Under review, the ‘guardian angel’ of the economy – El Financiero

What has kept the Mexican economy standing in the midst of external gales and those of our own manufacturing, is what those who govern us today fought: the North American Free Trade Agreement, forged by presidents Carlos Salinas and George Bush , and later signed by the Mexican president and William Clinton.

In just over a year there will be a comprehensive review of the treaty between President Claudia Sheinbaum and whoever wins the November elections in the United States. That will be the main focus of our foreign policy.

When Donald Trump became president of the United States, the government of Enrique Peña had to renegotiate it to prevent NAFTA from falling and – fortunately – it was saved, with modifications (in talks that included an observer of the winning candidate of the elections in Mexico , AMLO) and was renamed T-MEC.

Although formally the review of the T-MEC is almost two years away, the issue has already begun to cast a shadow on the relationship between the next United States government and that of Claudia Sheinbaum.

Under the unprecedented review clause of the T-MEC, the three partners must confirm by July 1, 2026 whether they decide to continue or abandon the treaty.

If Canada, the United States or Mexico decide not to renew the agreement, a process will begin that will leave the future of the USMCA in a state of uncertainty for the next few years, with its consequent impact on the economic horizon of North America.

Experts agree that the uncertainty generated by the review clause is already a major concern for the business communities of the three countries. Also for the three governments and their Congresses.

Pressures from interest groups will be felt.

At a recent legislative hearing on Capitol Hill, Arizona Rep. Gregg Stanton noted the upcoming review and said Mexico “has a lot to do” to overcome challenges to take advantage of the nearshoring.

Specifically, “it needs to open its energy policy and limit the cartels,” he said.

During the same hearing in Washington, Undersecretary of State Brian Nichols maintained that Mexico’s judicial reforms must preserve transparency, as well as respect and maintain legal protections for the investments of its partners, especially the USMCA.

“Obviously Mexico is a sovereign country and has procedures that they can use to change their legal framework. We believe that judicial transparency is vital for all investors, whether national, Mexican or international investors, particularly those from the United States and Canada as partners of the T-MEC,” said Nichols.

During the announcement of his appointment, the next Secretary of Economy of Mexico, Marcelo Ebrard, warned that the review of the agreement will be one of the challenges of the next Mexican government, especially due to global economic trends.

“We live in a more protectionist world, to a certain extent more unstable, and the task is to overcome these stormy waters with everything we have learned in our lives. To be successful and fulfill the mandate of the people of Mexico,” said Ebrard.

Indeed, protectionist currents are more present than ever in the ranks of the Democratic Party.

The signing of NAFTA was possible because then-President Bill Clinton was able to form a coalition of moderate Republicans and Democrats. But he left a mark by forcing the inclusion of labor and environmental agreements.

However, it was Clinton himself who violated the cross-border transportation clauses of the agreement, under pressure from the truckers’ union.

It took more than a decade of legal wrangling to bring the United States into full compliance with the transportation agreement.

Although the Republican Party has historically been more inclined to free trade, that vision succumbed to Donald Trump’s protectionist onslaught. During his mandate he blurred the traditional economic agenda of the Republicans and used trade policy as a weapon of global pressure.

Therefore, regardless of the presidential candidate who wins, Mexico will face the crossfire of pressure from the United States on trade matters.

If Biden is re-elected, he will face pressure from his ranks to demand concessions on energy, labor and agriculture.

In the case of Trump, similar pressures are expected to demand preferential conditions for his companies and investors.

The negotiation will be more complicated if the judicial reform in Mexico is approved in the terms in which President López Obrador sent it to Congress.

Here these reforms can win 500 votes to zero in the Chamber of Deputies, and it will certainly be a sovereign decision.

But our trading partners, also in the exercise of their sovereignty, can say that they are not convinced by the ‘popular justice’ that is going to be established in Mexico and impose unacceptable clauses on us.

The renegotiation will not be easy, neither with Biden nor with Trump.