Tuesday, August 28, 2018

U.S. and Mexico agree to new NAFTA terms (Aug. 28, 2018)

Mexico and the U.S. reached a preliminary new trade agreement, that aims to replace or revamp NAFTA. The talks were part of a broader NAFTA renegotiation, and the big question yesterday was what will happen with the free trade agreement's third partner, Canada. (Guardian)

The deal was presented in U.S. President Donald Trump's classic showman style -- in a press conference featuring a glitchy speakerphone connection with Mexican President Enrique Peña Nieto.

The new agreement increases the automobile content that must be sourced in North America in order to qualify for tariff-free treatment -- 75 percent, up from 62.5 percent currently. And the agreement stipulates that between 40 percent percent and 45 percent of auto content must be produced by workers earning at least $16 an hour -- which will either move production to the U.S. and Canada which have higher wages, or increase Mexican wages, explains the Wall Street Journal.

Trump indicated that Canada would be part of a separate negotiation, and could either be brought into the U.S.-Mexico agreement or be subject to a different bilateral deal. Experts say Trump is trying to force Canada to accept the terms of yesterday's deal, reports the Financial Times. But Peña Nieto emphasized Mexico's commitment to a trilateral agreement. (Aristegui Noticias

Nor is it clear that NAFTA can legally be replaced with bilateral deals, notes the Associated Press. Trump can't unilaterally scrap the deal -- all changes have to go through Congress. In the U.S., Congressional approval will likely be smoother if Canada is included. And Canada has to sign off on changes as well, reports Quartz. And existing supply chains under NAFTA encompass the three countries, which means bilateral agreements may not be practical.

In fact, the Atlantic calls the new deal more of a rebranding than a revolution. And the New York Times points out that the essential nature of the NAFTA agreement -- allowing U.S. companies to operate in Canada and Mexico without tariffs -- remains intact. 

Canada is expected to rejoin three-way talks today in Washington, reports the Washington Post. Canada has been excluded since Trump and Canadian Prime Minister Justin Trudeau sparred verbally at a recent G-7 meeting five weeks ago.

Though Trump heralded the preliminary agreement as a win, the Guardian that Mexico's congress will also have to approve the deal. Mexico's government changes in December, and it's not guaranteed that the incoming administration will accept the same terms. 

President-elect Andrés Manuel López Obrador celebrated that the agreement showed respect for Mexican sovereignty -- especially regarding the country's energy policies -- and raised automobile industry salaries. He also emphasized the importance of including Canada. (Aristegui Noticias and Reuters)

More from Mexico
  • AMLO backtracked on a campaign promise to immediately create a National Guard to replace military troops fulfilling internal security roles. He said instead the Armed Forces would temporarily continue working on the ground. The incoming administration's focus will be on combatting criminal organizations' financing, said AMLO's proposed head of security, Alfonzo Durazo. (Animal Político and Aristegui Noticias)
  • Last week authorities suspended the entire municipal police force of Tehuacán in Puebla State, due to suspected involvement in organized crime. The episode "demonstrates the level to which organized crime and corruption networks penetrate the state on a local level," says InSight Crime.
  • AMLO met with thousands of CNTE union teachers at a Chiapas forum to kick of a national consultation on education. He promised to modify Peña Nieto's signature education reform, but to replace it with new proposals from the consultation process. He promised an administration respectful of teachers and unions, but asked for "zero absenteeism" in return. The issues and location were flashpoints for the Peña Nieto administration. (Aristegui Noticias)
News Briefs

Latin America's Left
  • Latin America's mainstream leftists have proven unwilling to criticize human rights violations and authoritarian tendencies in Venezuela, Nicaragua and Cuba, a failure that speaks to broader need for reinvention, argues Gisela Kozak Rovero in a New York Times Español op-ed, calling for a left aligned with liberal values and social democracy.
  • About 100 Venezuelan migrants accepted a free flight home -- paid by their government -- from Peru, after encountering difficulties and hardships living abroad, reports the Associated Press. Nonetheless, the group is an outlier, and most incoming migrants said they preferred the challenges and even xenophobia they encountered in other countries to the crisis at home.
  • Venezuela's exodus (see yesterday's briefs) is increasingly carried out by migrants on foot, lacking money for any sort of transportation, reports Reuters. At the AULA blog, Michael McCarthy reviews the impacts of Venezuelan refugees in the region.
  • Venezuela announced new certificates backed by gold ingots, intended to be used as a savings mechanism, reports Bloomberg.
  • Nicaraguan foreign minister Denis Moncada met with U.N. Secretary-General Antonio Guterres regarding the Nicaraguan crisis, reports EFE.
  • InSight Crime has an in-depth report on Guatemalan President Jimmy Morales' alleged violations of campaign financing, the third in a series on illicit money in politics in Guatemala.
  • Coca cultivation and prices increased in Bolivia this year. The prices mean that manufacturing coca paste in Bolivia is not as profitable -- given far higher levels of production and significantly lower prices in Peru and Colombia --  and likely means farmers simply harvest and sell the leaves in the local market, reports InSight Crime.
  • An indigenous community in Peru has blocked a highway passing through its land, used by Chinese miner MMG to transport copper from the Las Bambas mine, reports Reuters.
  • Honduras' Garifuna minority -- descended from African slaves and indigenous tribes -- is struggling to defend its claim to ancestral lands, reports Reuters.
  • Former Argentine president Cristina Fernández de Kirchner's lawyers said her apartment may have been contaminated with a toxic substance after a judicial raid last week. (Reuters)
  • Brazil’s Supreme Court will determine next month whether jailed former president Luiz Inácio Lula da Silva will be freed in order to campaign for his presidential bid, reports Reuters.
  • A German shareholders association has urged companies to take a stronger stance against Brazilian far-right wing candidate Jair Bolsonaro. The Association of Ethical Shareholders Germany labeled the politician as "fascist" and urged companies not to repeat omissions of the past when they were indifferent to Brazil's military dictatorship. (Deutsche Welle)
  • Colombian President Iván Duque notified UNASUR of his country's decision to withdraw from the bloc due to the organization's failure to denounce Venezuela's "brutal treatment" of its citizens. (EFE)
  • Spanish Prime Minister Pedro Sánchez kicked off a four-country LatAm tour yesterday. He will visit Chile, Bolivia, Costa Rica and Colombia in a bid to strengthening relations with those countries and the region, reports TeleSUR. Speaking in Chile yesterday, he promised to support any effort to use dialogue in Venezuela to resolve the country's crisis. (Reuters)
  • Peruvian foreign affairs minister started an official visit to China yesterday, and met with Chinese Vice President Wang Qishan, reports EFE.
  • A Chilean court ordered the Pinochet family to return part of the late dictator Augusto Pinochet's fortune, stashed in the Caribbean. (Bloomberg)
Did I miss something, get something wrong, or do you have a different take? Let me know ... Latin America Daily Briefing

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