The North American Agenda: What Lies Ahead for the USMCA? – Seeing Double
North American relations are at a crossroads, with the recent U.S. Trade Representative’s decision to launch dispute settlement consultations over Mexican energy policies representing an important signpost of the times. In this moment of change, FTI Consulting’s binational team of policy, international relations, and industry experts has launched this biweekly newsletter with the analysis needed to navigate doing business on both sides of the border. Click here to see our past analysis on the topic, and here for a recent article on corporate compliance in Mexico’s energy sector.
“We must find a way forward [on corn] soon and I emphasized in no uncertain terms that – absent acceptable resolution of the issue – the U.S. Government would be forced to consider all options, including taking formal steps to enforce our legal rights under the USMCA.”
– U.S. Agriculture Secretary Tom Vilsack
Corn takes center stage.
Today, Mexico’s new Secretary of Economy Raquel Buenrostro will meet her U.S. counterpart Katherine Tai in person for the first time, following the rapid escalation of concerns over a presidential decree suggesting the phasing-out of GMO corn in Mexico. On Monday, U.S. Agriculture Secretary Vilsack visited President Andrés Manuel López Obrador to discuss the issue. He underlined the United States’ willingness to convoke separate consultations under the USMCA to address the topic. The potential ban has become an urgent concern for U.S. senators and farmers alike, given that Mexico is the second-largest market for U.S. corn exports.
- Diving deeper: President López Obrador’s treatment of this emerging issue is reminiscent of his approach to U.S. energy policy concerns, offering concessions to some without addressing systemic concerns on trade and investment protection. The Mexican government has stated at different points in time that it would only ban GMO seeds, all GMO imports, allow white corn but not yellow corn, and ban yellow corn for human consumption but not for feedstock. In recent weeks, the president has continued to double down on the ban while muddying the specifics of its implementation.
- Our takeaway: An ideologically-driven decree on corn may elicit a faster U.S. response compared to the bilateral energy saga. Its implementation timeline intersects with electoral processes on both sides of the border, and candidates and parties in the U.S. will be keen to appease Iowa voters ahead of the state’s influential caucuses in early 2024.
An elusive summit and resolution.
President López Obrador announced this week that U.S. President Joe Biden would visit Mexico on January 9-10 for the North American Leaders’ Summit. Meanwhile, spokespeople for the White House confirmed that “[t]he President is looking forward to being able to have that meeting. But we don’t have a date yet […].” This is not the first time that López Obrador has announced the summit without confirmation from his counterparts, first saying that the event would take place in November, and then in December.
- Diving deeper: Mexican officials have framed the summit as a chance to reach agreements on energy and now GMO corn. However, it is unclear if the U.S. and Canada – which reiterated their shared concerns in a bilateral meeting yesterday – would risk attending a meeting without having a deal in hand to sell back home.
- Our takeaway: Today’s meeting between Buenrostro and Tai may be key to determining if the countries can establish common ground on escalating corn and energy tensions, as well as the potential for a summit. However, achieving substantial progress on these complex issues might be too much to ask of the encounter, particularly as the two leaders have never before met in person.
Following the Conversation
- “We hope to reach an agreement, but if that agreement is not reached, well, there are panels. And we cannot be alarmed that the matter goes to court and that they decide. But we cannot give in to that request,” said President López Obrador in his daily morning conference on Tuesday regarding his meeting with U.S. Agriculture Secretary Tom Vilsack about GMO corn.
- “The summit will be in January, so we are trying to be clear about each of the most important fields, such as this, agriculture; they are all the exports and imports of Mexico, what are the decisions or points on which we have to agree; one issue is this [GMO corn],” said Secretary of Foreign Relations Marcelo Ebrard in regards to a bilateral meeting on GMO corn during the proposed North American Leaders Summit in January.
- “The minister reaffirmed Canada’s commitment to engage with Mexico to resolve these concerns, particularly regarding the rule of law, permit issues, and changes to Mexico’s energy sector. […] She indicated that Canada is prepared to explore all available options to reach a resolution that provides long-term predictability,” stated a readout describing Minister of International Trade Mary Ng’s meeting with Canadian businesses operating in Mexico’s energy sector.
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All translations provided by FTI Consulting.
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