Partially as a result of those constraints, two successive National Action Party (PAN) administrations struggled to enact the structural reforms needed to boost Mexico's economic competitiveness and effectively address the country's security challenges. Political Developments During the Calderón Administration

Felipe Calderón of the conservative PAN won the July 2006 presidential election in an extremely tight race, defeating Andrés Manuel López Obrador of the leftist Party of the Democratic Revolution (PRD) by fewer than 234,000 votes. Calderón was succeeded by Enrique Peña Nieto of the Institutional Revolutionary Party (PRI). Mexico-U.S. relations grew stronger through cooperation under the Mérida Initiative, as did Mexico's relations with Latin America. As predicted, the PRI that governed Mexico from 1929 to 2000 retook the presidency after 12 years of rule by the PAN and won a plurality (but not a majority) in the Senate and Chamber of Deputies. On December 1, 2012, President Peña Nieto took office for a six-year presidential term. Although President Peña Nieto has told U.S. media outlets that his government will not abandon the fight against organized crime, the primary goal of his security strategy is to improve security conditions inside Mexico. Mexico's GDP grew by 5.5% in 2010 and 3.9% in 2011. Mexico also took an active role with respect to global issues. Under the Calderón government, security cooperation, rather than immigration or trade, dominated the U.S.-Mexican relationship. U.S.-Mexican relations continued to be close under the first Obama Administration, with security cooperation intensifying under a new Mérida Initiative strategy that encompassed institution-building, border issues, and development in Mexico. U.S.-Mexican security cooperation continued even as tension emerged in bilateral relations, including after the resignation of the U.S. Whereas Mérida assistance initially focused on training and equipping Mexican counterdrug forces, it now aims to address the weak institutions and underlying societal problems—including corruption and impunity—that have allowed the drug trade to flourish in Mexico. The Senate Appropriations Committee's version of the FY2013 foreign operations appropriations measure, S. 3241 ( S.Rept. In the 2007 U.S.-Mexico joint statement announcing the Mérida Initiative, the U.S. government pledged to "intensify its efforts to address all aspects of drug trafficking (including demand-related portions) and continue to combat trafficking of weapons and bulk currency to Mexico." 112-93 increases penalties for aviation smuggling and P.L. 112-127 tightens sentencing guidelines for building border tunnels. Despite these efforts, the 112 th Congress held hearings, issued reports, and introduced legislation on how current money laundering efforts could be bolstered. U.S. and Mexican officials share security concerns about the increasing involvement of organized crime groups in alien smuggling. 112-74 ). The conditions required that 15% of INCLE and Foreign Military Financing (FMF) assistance be withheld until the Secretary of State reports in writing that Mexico is taking action in four human rights areas: 
1. improving transparency and accountability of federal police forces; 2. establishing a mechanism for regular consultations among relevant Mexican government authorities, Mexican human rights organizations, and other relevant Mexican civil society organizations, to make consultations concerning implementation of the Mérida Initiative in accordance with Mexican and international law; 3. ensuring that civilian prosecutors and judicial authorities are investigating and prosecuting, in accordance with Mexican and international law, members of the federal police and military forces who have been credibly alleged to have committed violations of human rights, and the federal police and military forces are fully cooperating with the investigations; and 4. enforcing the prohibition, in accordance with Mexican and international law, on the use of testimony obtained through torture or other ill-treatment. United States-Mexico Trans-Boundary Hydrocarbons Agreement119

Estimates that a marine area straddling the U.S.-Mexico border held billions of barrels of crude oil prompted discussions between the United States and Mexico starting in the 1970s on how to manage exploration. On February 20, 2012, the governments of the United States and Mexico announced the Trans-boundary Hydrocarbons Agreement. The United States and Mexico have strong economic ties through the North American Free Trade Agreement (NAFTA), which has been in effect since 1994. Mexico's accession to negotiations for a Trans-Pacific Partnership (TPP) trade agreement is likely to generate congressional interest. In 2011, the United States and Mexico finally resolved the long-standing NAFTA trucking dispute. Legislation Enacted in the 112th Congress133

P.L. P.L. P.L. 112-205 ( H.R. Signed into law December 7, 2012, the measure provides statutory authority for the Border Enforcement Security Task Force (BEST) program within ICE, and authorizes funding for the program for FY2012-FY2016.
The United States and Mexico have a close and complex bilateral relationship as neighbors and partners under the North American Free Trade Agreement (NAFTA). Although security issues have recently dominated the U.S. relationship with Mexico, analysts predict that bilateral relations may shift toward economic matters now that President Enrique Peña Nieto has taken office. Peña Nieto of the Institutional Revolutionary Party (PRI) defeated leftist Party of the Democratic Revolution (PRD) candidate Andrés Manuel López Obrador and Josefina Vázquez Mota of the conservative National Action Party (PAN) in Mexico's July 1, 2012 presidential election. As a result, the PRI, which controlled Mexico from 1929 to 2000, retook the presidency on December 1, 2012. Some analysts have raised concerns regarding the PRI's return to power, but President Peña Nieto has pledged to govern democratically and to forge cross-party alliances.
The outgoing PAN government of Felipe Calderón pursued an aggressive anticrime strategy and increased security cooperation with the United States. Those efforts helped Mexico arrest or kill record numbers of drug kingpins, but 60,000 people may have died as a result of organized crime-related violence during the Calderón Administration. Mexico's ongoing security challenges overshadowed some of the Calderón government's achievements, including its successful economic stewardship during and after the global financial crisis.
U.S. Policy
In recent years, U.S. policy toward Mexico has been framed by security cooperation under the Mérida Initiative. Congress has provided more than $1.9 billion in Mérida aid since FY2008 to support Mexico's efforts against drug trafficking and organized crime. Whereas U.S. assistance initially focused on training and equipping Mexican counterdrug forces, it now prioritizes strengthening the rule of law. Along the border, U.S. policymakers have sought to balance security and commercial concerns. The U.S. and Mexican governments resolved a long-standing trade dispute in 2011 involving NAFTA trucking provisions and have sought to improve competitiveness through regulatory cooperation. Bilateral trade surpassed $460 billion in 2011.The February 2012 signing of a Trans-Boundary Hydrocarbons Agreement for managing oil resources in the Gulf of Mexico could create new opportunities for energy cooperation.
Legislative Action
The 112th Congress maintained an active interest in Mexico. The Obama Administration asked for $269.5 million in assistance for Mexico in its FY2013 budget request. The Senate and House Appropriations Committees' versions of the FY2013 foreign aid measure, S. 3241 and H.R. 5857, each recommend increases in aid to Mexico, with human rights conditions similar to P.L. 112-74. Congress held oversight hearings, issued reports, and introduced legislation on how to bolster the Mérida Initiative and on related U.S. domestic efforts to combat gun trafficking, money laundering, and drug demand.
Violence in northern Mexico has kept border security on the agenda, with P.L. 112-93 increasing penalties for aviation smuggling, P.L. 112-127 tightening sentencing guidelines for building border tunnels, and P.L. 112-205 providing statutory authority for the bilateral Border Enforcement Security Task Force (BEST) program.
Mexico's recent accession to negotiations for a Trans-Pacific Partnership (TPP) trade agreement generated congressional interest. Congressional consideration of the Trans-boundary Hydrocarbons Agreement did not occur.
This report reflects legislative developments during the 112th Congress. It will not be updated. Also see: CRS Report R42917, Mexico's New Administration: Priorities and Key Issues in U.S.-Mexican Relations, by [author name scrubbed]; CRS Report R41349, U.S.-Mexican Security Cooperation: The Mérida Initiative and Beyond, by [author name scrubbed] and Kristin M. Finklea; and CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications, by [author name scrubbed].