Hello and welcome from Mexico City, where we are seeing how the T-MEC’s all-important trade agreement with the United States and Canada is doing, just over a year after it replaced the NAFTA.
The Secretary of Economy of Mexico, Tatiana Clouthier, visited Washington last week to discuss progress with top officials and business leaders and to resolve differences in implementation.
The T-MEC, as it is officially known, was negotiated on the order of Donald trump, who described the NAFTA as the “worst trade deal ever signed” and threatened to withdraw. The stakes were high: EU conducts transactions worth 1.3 trillion dollars a year with its two neighbors.
As president, Trump It almost completely torpedoed trade relations in 2019 when it threatened to close the border unless Mexico stopped the migration. The hostility of Trump towards trade agreements and the history of thorny relations of Mexico with its northern neighbor led many to fear the worst, but the results of the T-MEC so far they have been amazing, as we explain below.
Almost halfway through his term, President Andrés Manuel López Obrador has divided Mexicans. Supporters praise his emphasis on the poor. Entrepreneurs and professionals protest authoritarian tendencies, attacks on wealth creators and a preference for state-driven development.
One thing Mexicans agree on is that the T-MEC it has proven to be a success in its first year, although not always for the reasons they envisioned. Companies are pleased that restrictions on regulation and governance provide a layer of protection against the most radical ideas of Lopez Obrador. The President and his supporters like the agreement’s role as a job generator, as well as its labor provisions. These help improve wages and have enabled movements against a union closely linked to an opposition political party.
“The T-MEC It has been a lifesaver for Mexico, ”he said. Juan Carlos Baker, former Mexican negotiator. “If it was not for him T-MEC, the economic prospects of Mexico they would be very different. The recovery we have is only due to the prospects for exports to EU”.
The allies of Lopez Obrador they say that his conversion from a skeptic of the T-MEC The supporter was motivated by the desire to create jobs. “The President saw the T-MEC like something magical, ”said a former Mexican official. “He thought that having it and signing it meant that massive investments would come in.”
That is not to say that the first year of T-MEC it was simple: far from it. The biggest clouds on the horizon are the measurements of Mexico to restore state control over the energy sector and attempts to EU to interpret stricter rules of origin on automotive components in an even stricter way.
In energy policy, attempts to Lopez Obrador to reverse the opening towards private investment and renewable energies and return to Mexico to an energy and electricity sector fueled by oil and dominated by the state are against the new trade agreement.
“Either the President pretends that he does not understand or does not really understand what Mexico adhered to in terms of energy commitments,” he said. Arturo Sarukhán, former ambassador of Mexico in Washington.
When it comes to auto parts, disagreements are important because the automotive sector is a key area of trade under the T-MEC and employs more than a million people in Mexico. In a move that aims to promote reshoring (relocating production plants back to the country) of vehicle manufacturing jobs, the pact raised the proportion of automotive content that must be done in the country to 75 percent. North America to qualify as tax-free. The bone of contention now is how that ratio is defined.
Another challenge for Mexico, He says Martha Barcena, ambassador of the government of Lopez Obrador in EU Until February, it is the stipulation of the pact of minimum wage levels of 16 dollars per hour for workers who produce between 40 and 45 percent of automotive content. “It is good to raise wages in Mexico, but it will be very difficult to comply with this, “he said.
Also in the automotive sector, the first labor dispute initiated by United States under the T-MEC progressed so far without serious friction. Mexico agreed that workers at a plant General Motors in Silao They should hold a free vote before August 20 on the approval of a collective contract, amid complaints that they had been denied their rights.
In general, Barcena, like other Mexican experts, believes that the T-MEC it is proving to be a successful framework for trade. “There will be differences of interpretation, but the T-MEC it is there to solve them ”, he added. “The important thing is to keep talking.”