In just over two years of life of the T-MEC , the three trading partners have activated the dispute settlement mechanism four times, the last being due to the changes in the energy policy of the government headed by Andrés Manuel López Obrador .
The PRI deputy Ildefonso Guajardo and the PAN senator Gustavo Madero, participants in the Expansión Meeting: Current Situation of Mexico , commented that Mexico, the United States and Canada will not be able to resolve the energy issue in the consultations, a non-contentious dispute resolution mechanism, for what will be a panel of experts who will make the final decision.
“We are going to go to a panel and surely we are going to lose it. And the Americans are going to decide when they execute the consequences and the president (of Mexico) is going to ask for sacrifices from the sectors that may be affected by tariffs in order to defend sovereignty,” said Deputy Guajardo, who headed the negotiating team. of the T-MEC in the administration of Enrique Peña Nieto.
Once the panel resolves who is right, the damage will be quantified. “Once you quantify it, you will give the person who initiated the consultation the power to apply commercial retaliation and they can deduce where (to apply them). The times and sectors affected are going to be very important,” added Madero Muñoz.
According to the PAN senator, “the government is going to swallow the pill of the year because it is manageable and it is going to try to compensate it with subsidies and some type of stimulus.”
Prior to the formal request for consultations from the United States and Canada, the United States Trade Representative, Katherine Tai, sent a letter to Secretary Tatiana Clouthier in which, among other points, she warned that Mexico’s energy policy put investments at risk. for 10,000 million dollars.
An alternative to avoid reaching the panel of experts and, where appropriate, the trade sanctions of the United States and Canada, has to do with the Judiciary.
The amparos that the companies filed on the electricity industry law, if they prosper, would render the claims of Mexico’s commercial partners without matter. These can be resolved at any time.
However, Gustavo Madero warned, it will have consequences in terms of certainty, but investors and companies are already waiting for 2024.
“The Court’s ruling on the electricity industry law – which did not reach the votes to declare it unconstitutional – which is not what we wanted, left us in a not so bad place because it continues to leave the door of amparos open. That is going to give us a floor to review the law itself in a few years,” said PRI senator Claudia Ruiz Massieu.
President López Obrador understood that Mexico needs the T-MEC for the development of the country and a source of certainty to attract investment. However, under his discourse on Mexico’s energy sovereignty, “he crossed the line,” added Edda Jaime Treviño, general director of México Evalúa.
“The weight of this vision of energy sovereignty is so strong that, here it did break, here it did cross the line by making a change that is unconstitutional, even though the Court has ruled in a very strange way, and that is going to have repercussions,” he stressed. .
cross borders
President López Obrador, the participants in the Expansión Meeting agreed, has managed a double discourse in which, on the one hand, he “offends” North American trading partners and, on the other, understands the importance of the T-MEC for Mexico and , therefore, its permanence in the treaty.
Just as President Donald Trump did, who, for example, conditioned trade issues with immigration, López Obrador thinks he can cross-cut issues to negotiate, said Ildefonso Guajardo.
In this environment of arming blocs, the pandemic and recently the war in Ukraine make Mexico an ideal place for the relocation of supply chains.
“Mexico, being the 15th largest economy in the world, has everything to take advantage of the changes, but we are not achieving it due to the lack of vision and political, ideological and economic alignment with our main trading partner (the United States),” Madero lamented. .
Despite the uncertainty due to the decisions made in the current federal administration in Mexico, coupled with security issues and, mainly, problems in the energy supply have not prevented companies from seeking the country to relocate.
In places like Tijuana, Nuevo Laredo and El Paso there is great interest in buying and developing industrial parks. “The sale of industrial land in 2021 more than doubled compared to 2018”, highlighted Ildefonso Guajardo.
“Imagine where we could be if there was more clarity. The lost opportunities, the opportunity cost of ambiguity, of making laws that violate the T-MEC has costs, it erodes trust, but where could we be if we were determined to really engage with North America?” Edna Jaime questioned.
Despite the opportunities, Guajardo pointed out that the country has bottlenecks, such as the lack of electricity, which can slow down the arrival of investment and relocation.
Make the T-MEC tangible
Both in Mexico and in the United States there is ignorance of the benefits that the T-MEC has for both countries. Among other reasons, because public policy has failed to communicate it, lamented Edna Jaime.
A greater social assimilation is necessary that the T-MEC is a good thing for Mexico. However, just as in the United States, where 6% of Americans do not know how this trade agreement benefits them.
“A sustained effort must be made to make the benefits of the treaty clear, tangible and present for ordinary people, not for the businessperson, who is clear about it, not for those of us who share a vision; it is in general”, insisted Claudia Ruiz Massieu.
The future of the T-MEC
The horizon of the North American trade agreement has to be seen from several angles.
Guajardo recalled that NAFTA “was dead but they hadn’t been told,” he said, recalling that President Barack Obama, “in a very intelligent way,” invited Mexico and Canada to the TPP and, “through the back door, modernized the NAFTA without opening so much debate. Everything that was reflected in the T-MEC we had not already negotiated in the TPP”, detailed the deputy.
He added that, for issues such as the review mechanism, the T-MEC is better positioned than its predecessor.
None of the participants in the Expansion Meeting sees a panorama in which there is an exit from the Treaty between Mexico, the United States and Canada.
The T-MEC has mechanisms that give it the “horizon” of continuity,” added Claudia Ruiz Massieu. “Having a revision, in a way, guarantees that it is an instrument that can be adapted,” he added.
One of the challenges that the T-MEC has, Ruiz Massieu pointed out, has to do with inclusive development, something that has not been made tangible either, which will give social support to the treaty and ensure its continuity.
Although Mexico is still aware of the export sector, the economic engine, Claudia Ruiz Massieu pointed out the lack of agricultural workers in Mexico, because they are betting on migrating to the United States, or because the new generations no longer want to work in the fields.
