Mexico

Today World Trade Organization (WTO) Director Pascal Lamy confirmed that the latest round of WTO talks collapsed after nine days because of a dispute between developed and developing countries over “safeguard clauses” to protect lesser-developed economies from a flood of imports. For Mexico, this means increased reliance on its existing plethora of free trade agreements.

Some analysts say the collapse of talks symbolizes the end of the latest round of negotiations begun in 2001 that would arguably increase the world’s economy by $100 billion. Instead, countries will continue to negotiate free trade agreements on a regional or bilateral level, rather than a global basis.  Mexico is one of the best examples.  The country’s ruling political establishment has wholly embraced free trade and liberalization, having signed the most number of free trade agreements in the world.  These include full agreements with the US and Canada (NAFTA), the EU, Japan, nearly all of Central America, Chile, Uruguay, and Bolivia, in addition to framework agreements with South America’s MERCOSUR.

As a result, few countries are left trading with Mexico without a free trade agreement.  However, the existing agreements, particularly with the US, the EU, and Japan, pit Mexico’s economy against rich-world subsidies, most notably in agricultural and manufacturing sectors.  Notably, the stumbling block of safeguard clauses that brought down the latest round of WTO talks was resolved in NAFTA by a gradual lessening of tariffs and non-tariff barriers over a period of seven years.  Additionally, much work remains to be done to liberalize telecommunications and financial sectors.  On average, services account for 70% of a developed country’s economy, 50% of a developing country’s, yet only make up 19% of world trade.  Notwithstanding, the existing agreements leave Mexico with significantly more prospects for trade.

Pictured: Mexico’s Permanent Representative to the WTO, Fernando de Mateo y Venturini (center)

Barack Obama’s official position—at least according to his campaign website—is limited to promoting further economic development in Mexico to decrease illegal immigration. This is a reductionist position on one of the most important financial and political relationships in the world. Nevertheless, this does not mean that Obama does not have a more detailed platform in regard to US-Mexico relations. It is just that this platform is not on Obama’s website. This is unfortunate, as the website is the most obvious place to find about Obama’s position in regard to Mexico.

In February 2008, Obama proposed to “repair the relationship with Mexico”. This renovation is divided in three main issues: immigration, drug trafficking, and NAFTA. Obama’s proposals in these areas are more politically correct than innovative, but at least there is an acknowledgement that US-Mexico relations need to be renovated in order to solve common problems. John McCain’s proposal is limited to “building alliances in Mexico” in order to secure the border and solve the immigration problem in the US.

Obama’s campaign is far from being over. Hopefully, by the time his campaign has come to an end, he will have a clear, detailed, innovative, and realistic policy towards Mexico. If he wins the Presidency, such a platform will be a good starting point in the renovation of relations between the US and Mexico.

Mexico is one of the largest exporters of corn. Nevertheless, it also imports almost half of what it consumes. In a world of skyrocketing food prices, this dependency is becoming a national security problem.

In order to reduce pressure over rising food prices, President Felipe Calderón has launched an initiative that promises to improve the situation of farmers and consumers. The initiative is composed of three elements. The first element will facilitate access to basic foods produced in the international markets. The second component attempts to enhance production and productivity in the agricultural sector. Finally, the initiative will try to protect the income of poor families against inflation. In May 26th the Mexican government cut food import tariffs. This measure will immediately reduce the costs of importing corn, wheat, and rice. Additionally, the government agreed to provide a monthly cash payment to some of its poorest citizens.

These measures will reduce some of the pressure over food prices in Mexico, but only temporarily. The program launched by the Presidency does not seem to address structural problems in the Mexican country side such as migration to urban areas—or to the US for that case. The structural problems are so severe that the Minister of Agriculture has stated that Mexico will not be able to produce enough basic foods for the country’s population. Thus the importance of reducing food import tariffs.

These problems fill the Mexican headlines almost 15 years after the North America Free Trade Agreement (NAFTA) entered into force. In the early 1990s, several groups and organizations warned that Mexico would not be able to compete with its partners and that agriculture would be the economic sector most affected by trade. It seems that the Mexican country side—and with it the Mexican population—has been not only affected by trade in North America, but also by the powerful trends of a global economy. Hopefully, Mexico will also learn how to benefit from it.