The Beauty Pageant Gone Bad that Might Destroy North American Trade

By John Norris

At his latest somewhat unhinged public rally, Donald Trump declared of the North American Free Trade Agreement, “Personally, I don’t think we can make a deal because we have been so badly taken advantage of,” adding, “I think we’ll end up probably terminating NAFTA at some point.” This was a remarkably flip statement considering NAFTA involved more than a trillion dollars in trade between Canada, the United States and Mexico in 2015.

Trump has repeatedly called NAFTA “the worst trade deal in the history of the country.” But since taking office, the Trump Administration has pin-balled back and forth between claiming that it will totally overhaul the treaty and insisting that it is only going to “tweak” the agreement in what Vice President Pence, in his usual damage control mode, called a “win-win-win” for all parties.

Why is the United States heading down the path of potentially destroying a linchpin of its international trade arrangements? Sadly, the answer lies within a 2007 beauty pageant turned bad in Mexico City and a bunch of abandoned condo units in Baja. Welcome to Donald Trump’s foreign policy, where almost all of his intensely held views very clearly have their roots in his business dealings before, and after, taking office. This is a world where American national interest is often given a backseat to Trump’s personal pique, old grudges, and Trump Organization lawsuits.

A colleague, Carolyn Kenney, and I conducted extensive research into Trump’s conflicts of interest in 25 countries around the globe and put together an interactive series with our findings. Much of what we found — the bankruptcies, shadowy Russian investors, and lawsuits — were to be expected by anyone who has looked at Trump’s business record and finances to date. But what we were not expecting was to see how closely Trump’s most famous, or infamous if you prefer, foreign policy positions track back in perfect chronology to his business interests, and that seems to be particularly true for Mexico and NAFTA.

Indeed, a little more than a decade ago, Trump was quite high on Mexico. In 2006, Trump announced plans to develop a Trump-branded resort in Baja, Mexico, to be called Trump Ocean Resort Baja Mexico. Trump and the developers spent two years marketing the resort and selling units. In short order, more than 80 percent of the condo units were sold, collecting a total of $32.5 million in buyer deposits.

And in 2007, Trump hosted the Miss Universe pageant in Mexico City in partnership with Mexican businessmen Pedro Rodriguez and Rodolfo Rosas Moya. The pageant had all the usual glitz one would expect, with celebrity judges that included Dallas Cowboys quarterback Tony Romo, Olympic figure skating champion Michelle Kwan, and rock guitarist Dave Navarro. But in what may have been an omen, the pageant went poorly. Miss Sweden declined to participate, saying the pageant was degrading and marred by scandal. Miss USA fell during the competition and was booed by the audience. Miss Mexico wore a dress adorned with pictures of a firing squad, setting off an uproar. None of this seemed to bother Donald Trump who declared, “With each passing year our ratings continue to get better because of the beautiful and intelligent women who participate in our competitions.”

But Trump’s Mexico adventures quickly went further off the rails. Because of the financial crisis and its own mismanagement, the Trump resort in Baja was never built, and many of the condo buyers sued Trump and his partners for fraud, with most of them accusing “Trump and two of his adult children, Ivanka and Donald Trump Jr., of duping them into believing that Trump was one of the developers, giving them the confidence that it was safe to buy unbuilt property in Mexico,” according to the Los Angeles Times. (The fraud suit was settled in 2013 with the Trumps denying wrongdoing, but the developers agreeing to pay condo buyers at least $7.25 million.)

And for the greatest consequence to U.S. foreign and trade policy, Trump had a falling out with one of his beauty pageant partners, and Trump insisted he was owed some $12 million by Rodolfo Rosas Moya. Trump sued Rosas Moya and won in 2012, but was unable to collect that settlement.

And it was that unpaid settlement that seemed to drive Trump’s disdain for Mexico more than anything else. In 2015, in a series of tweets, Trump bemoaned, “The Mexican legal system is corrupt, as is much of Mexico. Pay me the money that is owed me now — and stop sending criminals over our border.” In addition, Trump complained, “I have a lawsuit in Mexico’s corrupt court system that I won but so far can’t collect. Don’t do business with Mexico!” As reported by the Daily Beast which has done good reporting on the topic, Trump “seemed to connect his own legal problems with his desire to build a giant barrier between the United States and Mexico,” writing “Mexico’s court system corrupt. I want nothing to do with Mexico other than to build an impenetrable WALL and stop them from ripping off U.S.”

So there we are. The United States is heading down the path of potentially blowing up its most important trade deal and contemplating building a wall along the length of its southern border (or closing the government when the president throws a tantrum after he doesn’t get the money to build a wall from Congress) because the president is still angry about a soured business deal. The fate of American exporters and America manufacturing jobs would seem only to be an afterthought. And that should be terrifying for anyone who has watched Trump and his team negotiate on the world stage to date.

John Norris is a Senior Fellow at the Center for American Progress.

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