Mexico prepares for intense trade audit from Biden

Mexico City—After years of fiery rhetoric from outgoing President Donald Trump, Mexico is bracing for more discreet but steadfast pressure from Joe Biden’s administration to fulfill its trade obligations to the letter, analysts say.

Mexico and Canada were pressured by Trump to renegotiate the North American Free Trade Agreement (NAFTA), the 1994 pact that the Republican branded “the worst trade deal in the history of the country.”

After more than two years of arduous haggling, it was replaced as of July 1 by the US-Mexico-Canada Agreement (USMCA)—but only after the Democrats demanded US officials renegotiate key elements including labor provisions.

“Biden won’t be as hostile as Trump, but he will watch to see that the commitments made in the USMCA are fulfilled, which Trump hasn’t done,” Kenneth Smith, who was the Mexican chief negotiator, told AFP.

NAFTA erased nearly all tariffs across the region and helped turn Mexico into an export powerhouse.

But Trump had long blamed the agreement for the offshoring of American jobs.

He also threatened to slap tariffs on imports from Mexico if it did not stop a wave of Central American migrants heading overland to the United States.

A new trade war would be devastating for Mexico’s economy, now reeling from the fallout from the coronavirus pandemic, as the United States buys more than 80 percent of its exports.

Analysts at the Spanish bank BBVA think Biden’s victory will clear the uncertainty hanging over trade between the US, Mexico and Canada, which in 2019 was worth $1.2 trillion.

Biden “supported the original free trade agreement and the current one. We would think that he is more committed to this vision,” said Carlos Ramos, chief economist at BBVA Mexico.

Trump’s scorching rhetoric is likely to be replaced by careful monitoring, under Biden, to ensure that Mexico is complying with the fine print of the trade deal, analysts said. AFP

Some fear this could produce cross-border spats.

“It’s very clear that President Andres Manuel Lopez Obrador doesn’t share the political agendas of the Democrats, and this will lead to permanent disagreements, mainly in energy and labor matters,” said Miguel Angel Jimenez, analyst at the Mexican Council on Foreign Relations.

Lopez Obrador managed to maintain cordial relations with Trump even though the Republican branded Mexican migrants as “rapists” and drug dealers  during his 2016 election campaign and vowed to build a wall across the southern US border.

The Mexican leader’s relations with Biden have got off to a rocky start; the left-wing populist has yet to congratulate the Democrat on his election victory, saying he will wait until all legal disputes are resolved.

Jimenez ruled out the possibility that Biden will seek to renegotiate USMCA, however, saying that the voice of the Democrats “has already been heard and included.”

Topics: Mexico , trade audit , Joe Biden , North American Free Trade Agreement , NAFTA , US-Mexico-Canada Agreement , USMCA
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