Monday, March 27, 2017

Mexico gearing up for NAFTA talks (March 27, 2017)

NAFTA is vital for Mexico. And U.S. President Donald Trumps threats to upend the free trade agreement seeking better terms for the U.S. threw Mexico's economy into a tizzy. But now the uncertainty is dragging on -- affecting foreign investment and other key indicators. So Mexican leaders are focusing energies in getting their U.S. counterparts to move on with the promised renegotiation, reports the New York Times.

Already administration officials have set down some limitations -- saying discussion of Mexican payment for a proposed border wall, for example, would be a deal breaker. Last week Mexican Foreign Minister Luis Videgaray said Mexico will pull out of the deal if the new terms offered are not beneficial to the country, reports Bloomberg.

And on the U.S. side, analysts say Trump's administration might be overwhelmed with other political conflicts to dwell on Mexican trade. Nonetheless, U.S. commerce secretary Wilbur Ross is expected to formally notify Congress of the Trump administration's plans to renegotiate, which will trigger a 90 consultation period with Congress, after which formal negotiations can begin, according to Bloomberg.

The U.S. proposal could be further hindered by the delicate situation Mexican President Enrique Peña Nieto finds himself in, according to the NYT piece: delays could further hit the country's economy, driving down his already low popularity ratings and robbing him of political capital to make concessions to the U.S.

Counter to the NYT piece, last week the Financial Times argued that Mexico's economy has learned to deal with the Trump era. "Uncertainty is the new normal," argues the piece which points to indications that the U.S. will seek a sensible deal, and Mexican officials' successful hedging of the peso.

And U.S. farmers are lobbying hard on both sides of the border, concerned that their exports are going to be collateral damage in the upcoming NAFTA renegotiation, reports the Wall Street Journal. Mexico is the primary market for many U.S. grain, meat and dairy products, and agricultural groups have been seeking to strengthen ties with Mexican clients and government officials in order to avoid potential retaliatory tariffs.

Hurting Mexico will only favor China, a poor decision for the Trump administration, argues Larry Summers in the Financial Times. On the one hand, economically it would eliminate the edge Mexican products have over Chinese. And as many Mexican exports to the U.S. are inputs to further U.S. production, it would affect U.S. manufacturing competition with China.

But, he notes, it would also give China diplomatic leverage by creating a potential anti-U.S. ally. "As illustrated by the more than $60bn China has poured into Hugo Chavez’s Venezuela, Beijing would regard opportunities to ally with a hard left anti-American government as strategic windfalls. What better than a country of 130m people with a 2,000-mile border with the US? Every Mexican with whom I spoke said that the risk of their country electing a Chavez-like government had gone way up in recent months on account of American disrespect and truculence."

Is Summers referring to presidential frontrunner Andrés Manuel López Obrador? Maybe, as he was at an Acapulco banking conference this weekend in which Mexican financiers and politicians blasted populism in an apparently thinly veiled criticism of AMLO, as he is called, according to Reuters.

News Briefs
  • Aid workers in Haiti found 240 people living in a cave on the outskirts of the Hurricane Mathew affected Jérémie, reports the Miami Herald. They have been living there since the storm in October. Last week, the same group, Food for the Poor, denounced over a dozen deaths in recent days due to hurricane related food shortages. People desperate for sustenance are turning to poisonous fruits and foliage.
  • Venezuelan President Nicolás Maduro said he requested U.N. assistance to help boost medicine supplies in light of crippling shortages around the country, reports the Associated Press.
  • Polls last week in Ecuador put ruling party candidate Lenín Moreno in the lead to win April 2's run-off presidential election. The second-round has become unusually acrimonious. Conservative banker, Guillermo Lasso, who is facing off against Moreno, has accused the government of using state-run media outlets to unfairly boost Moreno, while Moreno's camp is focusing on Lasso's role in the country's 1999 financial crisis and alleging he profited from it, reports the Miami Herald. (See last Wednesday's briefs on the polls.)
  • Ismael Moreno Coto is a Jesuit priest who has become a leader for opposition to Honduran President Juan Orlando Hernández, according to a New York Times Español profile. Padre Melo, as he is known, was close to environmentalist Berta Cáceres, who was assassinated last year. He says opposers of the "extractivist" model, activists who cannot be bought by companies or political parties, face a death sentence.
  • With the clock ticking towards the end of Cuban President Raúl Castro's presidency next year, he faces a series of economic challenges in order to leave a growing economy for his successor, reports the Miami Herald. Many state enterprises are not doing well, benefactor Venezuela's troubles are affecting the island, and the country sorely needs foreign investment, among other woes that include the dual currency system and low state salaries, according to the piece.
  • Across the region, economies must grow at higher than projected rates in order to defend the social gains of the past decade, argues Adriana Arreaza in Nueva Sociedad.
  • The Guardian profiles a group of activists providing social services to the shantytown they group up in. The members of Collectivo Villero bought second hand ambulances, which they use to transport residents of the sprawling Villa 1-11-14 in Buenos Aires to hospitals -- official ambulances have long failed to respond to emergencies within shantytowns, citing security concerns. Their activities take new meaning as official poverty rates climb above one third of the population and citizens are angry over President Mauricio Macri's pledge to bring poverty down to "zero."
  • China reopened its markets to Brazilian meat, a week after barring shipments in the wake of a scandal involving meatpacking companies bribing health inspectors, reports the Wall Street Journal. Several other countries also lifted bans this weekend, a victory for the country's third-biggest export industry, reports the Financial Times. (See last Thursday's briefs.)
  • Protests protests everywhere: Tens of thousands of protesters took to the streets in 18 Brazilian cities, in defense of the sprawling Operation Car Wash investigation into political corruption. In Rio de Janeiro and São Paulo also called for more freedom to bear arms and even advocated military intervention in the government, a sign that conservatives continue to turn out at protests, and have hardened their demands, according to the New York Times.
  • Thousands of Dominicans protested to demand trials for politicians accused of accepting Odebrecht bribes, reports EFE.
  • About a hundred people gathered to protest the death of Mexican journalist Miroslava Breach, the third killed in the country this month, reports Reuters. (See last Friday's briefs.)
  • Tens of thousands of Argentines commemorated the 41st anniversary of a military coup by gathering in Buenos Aires' Plaza de Mayo, where human rights activists demanded trial and punishment of human rights offenders and criticized the Macri administration's human rights policies, reports EFE.
  • And in Chile, tens of thousands protested the countries polemic private pension system, calling on President Michelle Bachelet to scrap it, reports the BBC.

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