Tuesday, January 31, 2023

Mexico could find Joe Biden a earthy neighbor

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US experts monitoring Mexico’s compliance with the strict labor provisions of the USMCA’s free trade treaty issued a stern warning before Christmas: “Nothing more as usual.”

Although they referred to the slow progress made by Mexico in the implementation of the commitments under the replacement of the Nafta, the phrase could equally well describe bilateral relations as well as Joe Biden enters the White House.

Tense security cooperation will be high on neighboring countries ‘priorities, eclipsing their $ 600 billion trade relationship, as will the two leaders’ diametrically opposed views on climate change and renewable energy.

Mexico deterioration of the business environment – with independent regulators and respect for contracts threatened by President Andrés Manuel López Obrador – promises to build up the pressure.

“A Biden presidency could be quite uncomfortable for Amlo,” said a member of the US transition team, using the Mexican leader’s nickname. Mr. López Obrador kept things soft with Donald Trump in exchange for a little American “interference” in his national agenda, the person added.

Mr Biden’s approach will be more institutional and “there will be no Jared to call.” The outgoing president’s son-in-law and senior adviser, Jared Kushner, was a frequent interlocutor with Mexico on migration and development cooperation.

Mexican President Andrés Manuel López Obrador, right, meets his US counterpart Donald Trump at the White House in July of last year © Bloomberg

Threats from Mr Trump to withdraw from Nafta and impose punishments on Mexican exports unless it clamped down on sometimes strained migrant flows, but Mr. López Obrador refused to engage.

Despite Mr Trump’s insults towards Mexicans and the country’s insistence on paying for its border wall, Mr López Obrador has broken his ban on traveling abroad to meet the US president at the White House.

In contrast, the Mexican president took six weeks to congratulate Biden on his election victory, ultimately sending a unassuming letter in which he reminded the elected president that he must respect Mexican sovereignty.

Jeffrey Davidow, a former US ambassador, compared Mexico’s sometimes thorny relationship with Washington to that of a porcupine facing a bear.

“With Biden, López Obrador intends to become a porcupine again – he hasn’t shown his thorns with Trump, but he’s going to do it now,” said Denise Dresser, political scientist and professor at Itam University in Mexico .

“It’s like López Obrador is preemptively trying to create a straw man to fight with. . . using anti-Americanism and nationalism to score political points in Mexico, especially in an election year, ”she added. Mexico holds midterm elections on June 6.

Mexico delivered two slaps to the United States this month. he offered political asylum to Julian Assange, the founder of WikiLeaks whose US is seeking extradition from the UK to face charges for the massive leak of classified documents in 2010. Then he accused Washington of fabrication of drug trafficking charges against his former Minister of Defense, General Salvador Cienfuegos.

Tensions in the energy sector, where U.S. companies are investing heavily, have also been mounting for months as Mexico has sought to curtail permits, curb renewable energy production, and favor its state-owned oil and power companies. , Pemex and CFE. Mr. López Obrador is a champion of fossil fuels, while Mr. Biden wants to make the United States carbon neutral by 2050.

In one January 11 letter to their Mexican counterparts, outgoing Secretary of State Mike Pompeo, Energy Secretary Dan Brouillette and Commerce Secretary Wilbur Ross have warned that “hundreds of millions of dollars” in US public investment in Mexico could be at risk due to Mexican politics.

“While we respect Mexico’s sovereign right to determine its own energy policies, we are obligated to insist that Mexico meet its obligations in USMCA, to defend our national interests, which include investments funded by the US taxpayer. The letter warns.

Labor relations, including collective bargaining the agreements and union rights, prerequisites for securing US Democrat support for the USMCA trade deal, are expected to create more friction.

“I think it’s only a matter of time before the first case is presented [against Mexico under USMCA]Said Juan Carlos Baker, Managing Director of Ansley Consultores, who helped negotiate the revised treaty as Deputy Minister of Foreign Trade. “The message could not be more disturbing.”

Vice President-elect Kamala Harris voted against USMCA when she was a senator for California, and Baker expected the two countries, whose economies are closely linked, “are going to clash very, very quickly”.

Mr. López Obrador has already scrapped a partially built American brewery and renegotiated gas pipeline contracts he considered too expensive. Now he’s targeting independent regulators in Mexico, which he wants to merge with ministries, which experts say could violate the New Trade Pact.

Indeed, Ariane Ortiz-Bollin, sovereign analyst at Moody’s Investors Service, said Mexico was at risk of undermining the trade advantages it enjoys under the treaty due to a hostile investment climate. “It is possible that this is a missed opportunity,” she added.

Security cooperation, an important part of the bilateral relationship, has also ignited in a serious dispute.

Last month, Mexico passed a law requiring U.S. drug officers to share information in what was seen as retaliation for the shock stop by Gen Cienfuegos. He softened the law, but a former senior military official said he remained a “non-runner”.

Mr. López Obrador, for whom the military is a crucial national ally, pulled the diplomatic strings to counter drug trafficking and money laundering in the United States charges dropped; Mexico then quickly closed its own case. By further increasing tensions, the United States threatened this weekend with stop cooperation on criminal investigations in Mexico after the president released all the evidence provided by US prosecutors, calling it fragile.

Between Covid-19 and the economy, Mr Biden will be put to the test. But analysts say Mexico shouldn’t assume it will get a free ride.

“The big question,” Ms. Dresser said, “is how much political capital will Biden be willing to spend to get Mexico to behave as a responsible North American partner and not as a national political enemy south of the border?”



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