The North American Agenda: What Lies Ahead for the USMCA? – AMLO Moderates Rhetoric
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.
Whole-of-Government Approach Remains Elusive
“There is a different tone, an attitude of respect; rather, it is the reaffirmation of respect for our sovereignty, because President Biden had always raised it, that the treatment with us, the relationship, was going to take place on an equal footing, respecting our sovereignty.
And what happened with the consultation, the tone, the mode, President Cárdenas would say, well it was not the most diplomatic nor what we deserve.”
– Mexican President Andrés Manuel López Obrador (AMLO)
Mexican President backs down from escalating the dispute.
Just days before AMLO was set to define his government’s position on the consultations requested by the U.S. and Canada during his Independence Day speech, he stated that he would not address the topic. He explained that this decision was due to a supposed change in tone from President Biden based on renewed respect for Mexico’s sovereignty.
Diving deeper: AMLO’s nationalist speech would have been a major irritant to trilateral relations, which was avoided by its cancellation. Yet his rhetorical balancing act between emphasizing national sovereignty and bilateral cooperation continues, even as the end of the initial 75-day consultation period fast approaches. Mixed messages are still being sent while the president glosses over his counterparts’ systemic concerns over Mexico’s energy policies.
Our takeaway: Although AMLO’s speech did not directly attack the consultation process, the president still found ways to energize his base by instead addressing the war in Ukraine. He criticized NATO’s position on Russian aggression and invited as guests of honor prominent left-wing leaders of the region as well as Julian Assange, who was represented by his family.
Secretary Blinken visits Mexico.
Lopez Obrador’s reversal regarding his Independence Day speech came hours before a meeting of the U.S.-Mexico High-Level Economic Dialogue (HLED). The U.S. delegation, led by Secretary of State Antony Blinken and Secretary of Commerce Gina Raimondo, also met with AMLO. By most accounts, discussions of the USMCA energy consultations took a backseat to other related topics such as addressing the climate crisis through investments in clean technologies such as electric vehicles, solar energy, and semiconductors. Yet, following the meeting, the president again sought to frame the USMCA process as related to the immediate concerns of a handful of companies.
Diving deeper: Biden administration officials appeared eager to promote the potential benefits to Mexico of a stronger North America, highlighting bilateral advantages of two recent legislative packages – the Chips and Science Act and the Inflation Reduction Act – and how they could also encourage clean tech supply chain investments in Mexico. It is unclear if this is part of a stick-and-carrot approach within the consultations.
Our takeaway: The USMCA dispute is representative of real hurdles to the vision of cleantech investments in Mexico proposed by the U.S. delegation. Climate commitments made by industry leaders have led even current investors to threaten to reduce their future footprint in Mexico given the country’s doubling down on fossil fuels. Numerous experts have opined that Mexico continues to miss ample nearshoring opportunities as the U.S. distances its supply chains from China, in part due to the country’s recent energy policies.
Following the conversation:
“[W]hat businesses are seeking is predictability, fairness, and transparency. And I think that that is true of every business everywhere in the world.” – U.S. Secretary of Commerce Gina Raimondo at a joint press conference following the High-Level Economic Dialogue.
“The consultations continue, but that was not the essential thing, it is a political matter and that is naming it in a subtle way, it is a matter of political intrigue, a vile intrigue; the thing is that our adversaries are desperate and they have turned out not to be good opponents, they are very obvious, elementary, they are even our supporters, they help us.” – President López Obrador regarding his discussion of the USMCA energy consultations with Secretary Blinken.
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All translations provided by FTI Consulting.
The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
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