By on February 26, 2018

Mexican flag

With NAFTA negotiations finally progressing a bit, now would be the perfect time for something to bring up another potential hurdle and ruffle everyone’s feathers. This time, the prospective cataclysm stems from Mexico, and has manifested itself as one man — presidential frontrunner Andres Manuel Lopez Obrador, known colloquially as “AMLO.”

Business interests and NAFTA advocates are fearful the leftist candidate could chuck a wrench into the trade policy by adopting a hardline stance opposing the White House’s plan to redefine the agreement to favor the United States. Lopez Obrador is a long-time proponent of social programs that help vulnerable members of society. However, many criticize him for being a populist with socialist ideals that do not serve the financial well-being of the country at large.

While this is debatable, winning Mexico’s July 1st election could see him push back hard against U.S. trade proposals, stalling progress. 

Thus far, Lopez Obrador has made a few promises after accepting the nomination by the Morena party last week. These include implementing widespread austerity measures for Mexico, subsidizing its farmers, and ending gasoline and diesel imports from the United States. The hope is to make the country more self-sufficient in terms of food and energy, but critics have accused the promises of being the tip of a protectionist-shaped iceberg.

Further complicating things is a fairly consistent belief that Lopez Obrador has an anti-American bent and is strongly adverse to trade. There is certainly past evidence to support these claims, and there is also plenty that refutes it. That’s especially true of late. Since putting in his presidential bid, ALMO has said he wants to establish a harmonious relationship with the U.S.

“When we work together, everyone wins. But in confrontation, the United States and Mexico will both lose,” he explained last May. But he simultaneously accused the Trump administration of xenophobia and racism, casting some doubt over his ability to work with Washington pragmatically.

One thing is certain, however. If Lopez Obrador wins, he has said he’d like to negotiate NAFTA himself. This has North American businesses supremely concerned, as nobody knows exactly what he wants to see from it. Meanwhile, Ricardo Anaya of the National Action Party is seen as a safer bet — and far less likely to shake up trade. Currently, Anaya is polling just behind Lopez Obrado in the national election. Jose Antonio Meade, the former finance minister for the ruling Institutional Revolutionary Party, also supports free trade and plenty of foreign investment. He’s lost ground to both candidates since the start of this year.

Fortunately, Lopez Obrado seems to understand there is a lot riding on NAFTA. Placing Mexico’s automotive industry at risk doesn’t appear to be something he takes lightly. Last week, he said he wanted to meet with international business leaders to better understand how to adopt policies to help move the country forward.

“It’s becoming increasingly clear that he believes NAFTA has been positive for Mexico, or at the very least that a withdrawal from NAFTA would be incredibly harmful for him and the country,”  Duncan Wood, director of the Mexico Institute at the Wilson Center in Washington, told Automotive News in an interview.

Wood also understands that Lopez Obrado is still a bit of a wild card, and that’s making plenty of people in the business community very nervous. “I think there’s an enormous amount of confusion out there about which is the real AMLO,” he said. “And I think he is being deliberately ambiguous on a lot of these issues.”

The potential threat Lopez Obrado poses to NAFTA is a long way off. Even if he does win the election, Mexico’s next president won’t be inaugurated until December. Negotiations could be done by then. Then again, the painfully slow progress of talks will certainly push things well past the initial March deadline. Experts now suggest real headway may not be made until the middle of summer at the earliest, claiming it would be absolutely feasible to see trade negotiations continuing into next year.

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27 Comments on “Slow-Moving NAFTA Talks Could Be Further Hampered by Mexico’s Next President...”

  • avatar

    We need H. Ross Perot’s voodoo stick and pie charts now more than ever.

    • 0 avatar

      Maybe, but the imbalance in the NAFTA agreement needs to be addressed and parity achieved.

      I hope it can be renegotiated because it benefits all the parties involved to some extent. Some more than others according to the trade-balance sheet.

      But if it can not be renegotiated, let’s scrap it altogether and go for individual trade agreements between the US and Canada, and the US and Mexico.

      • 0 avatar

        Nafta – as it involves Mexico, is almost totally balanced, it is one of the most neutral trade pacts we have. It also involves Canada. To put this in perspective, Mexico is our third largest trading partner, and Canada is our largest trading partner.

        I would suggest meddling with NAFTA is not particularly wise. This is doubly so, because in response to erratic, and ill informed American leadership, many of our trading partners are turning to, and signing agreements, with other countries.

        The largest of these agreements is the TPP which now puts China in a major international leadership role since we unilaterally pulled out. we are the world’s largest economy, but we are not the world’s only economy.

        • 0 avatar

          TPP was never a “good deal”.

          From Jeff’s blog no less:

          “One strong hint is buried in the fine print of the closely guarded draft. The provision, an increasingly common feature of trade agreements, is called “Investor-State Dispute Settlement,” or ISDS. The name may sound mild, but don’t be fooled. Agreeing to ISDS in this enormous new treaty would tilt the playing field in the United States further in favor of big multinational corporations. Worse, it would undermine U.S. sovereignty.

          ISDS would allow foreign companies to challenge U.S. laws — and potentially to pick up huge payouts from taxpayers — without ever stepping foot in a U.S. court. Here’s how it would work. Imagine that the United States bans a toxic chemical that is often added to gasoline because of its health and environmental consequences. If a foreign company that makes the toxic chemical opposes the law, it would normally have to challenge it in a U.S. court. But with ISDS, the company could skip the U.S. courts and go before an international panel of arbitrators. If the company won, the ruling couldn’t be challenged in U.S. courts, and the arbitration panel could require American taxpayers to cough up millions — and even billions — of dollars in damages.”

          • 0 avatar

            This is true, but you then stay at the table and hammer out a better deal.

            Trump walked away, and the rest of the world signed a treaty. This gives China a massive boost in international standing.

        • 0 avatar
          Big Al from Oz

          I agree with your position regarding the TPP.

          As for NAFTA, well I see the current US regime’s position as based on subjective and ill researched advice.

          Another issue I see as many comments on TTAC illustrate is the lack of correct information regarding trade deals.

          It seems many adopt a “us vs them” stance when in fact your customer is also a business partner. Countries have spent decades forming these alliances.

          Most trade is not just about making a buck, its also about the security of all involved.

          Trump being the populist he is, is being lead and advised by the wrong people.

          Remember Trump lives on perception and lies. He’s devisive and destroys.

          • 0 avatar

            ” based on subjective and ill researched advice.”

            I can take a drive around just about any Rust-Belt town in America and show you all the evidence needed.

          • 0 avatar
            Big Al from Oz

            Most of those jobs went the way of automation.

            The US can’t expect to maintain manufacturing jobs, like all nations around the world. This is NOT a US only problem. The world did not say “hey, let’s screw the US over”. Even China has lost over 30 million manufacturing jobs.

            You don’t here too many on TTAC whining about the loss of agricultural jobs through mechanisation. Many rural areas went into decline.

            Manufacturing jobs will keep on declining globally and the US has not entitled to keep them, like everyone around the world, change your ways, be innovative and compete.

            People need to move to find work, like they did to create the Rust Belt. Another piece of trivia, Americans are less incline to move now than in the past for work.

        • 0 avatar

          I agree, with the observation that a -if unfavorable for Mexico- renegotiated NAFTA, will mean more illegal immigration.

          • 0 avatar

            Illegal immigration will remain a problem for the US for some time to come. But DHS is working hard on that; and ICE and CBP have stepped up efforts to dislodge illegals in the US.

            Some say that they are doing an outstanding job considering the 15million illegal aliens nesting in the US.

            OTOH, LEGAL immigration, based on the needs of America is bringing more selective individuals to where America needs them to be, like Silicon Valley, et al.

            All good, considering the enormous task at hand.

            One day at a time. One day at a time.

            Tomorrow, Oakland, CA.

          • 0 avatar
            Big Al from Oz

            You write your comment using a congradulatory tone for these enforcment agencies, but yet you have on numberous occassions described how you employed “illegals” to work for you.

            Where do you stand? You seem to talk alot of rubbish.

          • 0 avatar

            I live in a sanctuary state. Been that way since before I came here in 1965. Illegal aliens, mostly from Mexico, Central and South America, The Philippines, China, India, and a ton of “Other Than White” countries like to live here.

            I’ve employed more than 300 of the illegals over the decades because they have to eat too. Some of them for the whole duration from 1985 – 2016.

            But that doesn’t make their presence here legal.

            And in case you forgot, I have two sons and a grandson currently working for DHS, or one of its arms like Border Patrol, or Customs and Border Protection.

            My parents were both immigrants, but they got here legally. I’m all for immigration, as long as it is legal immigration. None of this squatters schit.

            The only one peddling rubbish is you, bub. Always picking a fight with someone. Always trying to BS someone with your faux knowledge.


          • 0 avatar

            @HighDesertCat – The federal agencies involved in “dislodging” illegals can realistically only put their hands on criminals/convicts, besides those physically caught crossing into the US illegally.

            Yeah yeah technically they’re all “criminals”, but agent’s hands are tied otherwise, so the bulk of the 15 million (estimated) are virtually untouchable.

            Why? They obviously serve a purpose for too many industries with friends in DC, to list here. Those lobby dollars (billions up on billions) for the feds to look the other way certainly don’t hurt.

            When illegals use a “borrowed” SS#, even if they’re using up social services, they’re certainly not filing for a refund. How that can go on with today’s mega computers is a mystery to me. I guess some things are still their most efficient on 3X5 index cards.

          • 0 avatar

            DenverMike, you are correct in your analysis which is based on what information has been released to the public.

            But there is so much more that is not being released to the public and I know of no one who is at liberty to divulge that internal information.

            The pace has stepped up since this administration took over but this is just the beginning. The slate of coming events from DHS is mind-boggling. Kristjen Nielssen truly is the best thing that ever happened to DHS and its employees.

            But we, the people, may never get to know what is happening behind the scenes because DHS does not seek the limelight or attention. They just want to be effective at doing their jobs.

            Some of the drug busts, interdictions and apprehensions never make it to the news but when one of mine is involved they text me a link to where the big story is.

            And it makes for interesting reading and/or video.

          • 0 avatar

            @HighDesertCat – The DHS, CBP and related departments have challenges, most of which involving the interception and keeping us safe from illicit drugs entering the US, especially synthetic opioids, and apprehending their traffickers obviously.

            Not that they’re not also curbing terrorism and slowing the tide of illegal immigration, but keeping illegal drugs off the streets in the US seems to be their #1, #2 and #3 priorities.

            That’s not a bad thing, helps out the DEA and even the DOT (!), lighten’s their workload immensely, but sometimes it seems everyone in the US is trying to *get high* while all the Federal government can do is put 99% of their efforts keeping/forcing us sober, aside from alcohol abuse which they’re fine with?

            Sorry if it sounds like a rant, but isn’t that the bigger issue, biggest problem we all face? Illicit drug use/trafficking? The first 20+ articles I found while searching DHS/CPB/ICE/etc current operations are just about illicit drug importation/smuggling or similar mostly through international mail services.

            Maybe you have insider info that’s different, but if you’re getting texts and links about it, it can’t be too “classified”.

          • 0 avatar

            DenverMike, there’s no “classified” information involved in the texts I receive but the encounters are just not widely circulated, usually just making “local” news, wherever that locality happens to be.

            Interestingly enough, those incidents don’t always have to be in the US of A. Sometimes these incidents are outside of the US of A. And most of the times they involve interdictions other than drugs, weapons and explosives, or human trafficking.

            Americans have no idea how many would-be terrorrist attacks have been prevented.

            Rounding up illegal aliens in the US is but one small aspect of overall operations. But it will pick up in intensity over the next three years.

            If Trump gets re-elected, watch out, it will be Katie-Bar-The-Door!

          • 0 avatar

            @HighDesertCat – Thanks and we get about zero useful info just watching the cable news feed, I mean if you’re interested in what’s really going on.

            But yeah I’m fully aware of investigations extending past our borders. My BIL is an federal investigator for the DOL and gladly declined a position sending him to Mexico to investigate cases. Yes he’s Mexican and fluent in the language. I know that’s a smart move, and as a kid a local story stuck in my mind where a DEA detective of Mexican heritage went down to Mexico posing undercover as a “local”. I’m sure it took the narcos seconds to realize he wasn’t who he said he was.

            Similarly it would take either of us seconds to pick up on a NY, Boston, or Canadian accent on a person. I think his name was Enrique Camarana or something, but his body was never recovered.

            But internet searches have dug up some very “interesting” stories I’ve stumbled on to, the nation or world may be extremely interested in, not making past the local news.

          • 0 avatar

            Good on you, DenverMike. A little research usually goes a long way.

            And if you have a BIL in the bid’ness, then you have a good idea of what goes on behind the scenes, if he talks to you about it.

            I’ve got three in the Fed bid’ness and one of them is married to a CHiP officer.

            People doing this line of work need to de-stress with good listeners they trust not to go blabbing.

            Imagine the stories I get to hear when we get together on Skype each night.

        • 0 avatar

          @probert is correct. TPP was designed to keep the USA at the centre of the global trade axis. Withdrawing from TPP handed China at minimum 20% of the Pacific’s trading and some say that may be as much as 40%.

  • avatar

    What’s missed a lot in this debate is this setup that being against NAFTA means against any and all trade in North America.

    The United States, Mexico, and Canada all traded with one another before NAFTA was signed by Bill Clinton in 1993.

    So if NAFTA goes away, we can certainly strike up new trade agreements with these countries individually. It doesn’t have to be one omnibus trading agreement.

  • avatar

    Basically ending NAFTA amounts to forsaking all other aspects of cross-border North American trade, for the sake of maybe 50K union jobs, most involving pickups, since it’ll still be cheaper to to pay 2.5% import duty on Mexican built cars, vs 6% or so more, for US assembly.

    But this goes way beyond cars. Most other textile jobs will keep going towards China. But if Mexico closes its border to (legal) US exports on the secondary market, including up to a million used pickups exported from the US annually, what will be the fallout there? Plus used mobile phones to mobile homes. And that’s just one small aspect of the entire North American trade “ecosystem”, not involving narco trade necessarily, but it’s all intermingled.

    I say it’s time to throw a wrench in it!

  • avatar

    I can’t see negotiations getting any worse, irrespective of who gets elected President of Mexico, since the President of the US “lost his temper” in a phone call the other day with the current Mexican President, Peña Nieto.

    The Mexican President has now canceled a meeting planned for next month with President Trump in Washington.

    Good times.

  • avatar

    There’s a good chance that Obrador’s election would work fine for Trump:

    TL;DR – Trump is slow rolling the negotiations because uncertainty about the future of NAFTA helps him politically. However, sooner or later he has to either kill NAFTA or produce a new deal that he’ll have to sell, and neither option will be smooth sailing for him.

  • avatar
    el scotto

    Wait! was there something abut cars in there?

    • 0 avatar

      Cars? Okay. Wickenburg, AZ is as far as most illegals go on foot, then they transfer to cars, vans, and other motor vehicles in order to get across the rest of the Sonoran desert. Some of the vehiclles are probably made in Mexico under NAFTA.

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