in ,

Mexico takes American side in US-China trade war

New free trade agreement will benefit US and Canada and damage Mexico’s relations with China

Submitted by InfoBrics, authored by Lucas Leiroz, research fellow in international law at the Federal University of Rio de Janeiro…

Mexico is currently experiencing a serious social and economic crisis. The global pandemic of the new coronavirus is affecting the country fiercely, counting 317,000 confirmed cases and 37,000 deaths. In the first two quarters of 2020, Mexican GDP shrank 1.7%. It is estimated that at least 9 million Mexicans will go into poverty due to the social chaos generated by COVID-19. It is estimated that 70 million people will face economic difficulties in the country – about 56% of the national population. To escape the financial and social chaos, the Mexican government is betting on proposals of international cooperation and seeing international agreements as the main chance to prevent the crisis from worsening.

The main bet of cooperation of the Mexican government is with the neighboring countries of the north through the USMCA (United States-Mexico-Canada-Agreement), also called “new NAFTA” or “NAFTA 2.0”, a free trade agreement that became effective July 1. Mexico saw the agreement as an opportunity to strengthen its ties with the U.S., overcoming the relationship of uncertainty that had been created since 2016, when Trump had promised to break free trade agreements with the Latin country. Replacing NAFTA, the USMCA sets a new path for economic integration in North America, but the nature of this new path and its benefits for Mexico remain uncertain.

The terms of the agreement are clearly designed to guarantee American interests in a global context of trade war. The agreement, for example, establishes a rule for the automotive sector and an agreement with which 75% of the production of vehicles must necessarily originate in the countries of the region. Apparently, this measure would be generating continental protectionism to strengthen local economies, but, in truth, the objective is different: to prevent negotiations with China and to favor Washington in the trade war.

There is yet another curious rule established specifically for the automotive industry that directly harms Mexico: the agreement states that 45% of vehicles produced in North America must be manufactured by workers who receive a minimum wage of $ 16 an hour. The salary is fair, but it does not meet Mexico’s labor and economic reality, especially during the crisis generated by the pandemic. In practice, this percentage of workers could only be supplied by the USA and Canada, which would have their markets strengthened. It is a real blow to the Mexican automotive industry.

One of the most controversial points of the agreement is its clause 32.10, which states that if a North American country makes an agreement with a country that does not have a free market regime, this agreement must be reviewed and approved by all members of the USMCA. Apparently, this clause was meticulously designed to affect China, a country that does not adopt a free market system and that disputes with the United States in a trade war. In practice, this means that any agreement with Beijing can be vetoed and, thus, relations between Mexico and China could be near the end.

Cooperation between Beijing and Mexico City are many, mainly in infrastructure projects, as evidenced by the Chinese participation in the “Tren Maya” railway project. The ties are many, but the position of Chinese economic superiority is fully evident, with Mexico being the weakest part of the relationship. In 2019, Mexico imported 12 times more products from China than it exported. In short, China does not establish a relationship of economic dependence with Mexico and the end of strategic partnerships would mean much more for the Latin country, which does not have a strong and developed industrial policy, than for the Asian country, which is in the best phase of its history and is able to look for other markets in any part of the planet.

Obviously, there is nothing wrong with a country establishing strict economic rules to limit imports and exports, in order to develop its economy. However, these measures are only rational and necessary when inserted within a national sovereign project, which is not the case with the USMCA. Mexico is not abdicating its relations with China to develop its economy through protectionist policies, but it is adhering to American protectionism and taking sides in a trade war in which it should not participate.

The most strategic and rational for the Mexican government would be to create international cooperation projects that are politically out of alignment and aimed only at the benefit of the country’s economy. Projects should be developed on a case-by-case basis, considering each sector of the economy and each country capable of cooperation. The current policy, however, is different: investing in relations with the North in a policy of automatic economic alignment, abdicating relations with any country that poses a threat to American hegemony.

The US and Canada, rich and aligned countries, will benefit from the USMCA, Mexico will not. For a president who came to power with several promises of social reform, Lopez Obrador is taking inadequate paths and putting Mexican sovereignty and economy at real risk.

3 5 votes
Article Rating
Help us grow. Support The Duran on Patreon!

Report

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.

What do you think?

Subscribe
Notify of
guest
17 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Lou
Lou
July 17, 2020

Does any one gives a rat’s arse if Mexico sides with the US?

Tonatiuh
Tonatiuh
Reply to  Lou
July 21, 2020

In the project “North America”, Mexicans will be the ethnic majority. Mexico has a young population, a strong culture, and many natural resources.

Olivia Kroth
July 17, 2020

If this is really so, Beijing will survive it.

Smoking Eagle
Smoking Eagle
Reply to  Olivia Kroth
July 17, 2020

Easily.

Olivia Kroth
Reply to  Smoking Eagle
July 17, 2020

Very easily.

Sally Snyder
Sally Snyder
July 17, 2020

As shown in this article, recent developments clearly outline how the United States is threatened by China’s growing strength:

http://viableopposition.blogspot.com/2020/07/mike-pompeo-and-chinas-threat-to.html

Unfortunately, Washington seems incapable of realizing that the unipolar global world order is over.

Aleksandar Sarovic
July 17, 2020

The US has build the China’s economy, expecting capitalism will bring liberal democracy like everywhere else, and then they planned to take control over by corrupting political parties. China outsmarted the US and now it is on the best possible road. The US does not stand a chance.

Last edited 3 months ago by Aleksandar Sarovic
Clarity
Clarity
Reply to  Aleksandar Sarovic
July 18, 2020

I think it is rather rich when people claim that the US build China’s economy. More likely that China simply took advantage of the market, selected what worked best for its own development, and wisely limited outside influence. I am quite sure China was capable of all of these things itself. China is the production house of the world, not just the US. The US certainly supported any Chinese step that would be beneficial for the US. But to say the US build it, I can’t agree with that. I do agree that the US does not stand a chance.… Read more »

Aleksandar Sarovic
Reply to  Clarity
July 18, 2020

My friends sang in a chorus which was invited to China in 1980. It was a medieval country at that time. Then China opened to the world. The rich who rule the US saw it as a chance to capture China. They invested billions of dollars in China without which China would still be a medieval country. China exploited it perfectly

Last edited 3 months ago by Aleksandar Sarovic
Paul Furlong
Paul Furlong
July 17, 2020

The very meaning of Sovereignty starts with the soul of every individual person… that he owns his or her self and takes responsibility for his actions… or lack of actions. Thereby, a Sovereign Nation must do what is best for the people it represents. Notice I did not say, “its people” because this implies that the nation Owns its people, all too common in the world. Therefore, since I love the people of Mexico, I pray they will stand and “ask” their government to represent them as a Sovereign Nation and NOT sign any agreement that is bad for the… Read more »

Tonatiuh
Tonatiuh
Reply to  Paul Furlong
July 21, 2020

Please read my comment above.

Fred Mc
Fred Mc
July 17, 2020

When Mexico realizes it has sided with the wrong country, it can do what Trump does and simply cancel the agreement.

chris m
chris m
July 17, 2020

if worst comes to worst
Mexicans can always emigrate to US, as they have always done
then they can vote Democrat

John Ellis
July 18, 2020

The war on drugs, this is actually Empire USA engaged in a war on Mexico.
Than there was the trade agreement that under-cut Mexican farms to the point that thousands in Mexico committed suicide.

John Ellis
July 18, 2020

A fair and equal trade agreement is one that gives no control over government to rich corporations, and gives small business a competitive advantage over rich corporations.
For a rich corporation is a hostile government and most corrupting power.

kevifah
kevifah
July 20, 2020

With well over 60 million mexicans already well integrated in the states and who knows how many more in CA and after 30 years of the neoliberal policies dictated from abroad the choice was not only obvious but kind of neceseray, not only for poor old mexico but for the North American project (The only viable answer to the Chinese onslaught) Siding with China would amount to a mexican Hong Kong or worse an Ukraine type suicide. In the other hand it was China who replaced mexico in the first place, so is only natural theyll benefit of the tarde… Read more »

Tonatiuh
Tonatiuh
July 21, 2020

Mexico has no room to maneuver. The original NAFTA decimated the country’s industry, agriculture and technology creation capacity. It was established to prevent the development of the country because as former national security advisor, wrote “we cannot allow a new Japan at our Southern border” in a time when the Mexican economy grew at a rate of 6-7% per year. The strong and very protected Mexican industry was replaced by low-wage, low-skill manufacturing that kept the people employed at subsistence levels, or forced them to migrate or to join the drug cartels. President Obrador, once a fierce opponent of the… Read more »

Last edited 3 months ago by Tonatiuh

Ireland as an imperialist country

Twitter BITCOIN SCAM exposes crumbling activist social network (Video)