If Trump closes the door on Mexico, Canada can thrive by keeping it open: Don Pittis

According to Donald Trump's electionrhetoric, Mexico was exporting criminals and rapists. Now the president-elect is calling for a border tax on exports ofMexican-madeGeneral Motors vehicles.

In Trump's view, thesouthern neighbour represents a threat, whether it's from teeming migrants crossing the border to competeforU.S. jobs or low-paid workers attracting factoryjobsto Mexico.

That's not what the experts say,especially for Canada.

• Ford cancels plan for Mexican plant as Trump takes aim at General Motors

There is growing evidence that Mexico and Canada are ideal trade partnersand that Canadian business will benefit by opening doors, not building walls.

Trump tweeted his call for a "big border tax" on GM's Mexican-built vehiclesyesterday morning.

GM was quick to respond, insisting that most of its cars sold in the U.S. were made there.

Ford, meanwhile, announcedit was cancelling a $1.6-billion Mexican auto plant while expanding operations in Michigan to build electrics and hybrids.

Trade opportunity

With such a reaction, it might be tempting to suggestthat Prime Minister Justin Trudeaufollow suit and demand cars sold in Canada be made in Canada.

But in the case of Mexico, there'sa better way.

Although the U.S. with its right-to-work legislation could tryto compete with Mexico for low-wage jobs, that would be much more difficult for Canada.

And despite the stereotypical view of many Canadians, Mexico is much more than a low-wage economy.

Handicraft markets on beach vacations may perpetuate a cartoon image of the country, but a visit to Mexico's vibrant and sparkling capital city, undergoing a long-term building boom, offers a very different view.

A new report by the Conference Board of Canada commissioned by HSBC makes the case that Mexico and Canada may be ideal trade and investment partners.

The report sees clear signs that Mexico is on the verge of an economic transition that will only benefit Canadian companies that get involved.

Despite Trump's claims, the number of Mexicans running from poverty to the United States has dwindled. While Spanish speakers continue to cross Mexico to enter the United States from other Latin American countries, an increasing number of Mexicans are finding good work at home.

Mexico gains as U.S. trade partner

In December, news that Mexico had displaced Canada as America's second biggest trading partner got lots of attention in Mexico.

But the reason U.S. companies want to locate there is that the country has become a globalmanufacturing hub, having free trade deals with more countries thananywhere else.

The medianage of Mexicans is 28, compared with 42 inCanada, but the population explosion has ended. A declining Mexican birthrate and increasing job prospects are leading to what the Boston Consulting Group describes as an imminent "demographic dividend."

"Essentially, Mexico could benefit from a similar economic boom to what Canada and the U.S. experiencedin the 1970s,when the wave of baby boomers entered the workforce," says the Conference Board report. "As a result, millions of Mexican households will be joining the middle class in coming years which is likely to fuel robust growth in consumer spending."

Mexico is far less vulnerable to external shocks than it wasduring previous economic predicaments such as the Tequila Crisisin the mid-1990s.

According to a recent report from the rich countries' think-tank, the OECD, the largest part of Mexican growth is being created at homeas ordinary people strive to obtaingoods and services Canadians have grown to expect.

"Domestic demand remains the main driver of economic activity, supported by recent structural reforms that have cut prices to consumers, notably on electricity and telecoms services," says the OECD November economic forecast for the country.

As Robert Gordon noted in hisrecent book, The Rise and Fall of American Growth, the one-time adoption ofmodern technology cancreatea dramatic economic transition.

Already Canadian companies have begun to offertheir experience, notablyScotiabank, with more than 800 bank branches, in a country expected by the International Monetary Fund to outgrow the U.S. and Canada.

But as Mexicans explore middle-class advantages from pets to consumer goods and a wide variety of international foods, there are plenty more opportunities for Canadian companies, says the Conference Board report.

No country's future is perfectly secure. Inequality, corruption and organized crime make people feel unsafe and are bad for legal businesses.

There are signs of a backlash in the coming elections, asAndres Manuel Lopez Obrador(known as Amlofor his initials) takes a page out of Trump's book and runs for president as a populistoutsider, promising to stamp out corruption and"Mafia power" and bring real change to the country.

• Canada must brace for 'hard line' approach from Trump's new trade representative, experts warn

It seems inevitable that change is coming to Mexico, and Canada has much to offer,from education andtechnology to services and social strategies to specialized manufactured goodsand high-quality foods.

Trump's attacks on Mexico have damaged the country'spride, and the president-elect is so disliked that his image was used as a pinata during holiday festivities.Canadian business can win respect, and perhaps opportunity, simply bypresenting a friendly and understanding face.

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