.dtic.mil.) 71 CRS Report R43361, “Leahy Law” Human Rights Provisions and Security Assistance: Issue Overview, coordinated by Nina M. Serafino. 72 Jonathan Broder, “Citing Oversight Concerns, Leahy Holds Up Aid to Mexico,” CQ Roll Call, August 1, 2013. This hold remains in place. CRS electronic correspondence with State Department official, December 3, 2014. Congressional Research Service 17 Mexico: Background and U.S. Relations efforts has been to ensure that U.S.-funded anticrime efforts are carried out in a way that respects human rights and strengthens the rule of law in Mexico. U.S. assistance to Mexico has increasingly focused on supporting the Mexican government’s efforts to reform its corrupt and inefficient judicial system, both as a means to make anticrime efforts more effective and to strengthen the rule of law in Mexico. Congress has targeted money to support Mexico’s transition from an inquisitorial justice system to an oral, adversarial, and accusatory system that should strengthen human rights protections for victims and the accused. Congress has also increased funding for rule of law (ROL) programs in Mexico and expressed support for future ROL funding (H.Rept. 113-185).73 With $68 million of that funding, the U.S. Agency for International Development (USAID) expanded its program to support judicial reform from seven to twenty states. U.S. policy makers are likely to follow how the Peña Nieto government ensures that the unified code of criminal procedure enacted earlier this year hastens judicial reform at the federal and state levels. Human rights groups initially expressed satisfaction that President Peña Nieto had adopted a prohuman rights discourse and promulgated a law requiring state support for crime victims and their families.74 They also welcomed the historic April 2014 approval of reforms to the military code of justice requiring cases of military abuses against civilians to be tried in civilian courts. However, even before the high-profile incidents in Tlatlaya and Iguala, they criticized the government’s lack of concrete efforts to promote and protect human rights.75 Some have therefore urged U.S. policy makers to closely monitor the Peña Nieto government’s compliance with conditions on Mérida assistance and to continue rigorous vetting of Mexican individuals and units slated to receive U.S. training and equipment.76 How the Peña Nieto government moves to improve the ability of Mexico’s civilian institutions to investigate and prosecute cases of human rights abuses by security forces, enhance enforcement of prohibitions against torture and other mistreatment, and strengthen protection for human rights defenders, the media, and other vulnerable groups is likely to be closely scrutinized. Congress may choose to augment Mérida Initiative funding for human rights programs, such as ongoing training programs for military and police, or newer efforts, such as support for human rights organizations. Human rights conditions in Mexico, as well as compliance with conditions on Mérida assistance, are also likely to continue to be important oversight issues. The State Department submitted a report in September 2014 that met the statutory requirements for funding provided by the FY2014 Consolidated Appropriations Act (P.L. 113-76) that was on hold to be released. The FY2015 Consolidated and Further Continuing Appropriations Act (H.R. 83/P.L. 113-235 ) includes several human rights provisions regarding aid to Mexico. Those provisions 73 See also: U.S. Congress, Majority Staff Report, Judicial and Police Reforms in Mexico: Essential Building Blocks for a Lawful Society, prepared for Sen. John Kerry, Chairman, U.S. Senate, Committee on Foreign Relations, 112th Cong., 2nd sess., July 9, 2012, S. Prt. 112-36. 74 Human Rights Watch, Letter to President Enrique Peña Nieto, December 11, 2012. 75 José Miguel Vivanco, Mexico: President’s Disappointing First Year on Human Rights, Human Rights Watch, November 26, 2013. 76 Restrictions on certain aid to Mexico’s military and police have been included in each of the Mérida appropriations measures since P.L. 110-252. See CRS Report R41349, U.S.-Mexican Security Cooperation: The Mérida Initiative and Beyond. Congressional Research Service 18 Mexico: Background and U.S. Relations withhold 15% of assistance to the Mexican military and police until the State Department reports that progress has been made in meeting certain human rights conditions.77 U.S. policymakers may question how the Peña Nieto Administration is moving to punish past human rights abuses, how it intends to prevent new abuses from occurring, and how the police and judicial reforms being implemented are bolstering human rights protections. Trade, NAFTA, and the Trans-Pacific Partnership (TPP)78 The United States and Mexico have a strong economic and trade relationship that has been bolstered over the past 20 years through NAFTA. Since 1994, NAFTA has removed virtually all tariff and non-tariff trade and investment barriers among partner countries and provided a rulesbased mechanism to govern North American trade. Most economic studies show that the net economic effects of NAFTA on the United States and Mexico has been small but positive, though there have been adjustment costs to some sectors within both countries. Further complicating assessments of NAFTA’s benefits, not all trade-related job gains and losses since NAFTA can be entirely attributed to the agreement. Numerous other factors have affected trade trends, such as Mexico’s trade liberalization efforts, economic conditions, and currency fluctuations. Some speculate that NAFTA may have accelerated the ongoing trade and investment trends that were already taking place. Nevertheless, U.S.-Mexico trade increased rapidly since NAFTA, with U.S. exports to Mexico increasing 313% and imports from Mexico increasing 444% since the agreement’s entry into force. Mexico is the United States’ third-largest trading partner, while the United States is, by far, Mexico’s largest trading partner. Mexico ranks third as a source of U.S. imports, after China and Canada, and second, after Canada, as an export market for U.S. goods and services. Leading U.S. imports from Mexico in 2013 included: motor vehicles ($40.1 billion), motor vehicle parts ($35.2 billion), oil and gas ($32.0 billion), computer equipment ($15.0 billion), and audio and video equipment ($13.8 billion). Leading U.S. exports to Mexico in 2013 included: motor vehicle parts ($21.1 billion), petroleum and coal products ($19.3 billion), computer equipment ($14.8 billion), semiconductors and other electronic components ($13.0 billion), and chemicals ($10.1 billion). Foreign direct investment (FDI) is also an integral part of the bilateral economic relationship. The stock of U.S. FDI increased from $17.0 billion in 1994 to $101.5 billion in 2013. Mexican FDI in the United States is much lower than U.S. investment in Mexico, but has also increased in recent years. In 2013, the stock of Mexican FDI in the United States totaled $17.6 billion. The United States and Mexico have had several trade disputes over the years, most of which have been resolved. These issues have involved trade in sugar, trucking, product labeling, and tomato imports from Mexico. The most recent dispute involves U.S. sugar imports from Mexico. In 77 The funds will remain on hold until the Secretary of State reports in writing to the Committees on Appropriations that the Mexican government is: 1) investigating and prosecuting violations of human rights in civilian courts; 2) enforcing prohibitions against torture and the use of testimony obtained through torture; 3) ensuring that police and military officers promptly transfer detainees to the custody of civilian judicial authorities, in accordance with Mexican law, and are cooperating with such authorities in such cases; and 4) searching for the victims of forced disappearances and is investigating and prosecuting those responsible for such crimes. 78 This section draws from CRS Report R42965, NAFTA at 20: Overview and Trade Effects, by M. Angeles Villarreal and Ian F. Fergusson and CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications , by M. Angeles Villarreal. Congressional Research Service 19 Mexico: Background and U.S. Relations August 2014, the Department of Commerce announced a preliminary subsidy ruling on sugar imports from Mexico in which U.S. government investigations found reasonable evidence to suggest that Mexican sugar was entering the United States at less than fair value. A final ruling was expected in 2015 unless the U.S. and Mexican governments reached a settlement before then. The two governments reached a preliminary agreement on October 27 and a final agreement on December 19 to suspend the U.S. investigations. As part of that agreement, the quantity of imported sugar from Mexico is to be limited at prices that are subject to minimum reference levels.79 Another major bilateral trade issue concerns a 14-year U.S. effort to comply with NAFTA trucking provisions that would allow Mexican trucks that meet U.S. safety standards to operate in the United States. The Obama Administration’s three-year pilot program granting authority for Mexican carriers to temporarily operate in the United States ended on October 14, 2014. The Department of Transportation subsequently announced that the U.S. government would give the Mexican carriers participating in the program permanent permission to operate in the United States, pending final reports on the program from an advisory committee and the Transportation Department’s Inspector General.80 The United States and Mexico are both participating in the negotiations for a Trans-Pacific Partnership (TPP) agreement, a proposed free trade agreement among 12 countries.81 A TPP would likely enhance the economic links Mexico already has with the United States and Canada under NAFTA. This could include further reduction of barriers to trade and the negotiation of key issues in areas such as agriculture, intellectual property rights protection, government procurement, regulatory cohesion, and others. While a TPP would not render NAFTA obsolete, it could, if approved, update some of the rules governing North American trade. The Obama Administration has engaged in bilateral efforts, both with Canada and Mexico, to increase North American regulatory cooperation, maintain border security while facilitating legitimate trade and travel, promote economic competitiveness, and pursue energy integration. The aforementioned U.S.-Mexico HLED, launched on September 20, 2013, is a bilateral initiative to advance economic and commercial priorities through annual meetings at the Cabinet level that also includes leaders from the public and private sectors. Other bilateral efforts with Mexico include the High-Level Regulatory Cooperation Council (HLRCC) launched in February 2012 to help align regulatory principles. In addition, the two countries have a bilateral initiative for improving border management under the Declaration Concerning Twenty-first Center Border Management that was announced in 2010 as part of pillar three of the Mérida Initiative (see “Modernizing the U.S.-Mexico Border”). That initiative in particular aims to reduce wait times along the U.S.-Mexico border, which currently result in an estimated $8 billion in losses for the U.S. economy each year.82 79 See CRS Report IF10034, New Era Dawns in U.S.-Mexico Sugar Trade, by Mark A. McMinimy; U.S. Department of Commerce, International Trade Administration. “Antidumping and Countervailing Suspension Agreements on Sugar from Mexico,” fact sheet, December 19, 2014. 80 Oliver Patton, FMCSA Ends Cross-Border Pilot, Grants Authority to Mexican Carriers, HDT Truckinginfo, October 14, 2014. 81 The 12 countries involved in the Trans-Pacific Partnership (TPP) negotiations include the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. See: CRS Report R42694, The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress, coordinated by Ian F. Fergusson. 82 Testimony of Christopher Wilson, Senior Associate, Mexico Institute, Woodrow Wilson International Center for Scholars, before the U.S. Congress, House Committee on Foreign Affairs, Subcommittee on the Western Hemisphere, (continued...) Congressional Research Service 20 Mexico: Background and U.S. Relations Congress is likely to continue monitoring trade disputes, how a potential TPP could affect NAFTA, NAFTA’s institutions (the North American Development Bank and the Border Environment Cooperation Commission), and how the United States, Mexico, and Canada might work bilaterally and trilaterally to advance North American competitiveness. Experts have proposed ideas that Congress might consider to make North American industries more competitive and hasten regional integration. Some proposals that have emerged include calls for rethinking the current trade relationship under NAFTA by broadening the scope of North American integration and cooperation. One idea, for example, is to develop a North American Investment Fund.83 Others include better coordinating and financing border infrastructure projects, harmonizing regulations, establishing one common customs approval process for all three countries, building human capital, and fostering technology transfers and innovation.84 In the trade realm, potential questions for congressional consideration include how U.S.-Mexican trade and economic ties can be deepened, how efficiency on the border can be improved without compromising security, and how weaknesses in NAFTA can be addressed. Migration and Border Issues Mexico-U.S. Immigration Issues Immigration policy has been a subject of congressional concern over many decades, with much of the debate focused on how to prevent unauthorized migration. Mexico’s status as the largest source of U.S. migrants and a continental neighbor means that U.S. migration policies—including stepped up border and interior enforcement—have primarily affected Mexicans.85 As a result, immigration is a central issue in U.S.-Mexican relations. Since 1986, the United States has taken a number of steps to tighten border security and strengthen immigration enforcement,86 while also legalizing about 3 million people. Yet, the Pew Research Center reports that the number of unauthorized immigrants in the United States has grown from about 3.2 million in 1986 to about 11.2 million in 2012. At a broad level, today’s immigration debate is focused on additional steps to strengthen immigration enforcement and border security, potential legalization provisions for certain unauthorized immigrants, and possible changes to the rules governing lawful immigration flows. An overarching question is whether these three issues should be considered together as “comprehensive immigration reform (CIR) or whether they should be taken up separately (sometimes referred to as “piecemeal (...continued) Improving Security and Facilitating Commerce with Mexico at America's Southern Border, 113th Cong., 1st sess., December 9, 2013. 83 See Robert A. Pastor, The North American Idea, A Vision of a Continental Future, Oxford University Press, 2011. 84 Council on Foreign Relations, North America: Time for a New Focus, Independent Task Force Report no. 71, October 2014, available at: http://www.cfr.org/north-america/north-america/p33536. 85 Mexicans are by far the largest group of immigrants in the United States, accounting for about 12 million people in 2012, or 30% of all current U.S. immigrants. (About half of Mexican immigrants are unauthorized, representing about 58% of the U.S. unauthorized population. See Jeffrey Passel, D’Vera Cohn, and Ana Gonzalez-Barrera, Net Migration from Mexico Falls to Zero—and Perhaps Less, Pew Hispanic Center, Washington, DC, May 3, 2012. See CRS Report R42560, Mexican Migration to the United States: Policy and Trends, coordinated by Ruth Ellen Wasem. 86 For a fuller discussion, see CRS Report R42138, Border Security: Immigration Enforcement Between Ports of Entry. Congressional Research Service 21 Mexico: Background and U.S. Relations reform”). During the 113th and Law Enforcement. a. $11.8 million of ESF was designated for Global Climate Change (GCC) programs in Mexico. b. $12.5 million was designated for GCC programs.

    Possible areas for oversight may include the results of the Mérida Initiative thus far, how the State Department is measuring the efficacy of Mérida programs, and how coordination is advancing with the Peña Nieto government.

    Table 3. U.S. Assistance to Mexico by Account, FY2012-FY2017

    ($ millions)

    Account

    FY2012

    FY2013

    FY2014

    FY2015

    FY2016 (req.)

    FY2016 (est.)

    FY2017 request

    INCLE

    248.5

    195.1

    148.1

    110.0

    80.0

    100.0

    80.0

    ESF

    33.3

    32.1

    46.8

    46.1

    39.0

    39.0

    49.0

    FMF

    7.0

    6.6

    6.6

    4.7

    7.0

    7.0

    3.0

    IMET

    1.0

    1.2

    1.4

    1.5

    1.5

    1.5

    1.5

    NADR

    5.4

    3.8

    3.9

    2.9

    0.0

    Not Available

    Not Available

    GHCS

    1.0

    0.0

    0.0

    0.0

    0.0

    0.0

    0.0

    DA

    33.4

    26.2

    0.0

    0.0

    12.5

    0.0

    0.0

    TOTAL

    329.6

    265.0

    206.8

    165.2

    140.0

    147.5

    133.5
    Sources: U.S. Department of State, Congressional Budget Justification for Foreign Operations FY2010-FY2017.

    Notes: GHCS = Global Health and Child Survival; DA = Development Assistance; ESF = Economic Support Fund; FMF = Foreign Military Financing; IMET = International Military Education and Training; INCLE = International Narcotics Control and Law Enforcement; NADR = Nonproliferation, Anti-terrorism, Demining, and Related Programs.

    Extraditions Some U.S. policymakers are hoping that "El Chapo" Guzmán's July 2015 prison escape has changed the Peña Nieto government's position that he and other kingpins be tried in Mexico even though few, if any, transnational criminal organization leaders have been successfully tried in recent years. Under the Calderón government, Mexico extradited more than 100 individuals per year to the United States, on average. When President Peña Nieto took office, extraditions fell to 54 in 2013 and 66 in 2014 (see Figure 4, below).

    Although Mexico resisted pressure to extradite Guzmán to the United States (where he faces multiple charges) following his capture in 2014, the Mexican government has demonstrated more willingness to approve U.S. extradition requests in the past year. Mexico extradited 13 top drug traffickers to the United States in September 2015 and quickly initiated procedures to extradite Guzmán following his January 8, 2016, recapture. The process could reportedly take from several months to a year or more, however, due to injunctions and other delaying tactics that Guzmán's defense attorneys are using.55 Congress may increase pressure on the Department of Justice and the State Department to push harder for extraditions in the future due to concerns about the security of Mexico's prisons and the general corruption in its criminal justice system.

    Figure 4. Extraditions from Mexico to the United States

    Sources: U.S. Department of Justice and U.S. Department of State.

    Human Rights56

    The U.S. Congress has expressed ongoing concerns about human rights conditions in Mexico. Congress has continued to monitor adherence to the "Leahy" vetting requirements that must be met under the Foreign Assistance Act (FAA) of 1961, as amended (22 U.S.C. 2378d),57 and annual Department of Defense (DOD) appropriations58 for Mexican security forces59 to receive U.S. support.60 DOD reportedly suspended assistance to a brigade based in Tlatlaya, Mexico, due to concerns about the brigade's potential involvement in the extrajudicial killings previously described.61 From FY2008 to FY2015, Congress made conditional 15% of U.S. assistance to the Mexican military and police until the State Department sent a report to appropriators verifying that Mexico was taking steps to comply with certain human rights standards. In FY2014, Mexico lost funding due to human rights concerns.

    U.S. assistance to Mexico has increasingly focused on supporting the Mexican government's efforts to reform its corrupt and inefficient judicial system and to improve human rights conditions in the country. Congress has targeted money to support Mexico's transition from an inquisitorial justice system to an oral, adversarial, and accusatory system that should strengthen human rights protections for victims and the accused. USAID has some $35 million in human rights programming planned to run through 2018, including training for self-protection and digital security for journalists, support for legislative initiatives, and a national campaign against torture.

    Human rights groups initially expressed satisfaction that President Peña Nieto had adopted a pro-human rights discourse and promulgated a law requiring state support for crime victims and their families. They also welcomed the historic April 2014 approval of reforms to the military code of justice requiring cases of military abuses against civilians to be tried in civilian courts. However, even before the high-profile incidents in Tlatlaya and Iguala, some criticized the government's lack of concrete efforts to promote and protect human rights.62

    More recently, the Peña Nieto government has been faulted for failing to advance police reforms and for not investigating and punishing serious human rights abuses committed by government officials. Observers are particularly concerned about cases of torture, extrajudicial killings, and enforced disappearances. Some urge the U.S. government to stop funding Mexico's military-led approach to public security.63 Others recommend increasing U.S. support for judicial and police reform (particularly accountability and anticorruption programs) under pillar two of the Mérida Initiative.64 Many others recommend working with nongovernmental organizations to strengthen communities' abilities to exert oversight over the police and to report human rights abuses under pillar four of the Mérida Initiative.

    In an October 19, 2015, briefing, a spokesperson said that although the State Department was "unable to confirm and report to Congress that Mexico fully met all of the [human rights] criteria in the Fiscal Year 2014 appropriation legislation (P.L. 113-76) ... [it continues] to strongly support Mexico's ongoing efforts to reform its law enforcement and justice systems." As a result of the State Department's decision not to submit a report for Mexico, some $5 million in INCLE assistance was reprogrammed by the State Department to Peru. Mexico lost close to $500,000 in Foreign Military Financing (FMF) as well.

    The U.S. Congress may choose to augment Mérida Initiative funding for human rights programs, such as ongoing training programs for military and police, or to create new efforts to support human rights organizations. Human rights conditions in Mexico, as well as compliance with conditions on Mérida assistance included in the FY2015 Consolidated and Further Continuing Appropriations Act (P.L. 113-235),65 likely will continue to be oversight issues. The FY2016 Consolidated Appropriations Act (P.L. 114-113) attached similar human rights reporting requirements to FMF for Mexico but not to Mérida Initiative aid accounts.

    U.S. policymakers may question how the Peña Nieto Administration is moving to punish past human rights abuses, how it intends to prevent new abuses from occurring, and how the police and judicial reforms being implemented are bolstering human rights protections.

    Economic and Trade Relations66

    The United States and Mexico have a strong economic and trade relationship that has been bolstered over the past 20 years through NAFTA. Since 1994, NAFTA has removed virtually all tariff and nontariff trade and investment barriers among partner countries and provided a rules-based mechanism to govern North American trade. Most economic studies show that the net economic effect of NAFTA on the United States and Mexico has been small but positive, though there have been adjustment costs to some sectors in both countries. Further complicating assessments of NAFTA's benefits, not all trade-related job gains and losses since NAFTA can be entirely attributed to the agreement. Numerous other factors have affected trade trends, such as Mexico's trade-liberalization efforts, economic conditions, and currency fluctuations. Nevertheless, U.S.-Mexico trade has increased rapidly since NAFTA, with U.S. exports to Mexico increasing 313% and imports from Mexico increasing 444% since its entry into force.

    The United States is Mexico's leading partner in merchandise trade, and Mexico is the United States' third-largest trade partner after China and Canada. Mexico ranks second among U.S. export markets after Canada and is the third-leading supplier of U.S. imports. Total trade (exports plus imports) amounted to $531.1 billion in 2015.

    Foreign direct investment (FDI) is also an integral part of the bilateral economic relationship. The stock of U.S. FDI increased from $17.0 billion in 1994 to $107.8 billion in 2014. Mexican FDI in the United States is much lower than U.S. investment in Mexico but has also increased in recent years. In 2014, the stock of Mexican FDI in the United States totaled $17.7 billion.

    North American Development Bank

    The North American Development Bank (NADB), capitalized by the United States and Mexico, was created in 1994 as part of negotiations for the North American Free Trade Agreement (NAFTA). It finances environmental infrastructure projects in the U.S.-Mexican border region. As of September 30, 2015, the NADB's outstanding portfolio was $1.3 billion. Its sister organization, the Border Environment Cooperation Commission (BECC), certifies potential NADB projects. In recent years, the NADB and BECC have approved projects providing renewable energy to residents in the border region and promoted new private-sector investments in the United States and Mexico

    In FY2016, the Administration requested authorization for U.S. participation in a capital increase, up to $1.5 billion for the NADB. Paired with matching funds from the Mexican government, this request would support a doubling of the NADB's capital over five years, from $3 billion to $6 billion. Although the FY2016 omnibus measure provided some appropriations ($10 million) toward this first contribution for the NADB capital increase, the authorization language was not included.

    For FY2017, the administration is requesting appropriations for the second contribution ($45 million) to the capital increase and has resubmitted the authorization request.

    The Obama Administration has engaged in bilateral efforts, both with Canada and with Mexico, to increase North American regulatory cooperation, maintain border security while facilitating legitimate trade and travel, promote economic competitiveness, and pursue energy integration. The aforementioned U.S.-Mexican High-Level Economic Dialogue, launched on September 20, 2013, is a bilateral initiative to advance economic and commercial priorities through annual meetings at the cabinet level. These meetings also include leaders from the public and private sectors. After the January 2015 High-Level Economic Dialogue meeting, both governments pledged their support for a $3 billion capital increase over five years for the North American Development Bank (NADB). Any capital increase for the NADB would have to be approved by both the U.S. and Mexican Congresses to take effect.

    Other bilateral efforts with Mexico include the High-Level Regulatory Cooperation Council launched in February 2012 to help align regulatory principles. In addition, the two countries have a bilateral initiative for improving border management under the Declaration Concerning Twenty-First Center Border Management, which is part of pillar three of the Mérida Initiative (see "Modernizing the U.S.-Mexican Border").

    Mexico, Canada, and the United States participated in negotiations for the Trans-Pacific Partnership agreement (TPP), a proposed free trade agreement with nine Asia-Pacific countries that was signed on February 4, 2016.67 The agreement must be ratified by at least six countries to take effect. If the TPP is approved by the U.S. Congress, it may alter some of the rules that have governed North American trade since NAFTA entered into force in 1994. Changes are particularly likely in areas such as intellectual property rights protection, investment, services, rules of origin, government procurement, worker rights, and the environment.

    Experts have proposed ideas that Congress might consider to make North American industries more competitive and hasten regional integration. Some proposals that have emerged include calls for rethinking the current trade relationship under NAFTA by broadening the scope of North American integration and cooperation. One idea, for example, is to develop a North American Investment Fund.68 Others include better coordinating and financing border infrastructure projects; harmonizing regulations; establishing one common customs approval process for the United States, Mexico, and Canada; building human capital; and fostering technology transfers and innovation.69

    Despite positive advances on many aspects of bilateral and trilateral (with Canada) economic relations, trade disputes continue to cause tension in some areas. Over the years, the United States and Mexico have had several trade disputes under NAFTA or the World Trade Organization. Trade disputes involving trucking, sugar, tomatoes, and, most recently, meat labeling requirements have been largely resolved.70

    Congress is likely to continue monitoring how the United States, Mexico, and Canada might work bilaterally and trilaterally to advance North American industrial competitiveness, TPP and NAFTA, and trade disputes. In the trade realm, potential questions for congressional consideration include how U.S.-Mexican economic ties can be deepened, how efficiency on the border can be improved without compromising security, and how NAFTA can be built upon.

    Migration and Border Issues Mexico-U.S. Immigration Issues

    Immigration policy has been a subject of congressional concern over many decades, with much of the debate focused on how to prevent unauthorized migration. Mexico's status as both the largest source of migrants in the United States and a continental neighbor means that U.S. migration policies—including stepped-up border and interior enforcement—have primarily affected Mexicans.71 As a result, immigration is a central issue in U.S.-Mexican relations.

    Since 1986, the United States has taken a number of steps to tighten border security and strengthen immigration enforcement,72 while also legalizing about 3 million people. According to the Pew Research Center, the number of unauthorized immigrants in the United States grew from about 3.2 million in 1986 to about 11.3 million in 2009, an amount that remained roughly level through 2014.73 At a broad level, congressional debate on immigration has focused on additional steps to strengthen immigration enforcement and border security, potential legalization provisions for certain unauthorized immigrants, and possible changes to the rules governing lawful immigration flows. An overarching question is whether these three issues should be considered together as comprehensive immigration reform (CIR) or whether they should be taken up separately. There is also debate as to which component Congress should work on first and whether reform in one area should be contingent on reform in another. During the 113th
    Congress, the Senate passed CIR legislation (S. 744), and), while House committees reported a series of discrete bills, some of which focused on border security.87 74 Since the mid-2000s, successive Mexican governments have supported efforts to enact comprehensive immigration reform CIR in the United States, while being careful not to appear to be infringing upon U.S. congressional authority to make and enforce immigration laws. The Mexican government has pledged to enforce legal emigration, increase security along its northern and southern borders, and create opportunities for workers in Mexico so that fewer individuals will emigrate. Mexico has aggressively combated transmigration by unauthorized migrants crossing Mexico bound for the United States and worked with U.S. law enforcement to combat alien smuggling and human trafficking.75 Due to a number of factors, more Mexicans are leaving the United States than are arriving, and unauthorized arrivals are at 40-year lows.76 The proportion of apprehensions of Mexicans with respect to all apprehensions at the southwestern border is also decreasing.77 Due to a number of factors, illegal emigration from Mexico is estimated to be at a 40-year low.88 Still, corruption remains endemic within Mexico’s National Migration Institute (the entity within the Interior Ministry that enforces immigration laws).89 Mexico’s southern border also continues to be porous and insecure. President Peña Nieto, like former President Calderón, has not promised Mexicans that he can affect immigration reform efforts in the U.S. Congress or influence the Obama Administration. Both leaders saw how former President Vicente Fox's failure to secure a bilateral immigration accord with the United States in 2001 proved to be a major blow to his Administration. Nevertheless, Peña Nieto has pledged his full support for efforts to enact comprehensive immigration reform, and is likely to continue Mexico’s efforts to improve border security and enforce its migration policies and has stepped up Mexico's efforts to combat illegal transmigration from Central America. On November 20, 2014, the Mexican Foreign Ministry issued a statement welcoming President Obama’ Obama's executive action on immigration;9078 some 3 million of the estimated 5.2 million unauthorized immigrants who could qualify for the programs Obama announced are Mexican.91 Nevertheless, several79 Those programs are on hold pending legal challenges. Several migration-related issues have concerned the Mexican government. Mexico has protested the alleged excessive use of force by U.S. agents on the border; defended the rights of Mexican migrants in the United States, regardless of their status; and challenged certain state laws against illegal immigration. Record numbers of removals (deportations) under the Obama Administration, as well as certain removal procedures, such as the treatment of unaccompanied Mexican minors and removals that release migrants into violent border regions at night, have been issues of concern.92 Recent increases in Mexicans from some regions seeking asylum in the United States due to threats of violence in their communities and a rise in Central American migrants in transit through Mexico has been a concern of both governments. Emigrants from 87 See: CRS Report R43320, Immigration Legislation and Issues in the 113th Congress, coordinated by Andorra Bruno. Researchers attribute this decline to the U.S. recession, stepped-up U.S. border security and interior enforcement, increasing abuses of migrants by smugglers and transnational criminal organizations, and expanding job opportunities in Mexico, among other factors. Jeffrey Passel, D'Vera Cohn, and Ana Gonzalez-Barrera, Net Migration from Mexico Falls to Zero—And Perhaps Less, Pew Hispanic Center, 2012, available at http://www.pewhispanic.org/files/2012/04/ PHC-04-23a-Mexican-Migration.pdf. That trend has since continued. 89 Edward Fox, “Figures Show Corruption Rife in Mexico’s Migration Agency,” Insight Crime, January 9, 2013. 90 See: CRS Report R43798, The Obama Administration’s November 2014 Immigration Initiatives: Questions and Answers, by Kate M. Manuel. 91 Ellen Patten and Jeffrey S. Passel, How Obama’s Executive Action will Impact Immigrants, by Birth Country, Pew Research Center, November 21, 2014. 92 See, for example, Adam Isacson, Maureen Meyer, and Ashley Davis, Border Security and Migration: A Report from Arizona, WOLA, December 5, 2013, http://www.wola.org/publications/border_security_and_migration. 88 Congressional Research Service 22 Mexico: Background and U.S. Relations Mexico and Central America have increasingly become victims of kidnapping and abuses by organized crime, sometimes in collusion with corrupt Mexican officials.93 Dealing with Central American Migration, Including Unaccompanied Children94 As migration patterns between the United States and Mexico have changed, many U.S. policy makers have begun to view Mexico as a partner that has an important role to play in securing its southern border and combating Central American transmigration through its territory. In this emerging role, the Mexican government actively collaborates with U.S. law enforcement agencies to combat alien smuggling, human trafficking, and illegal migration by third country nationals. Mexico reportedly apprehended more than 15,795 minors between January and August 2014, compared to 9,727 in all of 2013, with enforcement in recent months focused on railway routes that some migrants have used to cross Mexican territory into southern Texas.95 While some have praised Mexico for increasing its migration enforcement, others have criticized the Mexican government for failing to grant Central Americans –particularly unaccompanied minors–asylum and for failing to punish and purge those who have committed abuses against migrants from within its agencies. With U.S. support through the Mérida Initiative (see “Security and U.S. Assistance through the Mérida Initiative”), the Mexican government started implementing a southern border security plan in 2013. Mexico’s plan includes the establishment of 12 naval bases on the country’s rivers and three security cordons that stretch more than 100 miles north of the Mexico-Guatemala and Mexico-Belize borders.96 Total State Department support for mobile Non-Intrusive Inspection Equipment and related equipment and training for Mexico’s southern border strategy is likely to reach at least $86.6 million. The U.S. Department of Defense (DOD) has also provided training to troops patrolling the border, communications equipment, and support for the development of Mexico’s air mobility and surveillance capabilities. This assistance may be expanded given the inclusion of $79 million above the Administration’s request for border security and other judicial sector programs in the FY2015 Consolidated and Further Continuing Appropriations Act (H.R. 83/P.L. 113-225). Modernizing the U.S.-Mexico Border The Department of Homeland Security (DHS) Customs and Border Protection (CBP) is charged with facilitating the flow of people, commerce, and trade through U.S. ports of entry while securing the border against threats. While enforcement efforts at the southwest border tend to focus on illegal migration and cross border crime, commercial trade crossing the border also poses a potential risk to the United States. Since NAFTA took effect, U.S.-Mexico trade has 93 Latin American Working Group, Perilous Journey: Kidnapping and Violence Against Migrants in Transit Through Mexico, October 2013, available at http://www.lawg.org/component/content/article/1267/1267. 94 See: CRS Report R43702, Unaccompanied Children from Central America: Foreign Policy Considerations, coordinated by Peter J. Meyer. 95 Miriam Dominguez, “Se Triplica Cifra de Niños Migrantes Asegurados,” El Universal, October 15, 2014. 96 U.S. Department of State, Bureau of International Narcotics and Law Enforcement Affairs, “INL Assistance for Mexico’s Southern Border Strategy,” fact sheet, June 2014. Congressional Research Service 23 Mexico: Background and U.S. Relations dramatically increased, while investments in port infrastructure and staffing of customs officials along the border have not, until recently, been made. Particularly since the terrorist attacks of September 11, 2001, there have been significant delays and unpredictable wait times at the U.S.Mexico border. Concerns about those delays has increased in recent years, since roughly 80% of U.S.-Mexico trade must pass through a port of entry (POE) along the Southwest border, often more than once, as manufacturing processes between the two countries have become highly integrated. In 2013, for example, there were more than 5 million commercial crossings in 2013. On May 19, 2010, the United States and Mexico declared their intent to collaborate on enhancing the U.S.-Mexican border as part of pillar three of the Mérida Initiative.97 A Twenty-First Century Border Bilateral Executive Steering Committee (ESC) has met seven times since then to develop bi-national action plans and oversee implementation of those plans. The plans are focused on setting measurable goals within broad objectives: coordinating infrastructure development, expanding trusted traveler and shipment programs, establishing pilot projects for cargo preclearance, improving cross-border commerce and ties, and bolstering information sharing among law enforcement agencies. In December 2014, the U.S. and Mexican governments reported that their efforts had resulted in a reduction in wait times at San Isidro from three hours to 30 minutes, the modernization of the Nogales-Mariposa crossing between Arizona and Sonora, and the mutual recognition of each country’s respective trusted shipper program.98 Figure 3. Snapshot of the U.S.-Mexico Border Source: CRS Graphics. 97 The White House, “Declaration by The Government Of The United States Of America and The Government Of The United Mexican States Concerning Twenty-First Century Border Management,” press release, May 19, 2010. As mentioned, U.S. - Mexican security cooperation along the border did not begin with the Mérida Initiative. This ESC is one of the most recent developments in the bilateral cooperation. 98 U.S. Embassy in Mexico City, “Joint Communiqué: U.S.-Mexico 21st Century Border Management Initiative Executive Steering Committee Policy Meeting,” press release, December 4, 2014. Congressional Research Service 24 Mexico: Background and U.S. Relations Congress authorized a pilot program in the FY2013 Consolidated and Further Continuing Mexican minors and removals that release migrants into violent border regions at night, have been addressed in bilateral migration talks.80 Dealing with Central American Migration, Including Unaccompanied Children81

    The Obama Administration and Congress have supported the Mexican government's efforts to secure its porous southern borders and enhance its immigration enforcement. Mexico's Southern Border Plan, announced in July 2014, includes increased security at 12 ports of entry into Guatemala and Belize and increased immigration enforcement along known migration routes, including northbound trains and bus stations. Mexico's National Institute of Migration (INM) has created more than 100 mobile highway checkpoints and increased the number of cases it refers to prosecutors for crimes against migrants.

    The State Department has allocated $130 million of Mérida Initiative assistance for border security in Mexico, at least half of which will support southern border efforts. This figure includes $70 million in FY2013-FY2015 appropriations and $60 million in FY2010-FY2012 appropriations that have been reprogramed.82 As of February 2016, the State Department had delivered $20 million of assistance for Mexico's southern border region, mostly in the form of nonintrusive inspection equipment, mobile kiosks, canine teams, and training in immigration enforcement. Additional funding will support a biometrics system, a secure communications network for Mexican agencies in the southern border region, and other new projects. The U.S. government likely will provide additional support for these efforts using a portion of the roughly $139 million in Mérida aid appropriated in FY2016; an additional $129 million in Mérida aid is requested in FY2017.

    The Mexican government's implementation of the U.S.-backed Southern Border Plan has coincided with a sharp increase in apprehensions and deportations of Central Americans. In FY2015, Mexico apprehended nearly 167,000 migrants from the northern triangle countries, up from 102,000 in FY2014. During the same time period, U.S. apprehensions of northern triangle nationals fell from 239,000 to fewer than 135,000. These figures suggest that migration outflows from Central America remained fairly stable throughout 2015 but fewer migrants reached the U.S. border as a result of increased apprehensions by Mexican authorities.83

    Human rights advocates have voiced concerns regarding Mexico's Southern Border Plan, asserting that it has led migrants to take more dangerous routes that expose them to new vulnerabilities while hindering their access to shelters and humanitarian assistance.84 In 2015, complaints of human rights violations by Mexican migration agents to the National Human Rights Commission increased 53% as compared to the previous year. Migrants' rights proponents also maintain that Mexico has not sufficiently increased its capacity to screen apprehended migrants for protection concerns, potentially denying refugees from northern triangle countries access to asylum.85

    Modernizing the U.S.-Mexican Border

    The Department of Homeland Security's Customs and Border Protection (CBP) is charged with facilitating the flow of people, commerce, and trade through U.S. ports of entry while securing the border against threats. Although enforcement efforts at the southwest border tend to focus on unauthorized migration and cross-border crime, commercial trade crossing the border also poses a potential risk to the United States. Since NAFTA took effect, U.S.-Mexico trade has dramatically increased, but large investments in port infrastructure and staffing of customs officials along the border have not, until recently, been made. Since the terrorist attacks of September 11, 2001, there have been significant delays and unpredictable wait times at the U.S.-Mexican border.86 Concerns about those delays have increased in recent years because the majority of U.S.-Mexican trade must pass through a port of entry along the southwest border, often more than once, as manufacturing processes between the two countries have become integrated.

    Figure 5. U.S.-Mexican Border

    Source: U.S. Department of State data. CRS graphics.

    On May 19, 2010, the United States and Mexico declared their intent to collaborate on enhancing the U.S.-Mexican border as part of pillar three of the Mérida Initiative (see Figure 5).87 A Twenty-First Century Border Bilateral Executive Steering Committee (ESC) has met annually since then to develop binational action plans and oversee implementation of those plans. The plans are focused on setting measurable goals within broad objectives: coordinating infrastructure development, expanding trusted traveler and shipment programs, establishing pilot projects for cargo preclearance, improving cross-border commerce and ties, and bolstering information sharing among law enforcement agencies. In 2015, the two governments opened the first railway bridge in 100 years at Brownsville-Matamoros and launched two cargo pre-inspection test locations at Laredo International Airport and near Mesa de Otay, where U.S. and Mexican customs officials are working together.88 The third trial program at San Jeronimo, Chihuahua, Mexico, will focus on the pre-inspection of finished electronics shipped into the United States and is planned for inauguration in mid-2016. A new Mexican law allowing U.S. customs personnel to be armed in Mexico has hastened these bilateral efforts. Congress authorized a pilot program in the FY2013 Consolidated and Further Continuing
    Appropriations Act (P.L. 113-6, Div. D) that permitted CBP to enter into public-private partnerships (PPPs) with certainwith localities and permitted the private sector to fund improvements in border facilities and port services.9989 Enacted on January 17, 2014, the FY2014 Consolidated Appropriations Act (P.L. 113-76, Div. F) extended the pilot programs and provided funding for additional customs inspectors and infrastructure at the U.S.-Mexico border. As part of this broader debate about immigration policy and border issues, one question that may arise is the degree to which U.S. immigration policy should treat Mexico as a “special case” on certain immigration questions given the sheer size of the bilateral flow of migrants and Mexico’s status as America’s continental neighbor.100 As Congress carries out its oversight functionprogram and allowed CBP to accept donations to expand port operations. As Congress carries out its oversight function on U.S.-Mexican migration and border issues, questions that may arise include the following: How well is Mexico fulfilling its pledges to increase security along its northern and southern borders and to enforce its immigration laws? What is Mexico doing to address Central American migration through its territory? What is the current level of bilateral cooperation on border security and immigration and border matters, and how might that cooperation be improved? How well are the U.S. and Mexican governments balancing security and trade concerns along the U.S.-Mexico border? Mexico’s Energy Reforms101 Mexican border? Energy90 The future of oil and natural gas production in Mexico is of importanceimportant for Mexico's economic growth, as well as for the U.S. energy security. Mexico’sector. As previously mentioned, Mexico's state oil company, Petroleos Mexicanos (Pemex), has struggled to counter declining oil production and reserves. Despite its challenges, Mexico remains a top U.S. crude oil supplier. Due to an inability to meet rising demand, Mexico and been forced to postpone investments due to fiscal challenges that have been exacerbated by low oil prices.91 Mexico has significantly increased natural gas imports from the United States due to its inability to meet rising demand for gas. Still, . Still, gas shortages have hindered the country's economic performance and caused electricity costs to rise. U.S. policy makers U.S. policymakers are closely monitoring the implementation of the historic December 2013 constitutional reforms and August 2014 implementing laws that allow Pemex to partner with international companies to boost productionopened Mexico's energy sector to private investment. Hailed by many analysts as the most significant economic reform undertaken by Mexico since its entrance into NAFTA in 1994, the energy reforms are expected to boost investment, growth, and eventually oil and gas production in the country. The U.S. Energy Information Administration (EIA) has estimated that the recentlyenacted energy reforms could boost Mexico’ reforms could boost Mexico's long-term oil production potential to 3.7 million barrels per day (b/d) by 2040, according to the U.S. Energy Information Administration (EIA). That estimate is 75% higher than the EIA's 2013 forecast for Mexico’ Mexico's long-term oil production that, which was issued prior to the enactment of energythe reforms.102 92 Mexico produced 2.2 million b/d in 2015. The reforms also opened Mexico’s electricity sector to private generators.103 If power sector 99 See Section 560. The FY2013 pilot program permitted five such partnerships in Dallas, TX; Houston, TX; and Miami, FL and land POEs in El Paso, TX and Laredo/McAllen, TX. 100 For a fuller discussion, see CRS Report R42560, Mexican Migration to the United States: Policy and Trends. 101 For background on Mexico’s recently enacted energy reforms, see CRS Report R43313, Mexico’s Oil and Gas Sector: Background, Reform Efforts, and Implications for the United States, coordinated by Clare Ribando Seelke. 102 EIA, “Energy Reform Could Increase Mexico’s Long-term Oil Production by 75%,” press release, August 25, 2014. 103 Lisa Viscidi and Paul Shortell, A Brighter Future for Mexico: The Promise and Challenge of Electricity Reform, Inter-American Dialogue, June 2014, http://www.thedialogue.org/uploads/IAD9603_MexicanEnergyFINAL.pdf. Congressional Research Service 25 Mexico: Background and U.S. Relations reforms reduce Mexico’s electricity costs, then Mexico’s manufacturing sector, which is highly 's electricity sector to private generators.93 U.S. companies are increasingly moving in to Mexico's electricity market; some participated in Mexico's first electricity auction, held in March 2016.94 If power sector reforms reduce Mexico's electricity costs, then Mexico's manufacturing sector, which is highly integrated with U.S. industry, should become more competitive. Mexico’s 2013/ Mexico's 2013-2014 energy reforms were designed to transform Pemex into a "productive state enterprise” enterprise" with more autonomy and lower taxes, but they made it subject to competition with private investors. TheyThe reforms created different types of contracts for private companies interested in investing in Mexico, including production- sharing and licensing; allowed companies to postbook reserves for accounting purposes; established a sovereign wealth fund; and created new regulatorsregulatory agencies. In August, Mexico’ 2014, Mexico's Secretariat of Energy announced the results of "Round Zero," which defines the exploratory and production areas that Pemex can retain. Pemex may partneris partnering with private companies to exploit some of those areas. In December 2014, the Mexican government announced the terms under which the first 14 terms of part one of Round 1, under which shallow-water offshore exploratory blocks available for public bidding will be auctioned through a process that is expected to be completed by July 2015.104 The opening of Mexico’s oil and natural gas sector to foreign investors poses significant changes in the U.S.-Mexico energy relationship that may have advantages and disadvantages for both sides. Reversing Mexico’s production decline would add more oil to the global market and enhance U.S. energy security. U.S. companies able to enter the Mexican upstream sector are likely to benefit from the opening of Mexican resources to foreign investment. Opportunities for infrastructure development, oil services companies, and downstream industries are also likely to open up. This would be true for both the oil and natural gas sectors, but U.S. natural gas exporters to Mexico might, over the long term, potentially lose some of their market share. Opportunities may also exist for greater U.S.-Mexican energy cooperation. The first leases have already been awarded in the Gulf under the U.S.-Mexico Transboundary Agreement that was would be auctioned. On July 15, 2015, Mexico's Energy Ministry announced the bidding results for all of those blocks. The results were deemed disappointing by some energy analysts, as 2 of the 14 blocks available were awarded to successful bidders.95 The government then altered the terms offered, including the amount of investment required by companies and its share of the profits, to attract more interest. Subsequent bidding rounds held in 2015 proved more successful and earned praise for the transparent way in which they were conducted.96

    The opening of Mexico's oil and natural gas sector could expand U.S.-Mexican energy trade and provide opportunities for U.S. companies involved in the hydrocarbons sector, as well as infrastructure and other oil field services. Industry analysts maintain that the reforms are generally well designed but that the way they are implemented will determine their impact.

    The reforms' success may also depend on trends in global oil prices. Should oil prices remain at current levels, shale resources and other unconventional fields may not be feasible to develop. With global oil prices much lower than they were in 2014, many companies have cut their capital investment budgets. Some of Mexico's oil and natural gas fields are highly sought after by industry, but the decline in global prices likely will affect the prices companies are willing to pay for access to those resources.

    In terms of energy trade, enactment of P.L. 114-113 allows U.S. crude oil to be marketed and sold to international buyers by repealing Section 103 of the Energy Policy and Conservation Act of 1975 (EPCA; P.L. 94-163).97 By removing the crude oil export restrictions, U.S. oil exports to Mexico can occur more efficiently and shippers/buyers will not need to arrange an oil-for-oil exchange, nor will they have to apply with the Department of Commerce for approval. Instead of having to arrange an exchange transaction with counterparty, exporters from the United States can simply sell and export crude oil to Mexico without restriction.

    Opportunities may exist for greater U.S.-Mexican energy cooperation in the hydrocarbons sector. The first leases have already been awarded in the Gulf of Mexico under the U.S.-Mexico Transboundary Agreement that was
    approved by Congress in December 2013 (H.J.Res. 59//P.L. 113-67).98).105 Bilateral efforts to ensure that hydrocarbon resources are developed without unduly damaging the environment could expand, possibly through collaboration between Mexican entities and U.S. federal or state regulatory entities. In terms of capacity- building, the University of Texas system has recently expanded educational exchanges and training opportunities for Mexicans working in the petroleum sector. Other U.S. universities could follow suit. Others have also urged the United petroleum sector. The United States and Mexico to workare also working together to provide oil and natural gas resources to help reduce energy costs in Central America. and connect Mexico to the Central American electricity grid. Analysts have urged the United States to offer more technical assistance to Mexico - particularly in deep water and shale oil exploration, to clarify rules for oil and gas swaps, —particularly in deepwater and shale exploration—and to ensure that new cross-border pipelines are approved expeditiously.106 On June 24, 2014, the House approved legislation (H.R. 3301), which would have tried to ensure the continued development of natural gas infrastructure and exports to Mexico. Those provisions were integrated into H.R. 2, which the House passed on September 18, 2014. Similar legislation may be introduced in the 114th Congress. 99 Oversight questions may focus on how the Transboundary Hydrocarbons Agreement is being implemented; the extent to which Mexico is developing independent and capable energy sector -sector regulators, particularly for deep waterdeepwater drilling; and the fairness of the terms Mexico offers to 104 Stratfor, Mexico Takes the Next Steps in Energy Reform, December 18, 2014. “BOEM Awards Leases in US-Mexico Transboundary Area to ExxonMobil,” Oil & Gas Journal, May 30, 2014. 106 David L. Goldwyn et al., Mexico’s Energy Reform: Ready to Launch, Atlantic Council, August 2014. 105 Congressional Research Service 26 Mexico: Background and U.S. Relations private companies interested in investing in its hydrocarbons industry. Policy makersPolicymakers are also likely to follow the effects of security conditions in Mexico, on the one hand, and global energy prices, on the other, both of which affect the attractiveness of Mexico's energy sector. Water Sharing107 Water Sharing100 Management of shared water resources is significant for U.S. and Mexican interests in the border region, as well asand it is a contributing factor to the level of cooperation or tension between the two countries. Multiple rivers cross or form the U.S.-MexicoMexican border. The two principal rivers are the Colorado River, which is predominantly in the United States but passes through Mexico on its way to the Gulf of California;, and the Rio Grande, which forms the U.S.-MexicoMexican border in Texas. These rivers are covered by long-standing international water -sharing agreements. Starting in 1906, agreements emerged to allocate the Rio Grande's water between the two countries. In 1944, the two countries entered into a comprehensive water treaty, the Utilization of Waters of the Colorado and Tijuana Rivers and of the Rio Grande (Treaty).108101 The 1944 Treaty reconfigured an existing entity into the International Boundary and Water Commission (IBWC),109102 which is responsible for managing water in accordance with the Treaty and resolving water-sharing disputes through amendments, called “minutes.”minutes. Recent experiences of international water management in the two basins have contrasted, with advances in cooperation in the Colorado River basin and increased tensions in the Rio Grande basin. Colorado River Colorado River The Colorado River flows through seven U.S. states (Arizona, California, Colorado, Nevada, New Mexico, Utah, and Wyoming) and into Mexico before emptying into the Gulf of California. Some 97% of the basin is in the United States.110103 The 1944 Treaty requires that the United States provide Mexico with 1.5 million acre-feet (AF) of Colorado River water annually,111104 roughly 10% of the river's average annual flow. Binational disputes have arisen over water quantity, quality, and conservation. Recent U.S.-MexicoMexican water -sharing discussions have coalesced around the need for better management and conservation of both the Colorado River itself and the Colorado River Delta. As a result, both governments, along with state officials and conservation groups from both countries, worked with the IBWC to develop an agreement that would allocate water to Mexico based on whether there is a surplus or drought and allow for joint investments to create greater environmental protection, as well as greater water conservation (i.e., ability to store water) for Mexico. These discussions culminated in the signing of Minute 319 on November 20, 2012. 107 See CRS Report R43312, U.S.-Mexico Water Sharing: Background and Recent Developments, by Nicole T. Carter, Clare Ribando Seelke, and Daniel T. Shedd. 108 Treaty between the United States of America and Mexico Respecting Utilization of Waters of the Colorado and Tijuana Rivers and of the Rio Grande, U.S.-Mex., Feb. 3, 1944, 59 Stat. 1219 (hereinafter Treaty). 109 The IBWC is an international body consisting of a United States and a Mexican section, which are overseen by the State Department and Mexico’s Foreign Ministry, respectively. 110 When the 1994 Treaty was signed, Colorado River flows were estimated at 16.8 million acre-feet (AF) per year; current flows are closer to 14.4 million AF annually. “U.S., Mexico: The Decline of the Colorado River,” Stratfor Global Intelligence, May 13, 2013. 111 Treaty, supra note 80, art. 10. Congressional Research Service 27 Mexico: Background and U.S. Relations Rio Grande While Mexico. These discussions culminated in the signing of Minute 319 on November 20, 2012. For the Colorado River basin, issues before Congress may be largely related to oversight of the impacts and implementation of Minute 319. Rio Grande Whereas Colorado River Basin relations have been increasingly collaborative, the delivery of water from Mexico to the United States in the Rio Grande basin at times has been a source of tension. The Rio Grande is divided into two basins: the western El Paso-Juárez Rio Grande basin and the eastern basin, which encompasses an area from Ft. Quitman to the Gulf of Mexico. For that eastern portion of the basin, under articleArticle 4 of the 1944 Treaty, Mexico's water delivery from designated tributaries must average at least 350,000 AF per year, measured in five-year cycles.112105 If Mexico fails to meet its delivery obligations for a five-year cycle because of "extraordinary drought”—a "—a term not defined in the Treaty—it must make up the deficiency during the next five-year cycle. As both the U.S. and Mexican portions of the basin experienced drought conditions in 2011-2012, deliveries from Mexico per the 1944 Treaty slowed, raising concerns in Texas about the predictability of water deliveries. The current delivery cycle started October 25, 2010, and will end October 24, 2015. Mexican interests maintain that “extraordinary drought” conditions hampered deliveries in the early part of this cycle but have since picked up. Texas interests assert that the drought has eased in the Mexican portion of the basin and deliveries should increase so the cycle can end with no water debt; they also are pursuing more predictability of future concern is that low deliveries, as occurred in the 1990s and early 2000s, reduce water available for agriculture and communities in the U.S. counties along the Texas-Mexico border. Mexican interests maintained that "extraordinary drought" conditions hampered deliveries in the early part of the 2010-2015 cycle but that deliveries subsequently picked up. According to the IBWC, Mexico made up its water debt from the 2010-2015 cycle, which ended in October 2015, by January 2016.106 Despite that development, Texas interests remain concerned about the predictability of future deliveries (i.e., they would like Mexico to maintain deliveries at the target annual delivery rate). The concern is that low deliveries, as occurred in the 1990s and early 2000s, reduce water available for agriculture and communities in the U.S. counties along the Texas-Mexico border. Historically, Mexico met its deliveries within the five-year cycles until the 1994 to 2003 drought. During that drought, Mexico accrued a water debt through two water cycles. Diffusion of tensions over the debt was the result of presidential intervention, negotiation of Minutes under the 1944 Treaty, and investments in improved water efficiency; hurricane-induced wet conditions cleared the water debt in 2005.113 The U.S. and Mexican sections of the IBWC have met regularly since late 2012 to discuss Mexico’s water deliveries; bilateral discussions since May 2013 also have involved high-level State Department and Mexican government officials. Among the outcomes has been an exchange of technical data to assist in options for future water management in the basin. Mexico delivered more than the 350,000 AF during the third year of the cycle.114 Technical and diplomatic discussions continued to occur in 2014 as well, and, although not yet publically reflected in official IBWC water accounting, State Department officials maintain that Mexico is likely to have nearly met the annual target in the fourth year of the cycle which ended in October 2014.115 If this is the case and Mexico delivers the annual target amount in the last year of the cycle, Mexico would have more than 200,000 AF in water debt at the end of the cycle due to its failure to make up for the low deliveries in the early years of the cycle. 112 The 1944 Treaty also establishes Mexico’s right to two-thirds of the flows that feed into the Rio Grande from the six major tributaries that enter from Mexico (Id. art. 4(A)(c)), and the United States’ right to all flows from Rio Grande tributaries in the United States side and one-third from the six Mexican tributaries (Id. art. 4(B)). 113 Ibid. 114 Letter from Edward Drusina, IBWC Commissioner, to various Senators and Representatives, October 23, 2013. 115 Electronic correspondence with State Department official, November 21, 2014. Congressional Research Service 28 Mexico: Background and U.S. Relations During the 113th Congress, Members wrote letters to the Administration and enacted provisions in legislation related to the Rio Grande water dispute.116 The Joint Explanatory statement accompanying the FY2014 Consolidated Appropriations Act (P.L. 113-76) required the Secretary of State, in consultation with the IBWC Commissioner, to report to the appropriate congressional committees within 60 days of the measure’s enactment on actions taken to ensure that the water deficits owed by Mexico to the United States do not increase and that allocations comply with existing bilateral water treaties. The Agricultural Act of 2014 (P.L. 113-79) required the State Department to submit a report within 120 days of the bill’s enactment on efforts by Mexico to meet its Rio Grande Treaty deliveries. On February 5, 2014, the State Department submitted one report to meet both those requirements, which predicted that, barring any unforeseen circumstances, Mexico would meet its 2014 delivery target.117 The FY2015 Consolidated and Further Continuing Appropriations Act (H.R. 83) requires a report within 45 days of the bill’s enactment on whether mechanisms discussed in the Act have been developed to ensure that Mexico is making its water deliveries. It also carried forward the aforementioned annual reporting requirement included in P.L. 113-79 on the status of Mexico’s deliveries. In addition to proposed legislation, questions that Congress may confront related to the Rio Grande basin include what are the most effective mechanisms and approaches for achieving a Mexican water delivery regime that provides more benefit to Texas water users, and whether interventions and investment like those employed to manage the previous water debt would be necessary or effective. For the Colorado River basin, issues before Congress may be largely related to oversight of the impacts and implementation of Minute 319. Outlook As Enrique Peña Nieto begins his third year in office, many questions remain about Mexico’s future. To what extent will the economic reforms that have been enacted actually be implemented and how long will it take for Mexicans to see benefits from the reforms? How will President Peña Nieto regain Mexicans’ trust in his ability to strengthen the rule of law and tackle corruption? As the 2015 mid-term elections approach, Mexicans will be increasingly concerned about whether President Peña Nieto and the PRI have delivered on their promises to reduce crime and bolster economic growth. Will the Peña Nieto government be able to reduce violent crimes that affect average citizens, such as kidnapping and extortion, while still combating organized crime? Will security forces be able to combat crime in a way that respects human rights? Answers to some of these questions will depend largely upon the actions of President Peña Nieto himself, others will depend upon external factors, while still others will be decided by a mix of domestic and external factors. For example, many feel Mexico would benefit immensely if certain immigration reforms were enacted in the United States, but there is little that the Peña Nieto government can do to support their enactment beyond pledging to reduce illegal emigration and bolster border security. In contrast, Enrique Peña Nieto’s domestic policies can have a 116 Letter from Reps. Cuellar, Gallego, Hinojosa, O’Rourke, and Vela, to the Honorable U.S. President Barack Obama, April 11, 2013. 117 U.S. Department of State, Report to the Congress on Actions Taken to Ensure that the Water Deficits Owed by Mexico to the United States do Not Increase and That Allocations Comply with the Treaty for the Utilization of Waters of the Colorado and Tijuana Rivers and of the Rio Grande of 1944, February 5, 2014. Congressional Research Service 29 Mexico: Background and U.S. Relations significant impact on security and economic conditions in Mexico, as well as bilateral efforts in those areas. Mexico and U.S.-Mexican relations are experiencing a time of transition. This transition may bring about advances in some areas of the bilateral relationship, while setbacks may occur in others. Analysts are hopeful, for example, that even as bilateral attention focuses more on trade and energy than in the recent past, intense U.S.-Mexican security cooperation can continue. Throughout this process, the 114th Congress is likely to closely monitor conditions in Mexico, as well as U.S.-Mexican cooperation on key issues as part of its legislative and oversight capacities. Author Contact Information Clare Ribando Seelke Specialist in Latin American Affairs cseelke@crs.loc.gov, 7-5229 Acknowledgments Nicole Carter, Specialist in Natural Resources Policy, contributed to the section on Water Sharing. Key Policy Staff Area of Expertise Name Phone Email Border Security and Immigration Enforcement Lisa Seghetti 7-4669 lseghetti@crs.loc.gov Immigration Policy Andorra Bruno 7-7865 abruno@crs.loc.gov Immigration- Legal Issues Kate Manuel 7-4477 kmanuel@crs.loc.gov Mexican Drug Trafficking Organizations (DTOs) June S. Beittel 7-0613 jbeittel@crs.loc.gov DTOs in the United States/Spillover Violence Kristin Finklea 7-6259 kfinklea@crs.loc.gov Firearms Trafficking William Krouse 7-2225 wkrouse@crs.loc.gov Economics Relations and Trade Angeles Villarreal 7-0321 avillarreal@crs.loc.gov U.S.-Mexico Sugar Dispute Mark A. McMinimy 7-2172 mmcminimy@crs.loc.gov Mexican Trucks in the United States John Frittelli 7-7033 jfrittelli@crs.loc.gov U.S.-Mexico Energy Issues Michael Ratner 7-9529 mratner@crs.loc.gov U.S.-Mexico Transboundary Hydrocarbons Agreement Curry L. Hagerty 7-7738 chagerty@crs.loc.gov Water Issues Nicole T. Carter 7-0854 ncarter@crs.loc.gov Congressional Research Service 30

    Since 2013, several Members of Congress have written letters to the Administration and enacted provisions in legislation related to the Rio Grande water dispute.107 Most recently, the FY2016 Consolidated Appropriations Act (P.L. 114-113) required a report within 45 days of the bill's enactment "detailing efforts taken to establish mechanisms to improve transparency of data on, and predictability of, the water deliveries from Mexico to the United States to meet annual water apportionments to the Rio Grande, and actions taken to minimize or eliminate the water deficits owed to the United States." That report was submitted in February 2016.

    Questions that Congress may confront related to the Rio Grande basin include what are the most effective mechanisms and approaches for achieving a Mexican water delivery regime that provides more benefit to Texas water users and whether interventions and investment such as those employed to manage the previous water debt would be necessary or effective.

    Educational Exchanges and Research

    Educational and research exchanges between the United States and Mexico have been occurring for decades, but they have risen to the top of the bilateral agenda relatively recently as part of the High-Level Economic Dialogue. President Obama has established a program called "100,000 Strong in the Americas" to boost the number of U.S. students studying in Latin America (including Mexico) to 100,000 (and vice versa) by 2020. Similarly, President Peña Nieto has implemented Proyecta 100,000, which aims to have 100,000 Mexican students and researchers studying in the United States by 2018. Together, the U.S. and Mexican governments launched a Bilateral Forum on Higher Education, Innovation, and Research (FOBESII) in May 2013. FOBESII has led to the establishment of more than 80 partnerships between U.S. and Mexican universities.108

    Country and bilateral efforts have begun to bear fruit. In 2015, the number of U.S. students studying in Mexico increased by 19% and the number of Mexicans studying in the U.S. increased by 15%, as compared to 2014. While these figures are impressive, many of the Mexican students coming to the United States have done so for short-term language-acquisition programs. Mexico ranks 10th on the Institute of International Education's list of countries with students studying in the United States. China is number one, and Brazil is number six. A lack of scholarship funding and a lack of English language skills have been barriers for many Mexican students.

    Outlook

    President Peña Nieto began his Administration focused on enacting economic reforms. By 2014, it had become clear that his economic agenda could not be successful without addressing the rule-of-law challenges that have long held back the country. Moreover, Peña Nieto's mishandling of several high-profile cases of human rights abuses allegedly involving security officials increased pressure on him and his government to strengthen the country's criminal justice institutions and demonstrate the political will necessary to address crime and corruption.

    U.S.-Mexican relations are strong but constantly evolving. Advances have occurred in some areas of the bilateral relationship, such as trade and energy cooperation, and setbacks have occurred in others. The 114th Congress is likely to closely monitor conditions in Mexico and U.S.-Mexican cooperation on key issues as part of its legislative and oversight capacities.

    Author Contact Information

    [author name scrubbed], Specialist in Latin American Affairs ([email address scrubbed], [phone number scrubbed])

    Footnotes

    1.

    See, for example, Testimony of Eric Farnsworth, Vice President of the Council of the Americas, in U.S. Congress, House Committee on Foreign Affairs, Subcommittee on the Western Hemisphere, Pursuing North American Energy Independence: Mexico's Energy Reforms, 114th Cong., 1st sess., July 23, 2015.

    2.

    According to Mexico's National Council for the Evaluation of Social Development Policy (CONEVAL), Mexico's poverty rate increased from 45.5% in 2012 to 46.2% in 2014.

    3.

    The National Action Party (PAN) faced bitter internal elections in spring 2014 that divided the party, while several prominent Party of the Democratic Revolution (PRD) figures resigned due to dissatisfaction with the way party leaders responded to events in Iguala, Guerrero (where PRD officials were allegedly complicit in the students' disappearances).

    4.

    Andrés Manuel López Obrador finished second in the 2006 and 2012 presidential contests as the candidate of the PRD. He subsequently split with the PRD and started the National Regeneration Movement (Morena) party. Morena first competed in the 2015 midterm elections.

    5.

    For background, see Andrew Selee and Jacqueline Peschard, eds., Mexico's Democratic Challenges: Politics, Government, and Society (Stanford, CA: Stanford University Press, 2010).

    6. On June 7, 2015, Mexico's new electoral agency, the National Electoral Institute, which was created as part of the political and electoral reforms described in Table 1, oversaw both federal and state elections. At 47%, voter turnout proved to be higher than in midterm elections held in 2003 and in 2009. All 500 seats in the Chamber of Deputies were up for election, with 300 selected by direct election and 200 chosen by proportional representation. 7. For details, see Instituto Nacional Electoral, "Calendario Electoral," at http://www.ine.mx/archivos3/portal/historico/contenido/Calendario_Electoral/. Tania L. Montalvo, "Elecciones 2016: las alianzas PAN-PRD vs candidatos de unidad en el PRI," Animal Político, January 25, 2016. 8.

    The Peña Nieto government retained the federal police that were recruited, trained, and equipped by former President Calderón with significant U.S. assistance.

    9.

    The size of the gendarmerie has been significantly scaled back from the government's original proposal to create a 40,000-member militarized police. After several delays, the force of roughly 5,000 officers—now focused on helping reestablish security in states facing high levels of violence—became operational in August 2014.

    10.

    Manuel Ureste, "Migración Triplica su Gasto, pero Deja a Migrantes Detenidos en Condiciones Precarias," Animal Político, March 11, 2016.

    11.

    Mark Stevenson, "Mexican Gov't Reticent to Make Changes After Chapo Escape," AP, July 14, 2015.

    12.

    Juan Montes, "New Details Emerge on Mexican Finance Minister's Property Deal," Wall Street Journal, March 18, 2015.

    13.

    E. Eduardo Castillo and Katherine Corcoran, "Mexico Extraditions Part of new Working Relationship with U.S.," AP, October 22, 2015.

    14.

    CRS Report R43313, Mexico's Oil and Gas Sector: Background, Reform Efforts, and Implications for the United States, coordinated by [author name scrubbed].

    15.

    Elisabeth Malkin, "Successful Auction for Oil Drilling Rights in Mexico Follows Weak Debut," New York Times, September 30, 2015.

    16.

    Peña Nieto budgeted $19 billion for prevention efforts in 2013-2014, but the program's budget has been cut since then. Federal funds are providing a variety of interventions in municipalities with high crime rates that also exhibit social risk factors. The program has been criticized by Mexican analysts for lacking a rigorous methodology for selecting and evaluating the communities and interventions it funds. The program's director was removed in November 2015 because he was being investigated for corruption; his named replacement appears to lack experience in crime prevention. José Antonio Román, "Dudas Entre ONG por Nombramiento de Begné," La Jornada, March 11, 2016.

    17.

    Vanda Felbab-Brown, Changing the Game or Dropping the Ball? Mexico's Security and Anti-Crime Strategy Under President Enrique Peña Nieto, Brookings Institution, November 2014.

    18.

    The eight states identified as "far behind" are Baja California, Campeche, Guerrero, Jalisco, Michoacán, Sonora, Tamaulipas, and Veracruz. See "Presentan 8 Estados Retrasos en Implementación del Nuevo Sistema Penal," SDP Noticias.com, February 19, 2016.

    19.

    Alejandro Hope, "Embracing a 'Failed Strategy'?," Daily Post, March 10, 2016.

    20.

    CRS Report R41576, Mexico: Organized Crime and Drug Trafficking Organizations, by [author name scrubbed]. Juan Montes, "Murders Jumped 8.7% in Mexico in 2015; First Increase Since 2011," Wall Street Journal, January 21, 2016.

    21.

    Information in this paragraph draws from Inter-American Commission on Human Rights (IACHR), Situation of Human Rights in Mexico, December 31, 2015.

    22.

    See, for example, U.S. Department of State, Country Report on Human Rights Practices for 2014: Mexico, June 2015, at http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm?year=2014&dlid=236702.

    23.

    Michael Evans, Tlatlaya Revealed: Archive Petition Cracks Open Investigative File on Mexican Army Massacre, National Security Archive, March 6, 2016.

    24.

    Maureen Meyer and Hannah Smith, "Ayotzinapa Fact Sheet: Investigating the Enforced Disappearance of 43 Students in Mexico," Washington Office on Latin America (WOLA), February 26, 2016; "Mexico: International experts no longer welcome in Iguala case," Latin News Daily, March 30, 2016.

    25.

    Guillermo Zepeda, Seguridad y Justicia Penal en los Estados: 25 Indicadores de Nuestra Debilidad Institucional, Mexico Evalua, March 2012.

    26.

    Marguerite Cawley, "Mexico Victims' Survey Highlights Under-Reporting of Crime," Insight Crime, October 1, 2014.

    27.

    These experts cite the example of the January 2016 Tierra Blanca case, in which five people were allegedly taken by Veracruz state police and handed over to a transnational criminal organization that subsequently killed them, thinking they were members of a rival criminal group. "Mexico's Tierra Blanca Case Sparks Fear of Second Iguala," Latin News Daily, March 2, 2016.

    28.

    "Mexico: Green Light to Police Reform," Latin American Security & Strategic Review, February 2016.

    29.

    "Mexican Anti-Corruption Debate Heats Up," Latin News Daily, March 18, 2016.

    30.

    Alexandra Alper, "Mexico President, Finance Minister Cleared in Ethics Probe," Reuters, August 21, 2015.

    31.

    Elisabeth Malkin and Raphael Minder, "A Former Mexican Governor Is Arrested, but Not by His Own Country," New York Times, January 21, 2016. The Mexican government reportedly assisted Humberto Moreira in gaining release from prison; he returned to Mexico in February 2016. José María Irujo, "Misión: salvar en Madrid a Humberto Moreira," El País, February 22, 2016.

    32.

    See CRS Report R42694, The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress, coordinated by [author name scrubbed].

    33.

    CRS Report R43748, The Pacific Alliance: A Trade Integration Initiative in Latin America, by [author name scrubbed].

    34.

    CRS Report R43702, Unaccompanied Children from Central America: Foreign Policy Considerations, coordinated by [author name scrubbed].

    35.

    CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications, by [author name scrubbed].

    36.

    Shannon K. O'Neill, "Mexico's Economic Divide," June 30, 2015.

    37.

    Mexican Institute for Competitiveness (IMCO), Índice de Competitividad Internacional 2015. La Corrupción en México: Transamos y no Avanzamos, November 2015.

    38.

    CIDAC, El Ajuste Presupuestal: un Síntoma de los Vicios del Gasto Público, February 23, 2016.

    39.

    Eric Martin, "Mexico Finance Ministry Preparing Pemex Support, Official Says," Bloomberg, March 8, 2016.

    40.

    McKinsey Global Institute, A Tale of Two Mexicos: Growth and Prosperity in a Two-Speed Economy, March 2014.

    41.

    "Mexico: Peña Nieto Wants 30 Million Mexicans to Join the Formal Economy," Latin News Daily Briefing, September 9, 2014.

    42.

    OECD, OECD Economic Surveys, Mexico, January 2015, pp. 4-5.

    43.

    This figure is from Mexico's National Council for the Evaluation of Social Development Policy (CONEVAL), in a study that is available at http://www.coneval.gob.mx/Paginas/principal-EN.aspx. According to CONEVAL, Mexico's poverty rate increased by 2.9 percentage points between 2006 and 2012, although it declined 0.6 percentage points from 2010 to 2012 as the country recovered from the effects of the 2008-2009 global financial crisis and U.S. recession.

    44.

    Tania L. Montalvo, "A 20 Años del EZLN, Indígenas Siguen en la Pobreza," Animal Politico, January 2, 2014.

    45.

    Gerardo Esquivel Hernandez, Concentration of Economic and Political Power, Oxfam Mexico, 2015.

    46.

    Prospera is Mexico's main antipoverty program. It provides cash transfers to families in poverty that demonstrate that they regularly attend medical appointments and can certify that their children attend school.

    47.

    CIDAC, op. cit.; Tania L. Montalvo, "Cruzada Contra el Hambre, Sometida a la Buena Voluntad de los Gobernadores," Animal Político, March 7, 2016.

    48.

    Lisa Troshinsky, "Despite Election-Year Bashing, Envoy Says U.S.-Mexico Ties 'Excellent'," Washington Diplomat, March 1, 2016.

    49.

    Azam Ahmed, "El Chapo Case Draws Mexico Closer to U.S.," New York Times, January 11, 2016.

    50.

    CRS Report R41349, U.S.-Mexican Security Cooperation: The Mérida Initiative and Beyond, by [author name scrubbed] and [author name scrubbed].

    51.

    See, for example, Government Accountability Office (GAO), U.S. Efforts to Combat Firearms Trafficking to Mexico Have Improved, but Some Collaboration Challenges Remain, GAO 16-223, January 11, 2016.

    52.

    Government of Mexico, "Mexico's Fight for Security: Strategy and Main Achievements," June 2011; Marciel Reyes Tepach, El Presupuesto Público Federal para la Función Seguridad Pública, 2012-2013 and 2013-2014, Cámara de Diputados, March and December 2013; U.S. Department of State, International Narcotics Control Strategy Report (INCSR), March 2015 and March 2016.

    53.

    U.S. Embassy in Mexico City, "Third Meeting of the U.S.-Mexico Security Cooperation Group- Joint Statement," October 16, 2015.

    54.

    See, for example, U.S. Congress, Senate Caucus on International Narcotics Control, Drug Trafficking Across the Southwest Border and Oversight of U.S. Counterdrug Assistance to Mexico, 114th Cong., 1st sess., November 17, 2015.

    55.

    Christopher Woody, "Here's Why El Chapo Guzmán may not Face Trial in the U.S. Anytime Soon," Business Insider, February 13, 2016.

    56.

    See CRS Report R43001, Supporting Criminal Justice System Reform in Mexico: The U.S. Role, by [author name scrubbed], and CRS In Focus IF10160, The Rule of Law in Mexico and the Mérida Initiative, by [author name scrubbed].

    57.

    The codified Leahy law (22 U.S.C. 2378d) prohibits the furnishing of assistance authorized by the Foreign Assistance Act (FAA) of 1961 and the Arms Export Control Act, as amended, to any foreign security force unit that is credibly believed to have committed a gross violation of human rights.

    58.

    A provision in the annual Department of Defense (DOD) appropriations legislation prohibits the use of DOD funds to support any training program involving a unit of a foreign security or police force if the unit has committed a gross violation of human rights. Current prohibitions cover DOD equipment assistance programs as well.

    59.

    There is no FAA definition for the term security force. DOD defines the term as "duly constituted military, paramilitary, police, and constabulary forces of a state." (DOD Dictionary of Military and Associated Terms, DOD Joint Publication 1-02, at http://www.dtic.mil.)

    60.

    CRS Report R43361, "Leahy Law" Human Rights Provisions and Security Assistance: Issue Overview, coordinated by [author name scrubbed].

    61.

    Michael Evans, US: Mexico Mass Graves Raise "Alarming Questions" About Government "Complicity" in September 2014 Cartel Killings, NSA Archive Electronic Briefing Book No. 515, May 2015.

    62.

    José Miguel Vivanco, Mexico: President's Disappointing First Year on Human Rights, Human Rights Watch, November 26, 2013.

    63.

    Christy Thornton, "Stop Arms Sales to Pressure Mexico," New York Times, December 2, 2014.

    64.

    Maureen Meyer and Jenny Johnson, The Disappearance of 43 Mexican Students: WOLA & LAWG Analysis, Washington Office on Latin America and Latin America Working Group, December 4, 2014.

    65.

    In the FY2015 Consolidated and Further Continuing Appropriations Act (P.L. 113-235), conditions apply to 15% of certain U.S. assistance to the Mexican military and police. These funds will remain on hold until the Secretary of State reports in writing to the Committees on Appropriations that the Mexican government is 1) investigating and prosecuting violations of human rights by military personnel in civilian courts; 2) enforcing prohibitions against torture and the use of testimony obtained through torture; 3) ensuring that police and military officers promptly transfer detainees to the custody of civilian judicial authorities, in accordance with Mexican law, and are cooperating with such authorities in such cases; and 4) searching for the victims of forced disappearances and investigating and prosecuting those responsible for such crimes.

    66.

    This section draws from CRS Report R42965, The North American Free Trade Agreement (NAFTA), by [author name scrubbed] and [author name scrubbed], and CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications, by [author name scrubbed].

    67.

    CRS In Focus IF10000, The Trans-Pacific Partnership (TPP): An Overview, by [author name scrubbed] and [author name scrubbed].

    68.

    See Robert A. Pastor, The North American Idea, A Vision of a Continental Future, Oxford University Press, 2011.

    69.

    Council on Foreign Relations, North America: Time for a New Focus, Independent Task Force Report no. 71, October 2014, at http://www.cfr.org/north-america/north-america/p33536.

    70.

    CRS Report RS22955, Country-of-Origin Labeling for Foods and the WTO Trade Dispute on Meat Labeling, by [author name scrubbed].

    71.

    Mexicans are by far the largest group of immigrants in the United States, accounting for about 12 million people in 2012, or 30% of all current U.S. immigrants. (About half of Mexican immigrants are unauthorized, representing about 58% of the U.S. unauthorized population.) See Jeffrey Passel, D'Vera Cohn, and Ana Gonzalez-Barrera, Net Migration from Mexico Falls to Zero—and Perhaps Less, Pew Hispanic Center, Washington, DC, May 3, 2012. See also CRS Report R42560, Mexican Migration to the United States: Policy and Trends, coordinated by [author name scrubbed].

    72.

    For a fuller discussion, see CRS Report R42138, Border Security: Immigration Enforcement Between Ports of Entry, by [author name scrubbed].

    73.

    CRS Report R42988, U.S. Immigration Policy: Chart Book of Key Trends, by [author name scrubbed] and [author name scrubbed].

    74.

    CRS Report R43320, Immigration Legislation and Issues in the 113th Congress, coordinated by [author name scrubbed].

    75.

    Testimony of Alan D. Bersin, Assistant Secretary for International Affairs, Department of Homeland Security, in U.S. Congress, House Committee on Foreign Affairs, Subcommittee on the Western Hemisphere, Border Security Challenges in Latin America and the Caribbean, 114th Cong., 2nd sess., March 22, 2016.

    76.

    Researchers attribute this decline to the U.S. recession, stepped-up U.S. border security and interior enforcement, demographic changes in Mexico, abuses of migrants by smugglers and transnational criminal organizations, and expanding job opportunities in Mexico, among other factors. Ana Gonzalez-Barrera, More Mexicans Leaving Than Coming to the U.S., Pew Research Center, November 19, 2015.

    77.

    U.S. Border Patrol, "Total Illegal Alien Apprehensions By Fiscal Year: FY2000-FY2015," at https://www.cbp.gov/sites/default/files/documents/BP%20Total%20Apps%2C%20Mexico%2C%20OTM%20FY2000-FY2015.pdf.

    78.

    See CRS Report R43798, The Obama Administration's November 2014 Immigration Initiatives: Questions and Answers, by [author name scrubbed].

    79.

    Ellen Patten and Jeffrey S. Passel, How Obama's Executive Action will Impact Immigrants, by Birth Country, Pew Research Center, November 21, 2014.

    80.

    See, for example, Adam Isacson, Maureen Meyer, and Ashley Davis, Border Security and Migration: A Report from Arizona, WOLA, December 5, 2013, at http://www.wola.org/publications/border_security_and_migration.

    81.

    CRS In Focus IF10215, Mexico's Recent Immigration Enforcement Efforts, by [author name scrubbed], and CRS Report R43702, Unaccompanied Children from Central America: Foreign Policy Considerations, coordinated by [author name scrubbed].

    82.

    Electronic correspondence with State Department official, February 26, 2016.

    83.

    Muzaffar Chishti and Faye Hipsman, "Increased Central American Migration to the United States may Prove an Enduring Phenomenon," Migration Policy Institute, February 18, 2016.

    84.

    Adam Isacson, Maureen Meyer, and Hannah Smith, Increased Enforcement at Mexico's Southern Border: An Update on Security, Migration, and U.S. Assistance, Washington Office on Latin America, November 2015.

    85.

    Ibid.

    86.

    Christopher E. Wilson, Erik Lee, et al., The State of the Border Report: a Comprehensive Analysis of the U.S.-Mexico Border, Woodrow Wilson Center, COLEF, and North American Center for Transborder Studies, May 2013.

    87.

    White House, "Declaration by the Government of the United States of America and the Government of the United Mexican States Concerning Twenty-First Century Border Management," press release, May 19, 2010. As mentioned, U.S.-Mexican security cooperation along the border did not begin with the Mérida Initiative.

    88.

    The White House, Office of the Vice President, "Joint Statement: 2016 U.S.-Mexico HLED," February 25, 2016.

    89.

    See §560 of the FY2013 Consolidated and Further Continuing Appropriations Act (P.L. 113-6, Div. D). The FY2013 pilot program permitted five such partnerships in Dallas, TX; Houston, TX; and Miami, FL and land points of entry in El Paso, TX, and Laredo/McAllen, TX.

    90.

    For background on Mexico's energy reforms, see CRS Report R43313, Mexico's Oil and Gas Sector: Background, Reform Efforts, and Implications for the United States, coordinated by [author name scrubbed]. This section does not focus on U.S.-Mexico cooperation in renewable energy. For information on that sector, see BECC-NADB, http://www.becc.org/uploads/files/oct_2015_renewable_energy_rev_eng.pdf. The NADB has provided more than $1 billion in loans for wind, solar, and biogas programs in the U.S.-Mexico border region.

    91.

    Duncan Wood, "What's Next for Pemex?" Forbes, February 9, 2016.

    92.

    Energy Information Administration, "Energy Reform Could Increase Mexico's Long-Term Oil Production by 75%," press release, August 25, 2014.

    93.

    Lisa Viscidi and Paul Shortell, A Brighter Future for Mexico: The Promise and Challenge of Electricity Reform, Inter-American Dialogue, June 2014, at http://archive.thedialogue.org/uploads/IAD9603_MexicanEnergyFINAL.pdf.

    94.

    Harry L. Webber, "Cash-hungry U.S. Power Producers Lured by Mexico Energy Reforms," Dallas Morning News, March 23, 2016.

    95.

    "First Phase of Mexico's 'Round 1' Oil Concessions Disappoints," Latin News Daily, July 16, 2015.

    96.

    "Mexican Oilfield Auction Thrives Despite Low Prices," Financial Times, December 15, 2015.

    97.

    CRS Report R44403, Crude Oil Exports and Related Provisions in P.L. 114-113: In Brief, by [author name scrubbed], [author name scrubbed], and [author name scrubbed].

    98.

    "BOEM Awards Leases in US-Mexico Transboundary Area to ExxonMobil," Oil & Gas Journal, May 30, 2014.

    99.

    David L. Goldwyn et al., Mexico's Energy Reform: Ready to Launch, Atlantic Council, August 2014.

    100.

    This section draws from CRS Report R43312, U.S.-Mexico Water Sharing: Background and Recent Developments, by [author name scrubbed], [author name scrubbed], and [author name scrubbed].

    101.

    Treaty between the United States of America and Mexico Respecting Utilization of Waters of the Colorado and Tijuana Rivers and of the Rio Grande, U.S.-Mex., February 3, 1944, 59 Stat. 1219 (hereinafter Treaty).

    102.

    The International Boundary and Water Commission (IBWC) is an international body consisting of a United States section and a Mexican section, which are overseen by the State Department and Mexico's Foreign Ministry, respectively.

    103.

    When the 1944 Treaty was signed, Colorado River flows were estimated at 16.8 million acre-feet (AF) per year; current flows are closer to 14.4 million AF annually. "U.S., Mexico: The Decline of the Colorado River," Stratfor Global Intelligence, May 13, 2013.

    104.

    Treaty, Article 10.

    105.

    The 1944 Treaty also establishes Mexico's right to two-thirds of the flows that feed into the Rio Grande from the six major tributaries that enter from Mexico (Id. Article 4(A)(c)) and the United States' right to all flows from Rio Grande tributaries in the United States side and one-third from the six Mexican tributaries (Id. art. 4(B)).

    106.

    IBWC U.S. Section, "Mexico Pays Rio Grande Water Debt in Full," February 24, 2016.

    107.

    For example, Letter from Reps. Cuellar, Gallego, Hinojosa, O'Rourke, and Vela, to the Honorable U.S. President Barack Obama, April 11, 2013.

    108.

    The White House, Office of the Vice President, "Joint Statement: 2016 U.S.-Mexico HLED," February 25, 2016.