With a population of 105 million people, Mexico is the most populous Spanish-speakingcountry in the world, and the third most populous country in the Western Hemisphere (after theUnited States and Brazil). This gives it a diplomatic weight in the hemisphere as a leader of LatinAmerican countries, and in the world as a leader of developing countries. With an estimated GrossDomestic Product (GDP) for 2005 of $660 billion, and estimated worldwide turnover trade (exportsand imports) for 2005 of $455 billion, Mexico is an active member of the World Trade Organization(WTO) and a leading trader in the world, principally through its partnership with Canada and theUnited States in the North American Free Trade Agreement (NAFTA). (1) Sharing a 2,000-mile border and extensive interconnections through the Gulf of Mexico, theUnited States and Mexico are so intricately linked together in an enormous number of ways thatPresident George W. Bush and other U.S. officials have stated that no country is more important tothe United States than Mexico. At the same time, Mexican President Vicente Fox (2000-2006), thefirst president to be elected from an opposition party in 71 years, has sought to strengthen thebilateral relationship through what some have called a "grand bargain." (2) Under this proposed bargain,the United States would regularize the status of undocumented Mexican workers in the United Statesand economically assist the less developed partner in the North American Free Trade Agreement(NAFTA) while Mexico would be more cooperative in border security and in controlling the illegaltraffic of drugs, people, and goods into the United States. Mexico is linked with the United States through trade and investment, migration and tourism,environment and health concerns, and family and cultural relationships. Mexico is the second mostimportant trading partner of the United States, and this trade is critical to many U.S. industries andborder communities. Mexican descendants constitute 64% (or 24 million) of the growing Hispanicpopulation of 37.4 million people in the United States, with a significant presence in California andTexas and other states. Moreover, Mexico is the largest source of legal migrants to the United States(21% of the total in 2002) and by far the largest source of undocumented migrants (57% of the totalin 2004, according to estimates). It also is the principal transit or source country for illicit drugs andit is a possible avenue for the entry of terrorists into the United States. As a result, cooperation withMexico is essential in dealing with migration, drug trafficking, and border, terrorism, health,environment, and energy issues. (3) In large part because of the United States, NAFTA is the world's largest free trade area, withabout one-third of the world's total GDP, accounting for about 19% of global exports and 25% ofglobal imports. Based on the volume of trade, Mexico is generally viewed as the least importantmember of NAFTA, although its population of over 100 million is more than three times that ofCanada (32 million), and its GDP is nearly equal to that of Canada ($757 billion). About 37% ofthe United States' trade with NAFTA countries is with Mexico, and 63% is with Canada. Under NAFTA, Mexico's estimated total turnover trade (exports and imports) with the UnitedStates for 2005 was $289 billion, making it the second most important trading partner of the UnitedStates (following Canada), while the United States is Mexico's most important partner by far,providing the market for 88% of Mexico's exports and supplying 62% of Mexico's imports. SinceNAFTA entered into force in 1994, total trilateral trade has more than doubled to $621 billion in2004, while Mexico-U.S. trade more than tripled from $82 billion to $266 billion, although theUnited States has experienced a generally growing trade deficit. U.S. foreign direct investment wasencouraged by NAFTA as well, although in recent years the amount and proportion of U.S.investment flows has declined from $20.4 billion (77% of total investment) in 2001 to $10.7 billion(56% of total) in 2003 as total worldwide investment declined. (4) As one of the major countries in the region, Mexico has historically played an important rolein Latin America and the Caribbean as a strong defender of the principles of non-intervention andself determination, particularly in the hemispheric Organization of American States (OAS). Thisstance put it at odds with the United States on policies toward Cuba since the 1960s and towardNicaragua in the 1980s, although it cooperated fully with the United States in the Summits of theAmericas process in the 1990s. Under President Fox, Mexico has sought to strengthen hemisphericrelations. The President has promoted the so-called Puebla-Panama Plan, which promotescooperative development efforts among the Central American countries and the southeastern statesof Mexico. He has revived the G-3 group (Colombia, Venezuela, and Mexico), has indicated theintent to become an associate member of the Southern Common Market (Mercosur) countries inSouth America, and is implementing free trade agreements with 10 countries in Central and SouthAmerica. In the OAS context, Mexico has been a strong advocate for the Inter-AmericanConvention Against the Illicit Manufacturing of and Trafficking in Firearms, the MultilateralEvaluation Mechanism of the Inter-American Drug Abuse Control Commission (CICAD), and therevision and updating of hemispheric security concepts after it formally withdrew from the RioTreaty collective security mechanism. In October 2003, it hosted a Hemispheric Security Conferencein Mexico City that adopted a new multi-dimensional approach, and in January 2004 it hosted aSpecial Summit of the Americas in Monterrey with emphasis on democracy and social issues. (5) While Mexico is strongly linked to the United States and to Latin America, it has importantties to Europe and Asia as well, and has been a member of the Organization of EconomicCooperation and Development (OECD) and the Asia-Pacific Economic Cooperation (APEC) forumsince the early 1990s. In addition, it is a regular participant in the Rio Group, the Ibero-AmericanConference, and the Latin America and Caribbean-European Union summits. Particularly underPresident Fox, Mexico has pursued an even more activist global foreign policy, with greater involvement in United Nations (U.N.) and Organization of American States (OAS) activities. Mexican officials are seeking to expand trade with the European Union under the EU-Mexico FreeTrade Agreement that went into effect in July 2000, and they signed a free trade agreement withJapan in 2004. Mexico held a temporary seat on the U.N. Security Council in 2002 and 2003 andexpressed support for continuing diplomatic efforts under United Nations auspices to achieve thedisarmament of Iraq, leading to expressions of disappointment from the Bush Administration andsome tension in the bilateral relationship. Under Fox, the country has been open to internationalhuman rights monitors and has played a stronger role in the United Nations Human RightsCommission, at times voting for resolutions critical of Cuba. On December 1, 2004, MexicanForeign Minister Derbez launched a bid for Mexico to have a permanent seat on the U.N. SecurityCouncil, placing it in competition with Brazil to represent Latin America in a still-to-be-approvedenlarged Security Council. In recent years, Mexico has hosted a number of important U.N. and OAS meetings. In March2002, it hosted the U.N. Conference on Financing and Development in Monterrey where PresidentBush announced the Millennium Challenge Account. In September 2003, Mexico hosted the WTOMinisterial in Cancun that collapsed without agreement despite the efforts of Foreign MinisterDerbez to achieve consensus between developing and developed countries to advance the DohaRound of global trade talks. In October 2003, it hosted a Hemispheric Security Conference inMexico City that adopted a multi-dimensional approach to transnational threats, and in January 2004it hosted a Special Summit of the Americas in Monterrey to refocus the Summit process on theadvancement of democracy and economic growth and the reduction of poverty and inequality in theregion. The United States and Mexico have developed a variety of mechanisms for consultation andcooperation on the wide variety of issues on which they interact, with some overlapping in thefunctioning of the various fora. Grouped together to some extent by function and longevity, thesemechanisms include (1) periodic presidential meetings; (2) annual cabinet-level BinationalCommission meetings with 10 Working Groups; (3) annual meetings of congressional delegationsin the Mexico-United States Interparliamentary Group Conferences; (4) NAFTA-related trilateralmeetings under various groups; (5) bilateral border area cooperation meetings hosted by such entitiesas the Border Environment Cooperation Commission (BECC) and the United States-Mexico BorderHealth Commission; and (6) trilateral meetings under the Security and Prosperity Partnership (SPP)of North America, launched in March 2005. Presidents Bush and Fox have met on a regular basis and have discussed a range of issues,at times in specially arranged bilateral meetings and state visits, and at other times at the margins ofmultilateral meetings. In 2001, the Presidents met in mid-February in Guanajuato, Mexico atPresident Fox's ranch where they launched bilateral immigration talks; in mid-April in Quebec,Canada during a Summit of the Americas meeting; in early May in Washington, D.C., in earlySeptember in the Washington, D.C. on an official state visit where migration issues figuredprominently again; and in early October in New York when President Fox expressed solidarity withthe United States following the terrorist attacks.