Feb 9, 2018

Signs of Progress in Nafta Talks but Countries Remain Deeply Divided

By ANA SWANSON - JAN. 29, 2018

MONTREAL — Discussions to revamp the North American Free Trade Agreement moved from stalemate to actual negotiation during the sixth round of talks that concluded on Monday, but a deal was still far from guaranteed as Mexico, Canada and the United States continue to squabble over how to reshape the 24-year-old pact.

Government officials and trade analysts described the mood around the talks as “cautiously optimistic” as Canada, in particular, joined Mexico in offering counterproposals to America’s requests for drastic changes, an outcome that seemed likely to dissuade the United States from imminent withdrawal.

Yet more than six months into the talks, a conclusion still appeared elusive. And tensions between the countries grew as the United States criticized Canada’s suggested changes to the pact on areas including automobile manufacturing and investment.

Robert Lighthizer, the United States trade representative, suggested that Canada had been responsible for the stalled talks. He said discussions were now progressing as the nation recognized the need to protect its trading relationships, though he added that talks were not moving fast enough.

“The reality is some of the participants weren’t willing to talk about anything,” Mr. Lighthizer said in remarks to the media. “Now, they’re starting to realize that we have to begin to talk. I think that’s a reason for guarded optimism. But you know, I’m never really very optimistic,” he added.

Officials from Canada and Mexico sounded more positive about the prospects for a deal. Ildefonso Guajardo Villarreal, the Mexican economic secretary, said that the three countries were at “a better moment in this negotiation process,” and that progress made so far had put the countries “on the right track to create landing zones to conclude the negotiation soon.”

Chrystia Freeland, the Canadian foreign minister, said that Canada had come to the table “with creative ideas we believed could move us forward.” She also emphasized the benefits of trade with Canada for the United States.

The Nafta pact, negotiated by President George H.W. Bush and signed into law by President Bill Clinton, spurred trade between the three countries by reducing Mexico’s high tariffs on goods from Canada and the United States. But, as President Trump has often highlighted, it also incentivized companies to shift labor-intensive manufacturing to Mexico.

Mr. Trump has repeatedly threatened to walk away from the trade pact if it cannot be renegotiated in the United States’ favor, a position that has put him at odds with many in the business community and Congress, who see trade with Mexico and Canada as integral to industries as varied as manufacturing, agriculture and energy. The auto industry, in particular, has arranged its North American supply chains around the deal’s terms.

With talks now reaching into their seventh month, negotiators are about to butt up against several political events that could make an agreement even more difficult, including the Mexican general election on July 1.

The election could usher in a leftist political party that may be less willing to make concessions. The front-runner, Andres Manuel Lopez Obrador, has advocated a more combative approach to the Trump administration.

“Doing this before the Mexican election is critical, because you don’t know who is going to be leading afterward,” said Representative Will Hurd, a Texas Republican who attended the talks.

The negotiations have faced a series of collapsing deadlines. Last year, officials insisted that the deal must be largely concluded by the end of 2017. Then in October, they decided to extend the talks into the first quarter of 2018, with March widely cited as a deadline.

Negotiators did not specify a new target for concluding the talks. In remarks on Monday, Ms. Freeland said that Canada looked forward to continuing its work at the next round in Mexico City in late February, and in Washington in April.

Officials from all three countries say they would rather have a good deal than a rushed one. But the delay is not without risks — some trade analysts fear that an extended process could cause Mr. Trump to lose patience, and spur an American withdrawal.

Midterm elections in the United States on Nov. 6 could also complicate the deal. The administration will need a simple majority in both the House and Senate to approve their revised trade agreement, which could prove difficult if Democrats win control of either chamber.

Mr. Lighthizer reiterated in his remarks on Monday that he hoped to win the support of some Democratic lawmakers. That may hinge on the administration’s efforts to improve labor standards. Last Tuesday, more than 180 Democrats and one Republican lawmaker sent a letter to Mr. Lighthizer urging the administration to propose stronger measures to improve Mexican labor conditions.

Representative Sander Levin, a Michigan Democrat and one of the signatories, said the Trump administration’s current labor proposals just “mask maintaining the status quo.” Mr. Levin said “the traditional view of these issues is that they’ll work out in the wash, but workers have been taking a bath.”

Negotiators said they reached agreement on a Nafta chapter focusing on anti-corruption, and were nearing completion on several other sections. But the ideas Canada brought forward to counter the Trump administration’s proposals were proving a source of contention.

The United States has proposed significantly raising the so-called rules of origin, which govern how much of a car needs to be manufactured within the free-trade area to be exempt from tariffs.

The Canadians last week discussed changing the way the figures were calculated to include design, investment and parts of an automobile like high-tech software and sensors that are common in cars today but not measured under Nafta.

The change is likely to raise the proportion of a car’s value produced by the United States, because many high-tech industries are centered there. But it also appeared unlikely to address Mr. Trump’s primary reason for renegotiating Nafta: strengthening American manufacturing.

Mr. Lighthizer criticized the idea, saying that it “may actually lead to less regional content than we have now” and said “this is the opposite of what we’re trying to do.”

Mr. Lighthizer also used his remarks to criticize a recent case Canada brought to the World Trade Organization, in which it claimed that the United States system for policing dumping and subsidies was unfair. “It is imprudent, and my suspicion is, spiteful,” he told reporters.


Feb 3, 2018

Tillerson in Latin America

Secretary of State Rex Tillerson touched down on Mexican soil Thursday and many Mexicans were not happy about it.  Tillerson is heading out into the land of "rapists and thieves", etc. to talk about the central themes of Trump policy in the region: the war on drugs, now referred to in government circles as "transnational crime" since the U.S. public's enthusiasm for a drug war has decisively waned in recent years, and, of course, immigration.

Tillerson plans to do a grand sweep of Mexico, Argentina, Peru, Colombia and Jamaica with a focus on a country he won't visit--Venezuela. The general purpose of the tour seems to be to convey two messages -- 1) no, the Trump government is not just a bad joke, and 2) yes, I am still Secretary of State.

The representative of the most unpopular U.S. government in decades, if not ever, Tillerson brings   his baggage of general opprobrium, plus a carry-on of indignation generated by his remarks just the day before setting off in which he warned the region of Chinese and Russian influence.

In a speech at the University of Texas, née Sonora, Tillerson said:

"Latin America does not need new imperial powers that seek only to benefit their own people." Not surprisingly given the history of the region, Latin Americans understood that as 'Just shut up and be happy with the old one'. You now, the one that goes around the world spouting the "America First" agenda (and doesn't mean "America" as a continent).

His statement was so inadvertently revealing that it provoked irate responses in the Latin American press. The Mexican daily La Jornada wrote (translation mine):
The affirmations cited are an unmistakable show of cynicism and ignorance--characteristics of the Trump administration--given that if any superpower has been characterized by its predatory trade and economic practices and its military support of dictatorial Latin American governments, it's the United States..."
He went on to say,
Russia’s growing presence in the region is alarming as well, as it continues to sell arms and military equipment to unfriendly regimes who do not share or respect democratic values. Our region must be diligent to guard against faraway powers who do not reflect the fundamental values shared in this region. The United States stands in vivid contrast. 
Here in Mexico nothing could be more tone-deaf than this image of the United States suddenly being a moral ally against other countries "who don't share our values." Apart from the long history of intervention, Mexicans have watched with growing outrage as the Trump administration proclaimed them the "other" that threatened U.S. values.

The Agenda

Tillerson has been the Secretary of State in abstentia for the Western Hemisphere until this trip. He stood alongside the real architect of the new Trump Era policy in the region, John Kelly, in several previous visits, but had little to do with the remapping of policy here and appeared more as a figurehead. Occasionally we've gotten a glimpse behind the public diplomatic protocols of his dealings as an empowered oil executive.  But except for the oil-rich U.S. nemesis, Venezuela, he hasn't shown a lot of interest in the region.

General Kelly however, does have a vision for the Americas. He sees a web of military bases and proxy forces that guarantee the United States can shield international investment and pre-empt threats to elites. As former head of Southern Command he has a militarist preference for confronting problematic drug by battling traffickers in the streets and fields (of foreign countries) with arms, rather than in the schools and courts with arguments.

The Kelly agenda is also all about borders. Who is kept in and who is kept out is the core of his foreign policy and what has defined Trump policy in the region. His stint at Homeland Security really never ended when he left for the White House as he continues to coordinate both Homeland Security and foreign policy in this region. Current Secretary Kirstjen Nielsen's total loyalty to her old boss and his boss (to the point of making herself ridiculous in the defense of Trump's "shithole countries" comment) proves the point.

In Texas, trying to sound like a statesman, Tillerson laid out three pillars for Latin American policy. (Washington likes the image of pillars--we have four of vastly differnt sizes in the Merida Initiative and every time policy appears to be crumbling we get more pillars, or one pillar is changed for another. As any architect knows, the problem with this kind of pillar construction is that if the foundation is rotten no number of pillars can hold up the structure.)

Anyway, the new pillars he presented are "economic growth, security and democratic governance"-- the same pillars we've had for years. Pillar One-economic growth- says nothing about who reaps the benefits, what happens to unrenewable resources or sustainability and environment. Tillerson focused first on NAFTA. Taking a different position from his boss, he tried to assuage the Texans and the Mexicans that Washington just wants to update the agreement:
I’m a Texan, former energy executive, and I’m also a rancher. I understand how important NAFTA is for our economy and that of the continent. But it should come as no surprise that an agreement put into place 30 years ago, before the advent of the digital age and the digital economy, before China’s rise as the world’s second-largest economy – that NAFTA would need to be modernized.
Our aim is simple: to strengthen our economy and that of all of North America, to remain the most competitive, economically vibrant region in the world. 
So Tillerson views NAFTA from the point of view of a U.S. "Texan, former energy executive and rancher." Then there's Peña Nieto who sees it from the point of view of a rapacious politician and representative of the Mexican transnational elite.

Tillerson, former head of ExxonMobil, adds:
We see a future where energy connectivity from Canada to Chile can build out and seize upon energy integration throughout the Americas, delivering greater energy security to the hemisphere and stability to growing economies. South America is blessed with abundant energy resources. Colombia, Peru, Brazil, Guyana, and Argentina all have significant undeveloped oil and natural gas. The United States is eager to help our partners develop their own resources safely, responsibly, as energy demand continues to grow.
His phrase "seize upon energy" jumps out at Mexicans who have zealously guarded their oil reserves from U.S. interests up until Peña Nieto finally privatized them. Mexico auctioned off the largest block of offshore drilling contracts to date the day Tillerson arrived.

Building a post fossil-fuel economy and energy plant is clearly not a language Exxon's Tillerson speaks. As John Saxe Fernandez notes, Tillerson's oil interests are reflected in his Latin American itinerary focused on isolating Venezuela and opening up the Hemisphere to U.S. companies like his under the Maximum Extraction Principle and the Mexican government is lockstepping alongside. Saxe Fernandez warns: 
..this energy entreguismo (a Spanish word for surrendering resources to a foreign power) creates extremely high-risk climate and war for our region in relation to the United States.
The Secretary of State talked about more than his oil-hegemony goal. He slammed Cuba and Venezuela as the blight on an otherwise democratic continent (nothing on Honduras' stolen elections, Mexican authoritarianism or Brazil's court maneuvers to bar the presidential frontrunner) and hinted ominously at support for a military coup in the latter.  singled out for praise Argentine president Mauricio Macri and his "market-basd economic reforms". But sympathetic words from the hegemon to the north may be counterproductive for the conservative leader, who has faced mass protests in the streets and slipped to an approval rating of 39% in January following his latest move to slash the nation's safety net.

On security Tillerson turned to the "transnational criminal organizations", again using the U.S.'s undeniable responsibility for cartel violence as a justification for further intervention and militarization. "Shared responsibility" has been the catchword for intervention since the Obama administration launched George Bush's joint drug war in Mexico and Central America. By citing U.S. demand, the Pentagon and US arms manufacturers have reaped millions in tax dollars to train and equip Mexican and Central American police and armed forces. According to Tillerson, this failed, interventionist model will continue to be U.S. policy:

We acknowledge our role as the major market for illicit drug consumption and the need for shared approaches to address these challenges. The opioid epidemic we are facing in this country is a clear, tragic representation of how interconnected our hemisphere truly is. Violence and drugs do not stop at our southern border. That is why we continue to employ a coordinated, multilateral approach to diminish the influence of these groups. It is time we rid our hemisphere of the violence and devastation that they promote.
Not one expert has pointed to evidence that this strategy has worked. The opioid epidemic is demonstrably demand-driven, not supply driven, and is overwhelmingly dominated by prescription drugs produced and distributed in the United States rather than foreign heroin. Mexican heroin can pose a serious health risk for Mexicans in growing and trafficking areas and for U.S. consumers, but the roots of the problem are in U.S. communities and pharmacies, and in the contradictory prohibition and enforcement regime. If dealt with there, the size and power and violence of Mexican groups will wither.

Tillerson believes that the current course is just fine, however. Ten years and 150,000 Mexicans killed and 33,000 disappeared in drug war-related violence--many of them by security forces--with no reduction in the availability of prohibited drugs appears to be insufficient reason to change course. Human consequences don't enter into the equation at all -- he talks about the Merida Initiative as if it were a (very expensive) package of good intentions, rather than a policy that has already racked up a decade of bloodshed and failure:

Through the Merida Initiative – a partnership between the United States and Mexico focused on improving security and the rule of law – the United States is providing assistance to build the capacity of Mexican law enforcement and judicial institutions. By providing inspection equipment, canine units, and training, we equip law enforcement officers with tools to eradicate opium poppy production, tighten border security, and disrupt trafficking activities – not just in drugs but in trafficking of humans. By improving cross-border communications, we make both sides of the border safer.
It's spin-off, the Alliance for Prosperity in Central America, gets the same treatment. He refers to the Kelly-sponsored meeting at SouthCom last June where:
the State Department and the Department of Homeland Security, along with our Mexican counterparts, cohosted the Conference on Prosperity and Security in Central America. Through many productive conversations with public and private sector leaders across the region, opportunities were identified to help Central American countries grow their economies, strengthen their institutions, and better protect their people. More opportunities for Central Americans will weaken the hold of transnational criminal organizations, address the underlying causes of legal and illegal immigration, and result in less violence.
This sounds reasonable, but the same policy, which has been going on for years, has actually played a major role in expelling people through megaprojects and land grabs and increased inequality, increasing violence through militarization of public safety and decreased rule of law by propping up repressive and corrupt governments in the name of battling organized crime, to which they are often tied.

At Friday's press conference in Mexico City, Mexico's Foreign Minister Luis Videgaray rambled obsequiously, Canada's Foreign Minister Chrystia Freeland mentioned the importance of "advancing democracy, especially in Venezuela" without saying a word about Honduras's recent election that the OAS deemed too dirty to call. Tillerson came back to his favorite theme of the need "to promote market-based energy development". He also said they discussed following up on the Central America conference last June on the Northern Triangle countries, stating, "Success there will better protect all of our countries and provide opportunities for the citizens of Central America." This statement in the context of the fraudulent election is meant to put a nail in the coffin of Honduran democracy.

In response to questions, Videgaray said that they did not discuss DACA but said if they come back "it will be a win situation for Mexico and a lose situation for the United States". he said Mexico would not support any decision on Venezuela that involved violence. Tillerson basically said the US would prefer a peaceful solution, but that depends on Maduro.

Tillerson went into a drawn-out attempt to justify Trump's anti-immigrant policies. He also revealed that they had a working dinner with the Mexican armed forces on disrupting transcriminal (sic) organizations, meaning the drug war will continue, more miltarized than ever since Mexico passed the Internal Security Law and Donald Trump took office.

Jan 15, 2018

Mexico: Cloaked by silence of Christmas, Police unleash spate of at least 5 enforced disappearances in Guerrero

By Amnesty International
11 January 2018, 16:22 UTC

While families were celebrating Christmas holidays at home, police in the city of Chilpancingo forcibly disappeared 5 young men, using chilling tactics that mirror those used by organized crime, said Amnesty International.

“Tragically, the enforced disappearance of these young men is the latest of a long line of horrors have befallen Guerrero state. The warning signs of corruption and terrible human rights violations have been there for all to see, and those officials that negligently ignored them are themselves complicit,” said Erika Guevara-Rosas, Americas Director at Amnesty International.

Mexico Takes to Twitter to Slam Trump on Wall Funding Claims

By Rita Devlin and Nacha Cattan
January 11, 2018, 9:19 PM CST

Mexico has long said it wouldn’t be paying for a border wall with the U.S. On Thursday, officials used some cheeky language on President Donald Trump’s favorite medium to reiterate their message.

Both Mexico’s Economy Minister Ildefonso Guajardo and the country’s chief Nafta negotiator Kenneth Smith rebuked Trump’s suggestion that gains from a new trade deal may be used to pay for a border wall with Mexico. That would mean the U.S.’s southern neighbor would indirectly be paying for part of the wall, Trump said in an interview with the Wall Street Journal.

Read More.

Jan 8, 2018

‘We’re Competing Against Everybody Just Like You’: Voices on Manufacturing in Mexico


At a time of uncertainty over the fate of the North American Free Trade Agreement, what does it feel like to work in a manufacturing plant in Mexico, where a surge of American companies have taken advantage of low labor costs?

This year, we followed a group of steelworkers in Indianapolis whose jobs were moving to Monterrey, Mexico, as discontent simmered in the American Rust Belt over the loss of blue-collar jobs.

In the wake of the article’s publication, and as tensions rose over attempts to renegotiate Nafta, we sought out perspectives on globalization from readers who had worked in the manufacturing industry in Mexico. We asked them what they would tell American workers if they could.

When Nafta was passed nearly 24 years ago, the trade deal marked a major milestone for globalization. It greatly expanded the number of assembly plants in Mexico known as maquiladoras, which import parts duty-free and send finished products back across the border. Today, Mexico’s maquiladora industry is far more sophisticated and global than when Nafta began.

In response to our queries, we received over 200 responses from readers. They ranged from expressions of solidarity — “We are not your enemy, but your brother in arms,” one wrote — to anger at being demonized for merely trying to make a living.Continue reading the main stor

Many of the respondents echoed a common theme: Fear of the looming threat of automation, and of losing jobs to China. In follow-up interviews, respondents shared more about their experiences and their views on globalization.

These interviews have been lightly edited and condensed, and one was translated from Spanish.
‘Americans should be seeking “first world” jobs’

Luis Arturo Torres Romero, 37, has worked for 19 years in factories in Tlajomulco de Zúñiga, a city in the Mexican state of Jalisco.

The son of an artist and a nurse who has struggled to make ends meet, Mr. Torres Romero put himself through college by working the night shift as an assembly operator at a factory that made consumer electronics. Now, he’s a development engineer for automotive electronics.

I would have never been able to finish college if there weren’t those kinds of jobs in a maquiladora. Now I have a good life, I can afford certain luxuries. I no longer live worried about money. I no longer wonder what am I going to eat tomorrow.

That kind of activity can’t fulfill you as a human being: doing something over and over like a machine. The staff turnover is very high. A lot of us didn’t even have a contract. We were outsourced by employment agencies. If there was a production spike, they would hire people, but if it lowered you would get fired.

Those jobs no longer have a future. Machines will make them cheaper. Those jobs are being automated. Americans should be seeking first-world jobs. They should focus on making education accessible to more people to focus on higher-ranking positions.
‘We’re competing against everybody just like you’

Raquel Gerardo, 22, grew up in Tijuana in a family that depended on the maquiladora industry for its livelihood.

Ms. Gerardo’s parents met while working together in a factory. Her father started off sweeping floors as a teenager. He rose through the ranks, becoming a technician, an engineer and finally a plant manager at an electronics factory in Tijuana.

Ms. Gerardo attended high school in Tijuana, where students were taught quality control, marketing and other skills necessary for the maquiladora industry. She went to college in Idaho, but returned to Tijuana for an internship at a factory. Today, she lives in Tijuana and works for an American software company that markets to Latin American customers.

We are privileged. Not everyone has a chance to learn English and get an education to that level. I remember as a kid, my father would take me to the factory. Now that I’m an adult, I realize that people’s education levels are very mixed. If you are under, you are under. If you are the boss, all the respect is for you.

Even if you earn a little above minimum wage, it’s not a livable wage. You can’t just do one shift and survive. Everybody in the family has to be working two or even three shifts.

We’re competing against everybody just like you. China — it’s almost impossible to compete with them. My dad was the plant manager for this company and his bosses would call him every day and say, “If you don’t reduce the costs by this much, we’re going to move.” We didn’t celebrate my 12th birthday because of the stress.

Work from the United States has been ‘a boon for Mexico’

Douglas Naudin, 75, of Laredo, Texas, worked as a human resources manager in the maquiladora industry from 1983 to 2007.

Mr. Naudin was born in Mexico, but grew up in El Paso after his father earned an engineering degree from the University of Missouri. A dual citizen of the United States and Mexico, Mr. Naudin always felt drawn to the Mexican side of the border.

He was thrilled when an American company based in Carrollton, Tex., hired him in the 1980s to work in a newly built electronics factory in Juárez, Mexico. Mr. Naudin became head of human resources at that plant, which made LED bulbs for automobile dashboards.

The Americans liked the idea of me going over there, because they could communicate with me. At the time, they had a Mexican H.R. manager who couldn’t speak English. People in Carrollton struggled with “Why are people leaving? What’s the head count?”

We were putting together little teeny tiny bulbs. They are soldered with little teeny gold string, wire. And it was done through microscopes. It was tough work. We used to manufacture a kajillion of them. The workers were coming from some of the farms nearby.

By the 1990s, American companies started sending more technical work, higher-grade equipment, laboratories. As time went on, all these other tasks started going to Mexico. Engineers. Machinists. Mechanics. You had a lot of the second and third generation who are professionals at the plants, where their parents had been operators. It has been a boon for Mexico.

‘Mexico, the U.S. and Canada should be working together’

David Treviño, 56, worked for 12 years as a production manager at a plant in Mexico City that made electrical bundles.

Mr. Treviño has traveled to China more than 100 times in the last 27 years, first as the representative of an international wire assemblies company that was establishing factories in China in the 1990s, and with an electronics distributor in Mexico City he founded that imports products from China to Mexico and the United States.

In 1989, I was working for a Mexican company that was making wiring assemblies, those bundles of wires that connect to all the buttons in the back — for example, in a washing machine. I called it “working in the salt mines,” because it was hard. I was one of the few guys to speak English. I got promoted.

At that time, China was totally underdeveloped. There were almost no hotels. You had to stay in the factory. The salary in China was $1 per day. More and more companies were coming, to the point that in the early 2000s, you had to have a factory in China, or you were wrong. Americans transferred huge investments and know-how to China for free. They did it for corporate profits, to keep shareholders happy. But you see the results.

Chinese people started their own factories, becoming a rich country and now a U.S. rival. My youngest son just graduated a year ago from a very good college in Mexico. He did an exchange in China. Given the situation, I told him, “You might want to learn Chinese because it’s the language of the future.”

Americans should have made better political and economic decisions years ago. Punishing Mexico is not the solution. Eliminating Nafta or building walls is not the solution. Mexico, the U.S. and Canada should be working together to face the big challenges the rest of the world is posing. If the U.S., Mexico and Canada do not find ways to work together, we will see many U.S. manufacturing companies closing due to the brutal competition from Asia, and China in particular.


Dec 20, 2017

Exclusive: Anti-Money Laundering Group Blasts Mexico in Draft Report

By Michael O'Boyle - DECEMBER 19, 2017

Mexican prosecutors are failing to systematically punish money launderers and tax authorities are too lax with potential drug money fronts such as real estate and luxury goods firms, according to a draft report on Mexico’s efforts to fight illicit finance.

The report by the Financial Action Task Force (FATF), an international organization that sets global standards for fighting illicit finance, highlights the tiny dents made by Mexican prosecutors in the financial networks of drug gangs and corrupt officials.

Dec 13, 2017

A Nasty, Nafta-Related Surprise: Mexico’s Soaring Obesity


William Ruiz Sánchez spends his days grilling burgers and slathering fried hot dogs with pepperoni and cheese at his family’s restaurant. Refrigerators and fire-engine red tables provided by Coca-Cola feature the company’s logo in exchange for exclusive sale of its drinks.

Though members of the Ruiz family sometimes eat here, they more often grab dinner at Domino’s or McDonald’s. For midday snacks, they buy Doritos or Cheetos at Oxxo, a convenience store chain so ubiquitous here that nutritionists and health care advocates mockingly refer to the city as San Cristóbal de las Oxxos.