Mexico is a modern country, an industrialized country, a country that is exactly as "western" as the US or Canada. They have the same religious beliefs, speak a dialect of a European language. They have European style cities, a long history of cultural contributions. Yet they're not white enough to be part of "The West".
I think at this point we should be honest with ourselves in it's usage. 90% of the time it's a racist dog whistle.