Virginia Doubles Down on Mexico Trade Push After TPP Withdrawal

(Bloomberg) -- President Donald Trump's decision to withdraw the U.S. from a trade deal with 11 Pacific nations increases the importance of strong ties with Mexico and Canada for major exporting states including Virginia, Governor Terry McAuliffe said.

Virginia needs trade in order to create jobs and spur the growth that helps provide for its education and transportation systems, McAuliffe, a Democrat, said in Mexico City on Wednesday after meeting with President Enrique Pena Nieto, Foreign Minister Luis Videgaray, Mexican governors and corporate executives. The misguided decision to abandon the Trans-Pacific Partnership, the signature trade deal of Barack Obama's presidency, increases the importance of economic cooperation with America's neighbors, he said.

During the 2016 campaign, Trump called TPP, designed to knit together almost 40 percent of the global economy, including the U.S. and Japan, "a rape of our country" and abandoned it during his first week in office. Trump compared TPP to the two-decade-old North American Free Trade Agreement, which he blames for lost manufacturing jobs and pledges to scrap if he can't negotiate a better deal. Critics of his decision said the deal was indispensable for maintaining America's presence in Asia and competing against China.

"Clearly we are going to look back and it's going to affect those big trading states where China has now moved in, and America will not have an agreement, especially on the intellectual property issues and technology," McAuliffe said in an interview Wednesday. "We want to double down on Mexico -- you bet. As well as Canada," he later added.

Cause for Optimism

McAuliffe said U.S. economic policy would be better off left in the hands of U.S. Secretary of Commerce Wilbur Ross than with Trump. Ross said on Wednesday in an interview at the Bloomberg Breakaway Summit in New York that parts of TPP could form the basis of a revamped Nafta.

"Wilbur Ross understands global markets," McAuliffe said. "He understands what's going on here in Mexico. He understands what we have to do to increase trade."

Virginia exported $1.23 billion to Mexico in 2015, led by industrial machinery, vehicles, meat and plastics. The state also relies on migrant workers to help harvest agricultural products from apples and grapes for wine to tobacco.

McAuliffe, a former chairman of the Democratic National Committee, supported Hillary Clinton over Trump in the 2016 presidential race and was chairman of her 2008 presidential campaign, when she lost the nomination to Obama. Asked on Wednesday about Clinton's opposition to the TPP during the 2016 race, McAuliffe said "she's running for president, she's got to make her own decision. She made her decision. I can only talk to you as the governor of Virginia. This would have helped me create more jobs in Virginia, bottom line. And that's my job."

The trade mission is McAuliffe's 26th since taking office three years ago and his first to Mexico.

To contact the reporter on this story: Eric Martin in Mexico City at emartin21@bloomberg.net.

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Robert Jameson