May 19, 2015
Mexico and Canada won a final appeal from the World Trade Organization (WTO) yesterday, when the trade body upheld an early decision that found that U.S. country-of-origin labeling (COOL) requirements for meat products violated international trade law. Both countries have warned that they may pursue punitive measures against U.S. exports unless the requirement, which was adopted in 2009 and amended in 2013, is dropped. The USDA describes COOL as a “consumer information program.”
The Canadian Ministers of International Trade and Agriculture and Agri-Food, along with the Mexican Secretaries of Economy and Agriculture, Livestock, Rural Development, Fisheries and Food, issued a statement yesterday that said, “Once again, the WTO has confirmed Canada and Mexico’s long-standing position that the United States’ mandatory COOL requirements for beef and pork are blatantly protectionist and are a violation of the United States’ international trade obligations,” adding that “our governments will be seeking authorization from the WTO to take retaliatory measures against U.S. exports.” According to estimates, the COOL requirements have cost Canada $1 billion a year. Industry groups have argued that the rule hampers trade in livestock due to the added costs of tracking animals along the supply chain and separating them according to country of origin.
Republican lawmakers in the U.S. have signaled that they will move to repeal the legislation. “It is important now more than ever to act quickly to avoid a protracted trade war with our two largest trade partners,” said Michael Conway, the Republican chairman of the House Committee on Agriculture, whose office has reportedly downplayed the impact of COOL requirements on food safety.
U.S. consumer groups, however, have decried the ruling. “Today’s WTO ruling ... effectively orders the U.S. government to stop providing consumers basic information about where their food comes from," said Lori Wallach, director of Global Trade Watch at Public Citizen, a consumer group.
Meanwhile, U.S. beef and cattle producers have offered mixed responses. Ron Prestage, president of the National Pork Producers Council, called the prospect of Mexican and Canadian tariffs on U.S. exports a “death sentence for U.S. jobs and exports,” urging Congress to act quickly. Others, including Roger Johnson, president of the National Farmers Union, maintain that any resolution to the dispute “must involve continuation of a meaningful country-of-origin labeling requirement.”
April 28, 2015
On April 24, a bipartisan group of five U.S. congressmen, led by Chairman of the House Homeland Security Committee Michael McCaul (R-TX), submitted a letter to President Barack Obama urging the president to exempt Mexico from U.S. crude oil export restrictions. This House letter follows the February bipartisan letter from 21 U.S. senators to U.S. Commerce Secretary Penny Pritzker encouraging the Commerce Department to lift restrictions.
Lifting of crude oil export restrictions would open the door towards a proposed “oil swap” between Mexico and the United States. Mexico would supply heavy crude oil in exchange for U.S. light sweet crude oil. The two types of oil are complementary, as Mexico’s refineries are built for light oil, while the opposite is true in the United States.
Petroleos Méxicanos, or Pemex, would like to import some 100,000 barrels per day of light oil. The rationale is that the light oil may be mixed with Mexico’s heavier oil, allowing for refineries to produce more diesel and gasoline per barrel. In fact, Pemex already sends 700,000 barrels per day of crude oil to the United States, but the proposed deal is in fact a swap of light crude for heavier crude, not a net import of U.S. oil.
Pemex submitted the request in August of 2014 and is expecting an answer from the U.S. Commerce Department very soon. The approval of this oil swap would represent a huge step forward in removing all restrictions on crude oil exports, which have been banned for over 40 years, in response to the 1973 Arab oil embargo.
February 20, 2014
North American heads of state met in Mexico on Wednesday to discuss the future of the North American Free Trade Agreement (NAFTA). Canadian Prime Minister Stephen Harper, and Presidents Enrique Peña Nieto of Mexico and Barrack Obama of the United States, widely known as the "three amigos," commemorated two decades of NAFTA in Toluca, Mexico and discussed what's next for North American trade, among other issues.
Perhaps the most significant outcome of the meetings were the negotiations over the Trans-Pacific Partnership (TPP), a trading pact between 12 countries in Asia and the the Americas. "The Trans-Pacific Partnership is an opportunity to open our markets and to open ourselves to new markets in the Asia-Pacific region, one of the fastest growing and most promising in the world," President Obama said.
Among other issues, two that were anticipated hot-topics were travel and energy. A trusted traveler program was proposed, which would allow frequent travelers more ease when moving between borders. Also agreed upon was improvement in customs data and infrastructure to decrease drug movement across borders.
The energy discussion hit a snag, however, given that Obama and Harper still have yet to reach a decision on the Keystone XL pipeline project, which has been a source of tension between the two countries.
Read more about NAFTA in the Winter 2014 issue of Americas Quarterly.
February 18, 2014
As the North American leaders Stephen Harper, Barack Obama and Enrique Peña Nieto meet in Mexico City this week, we can expect smiles and all the rhetoric about intensifying the relationship between the North American Free Trade Agreement (NAFTA) partners. While the trade numbers justify applauding and celebrating the NAFTA agreement 20 years after its inauguration (January 1994), there remains a lot of “behind the scenes” tension, conflict and unresolved issues.
For Canada, NAFTA has been a positive development. In 2010, trilateral trade represented $878 billion, which is a threefold expansion of trade since 1993. Mexico now represents Canada’s first Latin American partner in trade, and we are Mexico’s second most important trade partner in the world. Bilateral trade has expanded at a rate of 12.5% yearly to attain $30 billion in 2010. Canadian investment in Mexico is now estimated at over $10 billion. In short, both countries have benefitted from the deal.
This being said, it is generally acknowledged that both Canada and Mexico invest more time, energy, and resources in pursuing bilateral relations with the world’s number one economy, the United States. As a result, some outstanding issues such as Canada’s imposition of visas on Mexican tourists continue to be a major irritant for the Mexican government. The continuing disputes on respective beef import bans also continue to create tension between the two countries.
Just this past weekend, Canada’s highly respected Globe and Mail had the following headlines: “Mexico has stern messages for Harper” and “Canada-Mexico relations merit more than forced smiles”. Clearly, the relationship is strained.
February 12, 2014
Americas Quarterly's Nafta @20 and in 20 event on Thursday, February 13 has been postponed due to inclement weather and will be rescheduled at a later date. We apologize for the inconvenience.
Welcome and Introduction:
- Susan Segal, President and CEO, Americas Society/Council of the Americas
- Thomas “Mack” F. McLarty III, Charmain, McLarty Associates
- Anne Marie Slaughter, President and CEO, New America Foundation
- Ernesto Zedillo, former President of Mexico; currently Director of Yale University’s Center for the Study of Globalization
- Christopher Sabatini, Editor-in-Chief, Americas Quarterly; Senior Director of Policy, Americas Society/Council of the Americas (Moderator)
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January 14, 2014
President Barack Obama will travel to Toluca, Mexico on February 19 for the annual North American Leaders Summit, the White House announced Tuesday. The president will meet with Mexican President Enrique Peña Nieto and Canadian Prime Minister Stephen Harper to discuss economic competitiveness, entrepreneurship, trade and investment, and citizen security.
The White House has applauded recent reforms championed by President Peña Nieto, including the recently passed energy reform that the Mexican executive has promoted to boost the growth in the region’s second largest economy.
While increasing trade is expected to be the main focus of the meeting—Canada and Mexico account for about 33 percent of all U.S. exports—border security is likely to play a large role in the discussions. Leaders may also privately discuss the recent slew of deadly clashes between Mexican soldiers and federal police and vigilante groups known as autodefensas (self-defense groups) in the state of Michoacan.
The summit, the seventh such meeting, marks the first meeting of all three North American leaders since Peña Nieto assumed the presidency in 2012. It will take place just one month after the 20 year anniversary of the NAFTA agreement that tripled trade between the three countries.
May 1, 2012
The Service Employees International Union (SEIU) and the Asociación Nacional de Abogados Democráticos (ANAD) filed a complaint with the Mexican Department of Labor on Monday against Alabama’s harsh immigration law, HB 56. The SEIU, which represents 2.1 million workers in North America, wrote in the complaint that the law violates international human rights and labor rights standards and is in direct conflict with the North American Free Trade Agreement (NAFTA).
Specifically, both organizations argue that HB 56 contradicts the North American Agreement on Labor Cooperation—a supplemental labor agreement to NAFTA—by “creating a climate of fear and intimidation that chills immigrant workers and their co-workers who seek to form trade unions, bargain collectively or participate in other worker advocacy organizations.” The complaint goes on to claim that HB 56 contributes to increased racial discrimination, minimum wage and overtime violations, workplace health and safety hazards, and discrimination against workers who appear foreign.
The Mexican Labor Department will now launch an investigation into the allegations. “We are confident they will see HB 56 for what it is: an immoral racial profiling law that now threatens workers and economic stability,” said Eliseo Medina, SEIU's International Secretary-Treasurer. SEIU filed a similar complain last month with the International Labour Organization.
Monday’s complaint focuses on the economic and labor consequences of HB 56, but this type of harsh immigration legislation also takes a significant social toll on immigrant families, and particularly children—including many who are U.S. citizens—argues Marcelo M. Suárez-Orozco in, “The Dream Deferred,” published last week in the Spring 2012 issue of Americas Quarterly.
April 4, 2012
Assembled in the White House Rose Garden for a joint press conference on Monday, the “three amigos” of North America projected an image of trilateral comity in keeping with the depth of their countries’ relationships. Yet Mexican President Felipe Calderón and Canadian Prime Minister Stephen Harper departed the one-day North American Leaders’ Summit without a firm commitment from U.S. President Barack Obama on their request to join the Trans-Pacific Partnership (TPP). Buried in the penultimate line of the lengthy joint statement was a coy response: “The United States welcomes Canada’s and Mexico’s interest in joining the TPP as ambitious partners.”
As President Obama acknowledged in the Rose Garden, TPP’s high-standards approach “could be a real model for the world.” Indeed, the goal of the original four TPP members—Brunei, Chile, New Zealand, and Singapore—was to create a uniquely comprehensive agreement to which like-minded countries on both sides of the Pacific could accede, thus linking Asia and the Americas. Similarly, the U.S. decision to join TPP made more sense for the bloc’s potential to grow than for the market-access gains to be found in the members’ relatively small economies. For Washington, TPP carries significant strategic weight as long as it continues to expand.
To its credit, the Obama administration recognizes the geopolitical benefits of TPP in the context of increased U.S. engagement with the Asia-Pacific. Its reluctance to advocate for expanded participation from the Western Hemisphere, however, risks a gross strategic oversight. As Harper candidly remarked to an audience at the Woodrow Wilson Center on Monday, while “most of the members of the Trans-Pacific Partnership would like to see Canada join, I think there’s some debate, particularly within the (Obama) administration, about the merits of that."
July 7, 2011
After nearly two decades of tension and ongoing dispute, the United States Department of Transportation yesterday announced the signing of an agreement that will allow U.S. and Mexican trucks to freely transport goods anywhere across the nearly 2,000-mile long U.S.-Mexico border. The new accord formalizes an agreement announced in March by Presidents Calderón and Obama and marks the end of one of the largest commercial disputes to arise between the two countries since the North American Free Trade Agreement came into force in 1994.
An immediate effect of the new accord will be the removal by Mexico of nearly $2.4 billion worth of punitive tariffs that it imposed in 2010 in response to a U.S. court ruling that prohibited Mexican trucks from transporting goods within the United States. According to a statement by U.S. Transportation Secretary Ray LaHood, "the agreements…are a win for roadway safety and they are a win for trade."
The accord resolves numerous safety concerns, which had stymied earlier efforts to conclude negotiations. Mexican trucks will be required to use electronic systems that monitor hours of service and routes and Mexican drivers will be required to take tests that gauge their understanding of English and ability to read traffic signs.
Pro-business groups, which had lobbied hard on behalf of the agreement, responded swiftly to yesterday’s news: "This is a vital program to our region's competitiveness that will foster greater security and increase efficiency at our border, while reducing the cost of business in our region, which ultimately benefits consumers with lower prices," said Kyle Burns, president and CEO of the Free Trade Alliance San Antonio.
June 25, 2010
When the knock-out round of the World Cup begins Saturday morning, the Western Hemisphere will have almost half of the final 16 teams in contention, and at least two teams (the winners of Argentina vs. Mexico on Sunday and also Brazil vs. Chile) guaranteed in the final eight. Even more compelling: both 2006 finalists, Italy and France, will be watching the games from the sidelines, the first time that’s ever happened. Other European teams that were early on picked to outperform have struggled; so far Holland appears to be the strongest European team although Slovakia has certainly surprised and Spain has finally recovered from an early setback to Switzerland. Latin America and also the United States have acquitted themselves well so far.
In soccer terms the Western Hemisphere has appeared to equal its former colonials overseers. The United States tied England 1-1; Brazil tied its “second team,” Portugal, 0-0. For good measure, even Mexico defeated its one-time colonial aspirant, France, 2-0. Mexicans should consider adding June 17 to their holiday calendar, to compliment Cinco de Mayo which celebrates the defeat of the French at the Battle of Juarez. Only Spain was able to prevail against its former colonies, defeating hapless Honduras, 2-0, and Chile by 2-1. (Honduras did eke out a tie in its last game.)