It isn’t supposed to work this way…

Nov. 16 (Bloomberg) — Mexico’s economic growth accelerated in the third quarter, spurred by construction projects and U.S. demand for manufactured exports such as automobiles.Gross domestic product, the broadest measure of a country’s output of goods and services, grew 3.7 percent from a year earlier, the fastest pace this year, after expanding 2.8 percent in the second quarter, the government said. Mexico’s growth has quickened for two straight quarters, reversing a slowdown that began last year.“Mexico’s economy is strong,” Omar Borla, a senior Latin America economist with Dresdner Kleinwort in New York, said in an interview. “The third quarter shows a good recovery led by manufacturing and construction.”

Normally, “when the U.S. catches a cold, Mexico gets pneumonia,” but the Mexican economy has been developing an immunity to U.S. downturns over the last few years — becoming less dependent on U.S. trade.

Mexico’s economy is better positioned to withstand a slowing U.S. economy in part because of rising sales to Europe and Latin America, said Gray Newman, senior Latin America economist at Morgan Stanley.

Mexico’s sales to the U.S. as a percentage of total exports peaked at about 90 percent in 2001 and since have fallen to about 80 percent, according to the statistics ministry.

According to a Morgan Stanley report published Oct. 22, the U.S. accounted for 41 percent of Mexico’s total export growth in the first eight months of the year. Europe and Latin America accounted for 43 percent. In 2000, before the U.S. and Mexico went into recession, the U.S. accounted for more than 90 percent of Mexico’s export growth, according to the report.

“There has been a decoupling of sorts if you look at the rate of growth of Mexican exports to non-us destinations, Newman said. “It’s pretty striking.”

Growth in U.S. consumer spending and more domestic infrastructure spending also accounts for the relatively good Mexican economy. Mexican economic growth is still lagging behind other Latin America nations — specifically those that have turned their backs on “neo-liberalism” — Brazil, Argentina, Ecuador, Uruguay — all considered “leftist-populist” governments, with policies similar to the PRD’s.

Neither Calderón, nor Finance Secretary  Augustín Carstens are stupid.  They recognize, like every other Latin American leader, that the present “Free Trade Agreements” aren’t “free trade” and don’t lead to growth.  With a falling U.S. dollar and less sales (outside of Mexican made “American” automobiles) to the U.S., there isn’t much for the Bush administration to sell except rhetoric:

Politicians find it exceedingly difficult to explain free trade’s virtues without drowning the listener in a torrent of common coinage. For a recent example of this, take President Bush’s speech in Miami, designed to shore up flagging congressional support for pending free-trade agreements (FTAs) with Colombia and Panama. Echoing those all-too-familiar Bush bromides, he insisted that approving these FTAs would fortify “freedom,” strengthen “democracy,” and increase “prosperity” in Latin America.

As I’ve said before, PAN sort of won the Presidency, but the left won the election (after all, 2/3rds of Mexican voters chose socialist or social-democratic parties in 2006). With a string on PRI and PRD victories of late in state elections, and more cooperation between the two “revolutionary” parties (on a symbolic issue — secularism — PRI is supporting a PRD initiative, which is something of a change), I expect there will even less reliance on U.S. based policies in the future, and even under Felipe Calderón, an economic policy more in line with the other Latin countries.

This COULD (at the outside) include changes to NAFTA, if Mexico seeks closer ties to Mercosur. Both in the U.S. and in Latin America there is less and less support for the U.S. based “free trade agreements” and development funds… and more support for the regional economic blocs. Even the die-hard neo-liberals know a dollar ain’t a dollar any more.