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Milking NAFTA for all it’s worth

31 January 2017

I’ve always been fascinated by the differences between anti-NAFTA critiques north and south of the border. While in both Mexico and the United States, the left has always attacked NAFTA over its unfair labor provisions, and lack of environmental regulations, in Mexico, the biggest “losers”… and most vociferous critics have been the farmers. Although it was the subsistence farmers and small producers who were devastated (many turning to “unregulated” crops like marijuana or opium poppies if they were to survive at all) even the large producers have had nothing but complaints. The political left has been particularly strong in rural areas in good part because they have demanded renegotiations of NAFTA, and more support for farmers, especially those growing maize (corn).

cowsIn the United States, where it is industrial workers who felt shafted by NAFTA, the strongest supporters have been the farmers… or at least the “Big Agro”, which had the advantage of US export credits and tax breaks corporate tax breaks that allowed it to profit from Mexico’s agricultural crisis.

Trump may have accidentally upset the balance, bringing the “big business” producers… those who managed to profit from US markets, more in line with the small farmers, bringing hope to corn growers and milk producers, while realizing their own position may not be as bad as they first thought.

Even more interesting is that I came across “Sector agropecuario sería contrapeso en renegociación del TLCAN” (by Valente Villamil and Daniel Blanco) in today’s El Financiero from a post on a left-wing site. El Financiero is the Mexican equivalent of the Wall Street Journal, and while less reactionary in its editorials, is the voice of the buinesss elites. My translation follows.

Mexican agriculture may be the industry that balances out the impeding renegotiation of NAFTA, said Luis de la Calle, an expert on foreign trade, during his participation in the EF Agro Forum, organized by El Financie

“It is what gives balance to the negotiation: the agricultural sector is very important because we are a major market,” said de la Calle, who participated in negotiating the original NAFTA treaty that was signed in 1993.

And although Mexico fruit and vegetables are a major export — in 2016, selling more than 1.9 billion dollars in tomatoes and another 1.7 billion in avocados, — the country is also a big buyer from its neighbor of the North, purchasing over 1.4 TRILLION dollars in agricultural products over the last two years.

In the event that NAFTA ends, although Mexico would see effects, the United States would be severely impacted, as World Trade Organization (WTO) rules would automatically be applied. Mexican agricultural exports would pay a 6.4 % tax to enter the United States, while US goods entering Mexico would be taxed at 38.4 %, de la Calle explained.

De la Calle, managing director of De la Calle, Madrazo, Mancera Consultants, quoted from an open letter to US president Donald Trump, from dozens of agri-business companies and organizations in which they asked Trump to maintain NAFTA, or renegotiate it in light of the impact on the US agricultural sector.

“For reasons having to do with the higher taxes, the producers in the United States are very fond of NAFTA as it stands now,” he said.

At the same forum, Eduardo Orihuela, president of the National Confederation of Rural Landowners, warned that the US decision to renegotiate NAFTA could lead to a shortage of Mexican products in the US market, which would eventually lead to an increase in prices, if there is no Substitution capacity.

” If there is no substitution capacity (for food products that Mexico sends to the US) it will generate a price increase and consequently a decrease in consumption. One of every fruit consumed in the United States comes from Mexico,” he added.

Scot Rank, General Director of Grupo Lala [Mexico’s largest dairy products company], opined that while the agricultural sector in Mexico is a success story in many ways, there are also examples where many producers barely survive.

“The dairy industry represents 20 percent of the agricultural sector, producing 11 billion liters of milk a year and growing 5 percent a year. To meet the present demand for 16 billion liters of milk, we have to import, and there are more than 100 formal companies in the sector, “said Rank.

According to Rank, in order to improve opportunities in the dairy sector, “yellow maize production must be grown to feed the livestock and to be able to produce 5 billion liters more to meet demand, there have to be protocols to facilitate the importation of dairy products from various counties, give tax incentives to the dairy producers, and promote milk consumption in the schools.”

We’ve been here before….

31 January 2017

A friend of mine recently said that the “greatest generation” in the United States was not those that lived through the Depression of the 1930s, and fought in Europe and the Pacific in the 1940s, but those who’d lived through the 1830s, and fought at home for reforms in the 1840s… and beyond.

Think of Lincoln (born 1819), Fredrick Douglas (b. 1818), Susan B. Anthony (b. 1820), Ulysses S. Grant (b. 1822) and Henry David Thoreau (b. 1817).

Thoreau maybe never really had the immediate impact on his own time that the others did, but he’s a sure guide to what is happening today. Substitute “European Union” for “Great Britain”, “Aliens and refugees” for “run-away slaves” and… “Mexico” for “Mexico”… and the present office-holder for James K. Polk.

Once upon a time…

30 January 2017




From: Joseph Nevins, “Pat Nixon at the US-Mexican Border” Common Dreams, 22 August 2008

Mrs. Nixon was in Imperial Beach, Calif. on Aug. 18, 1971 to inaugurate a state park. A 370-acre, former naval base at the extreme southwest corner of the continental United States, it is the site of the initial international borderline after the U.S.-Mexico War ended in 1848. The park’s planners, according to the San Diego Union, envisioned free access to it for people on both sides of the boundary.

In her speech, the First Lady promised to cross the boundary to shake hands with some of the hundreds of Mexican nationals witnessing her visit. As reported in the Los Angeles Times, she declared, “I hate to see a fence anywhere.”

After a member of her security detail cut a section of the then barbed-wire barrier, she traversed the divide and embraced Mexican children, stating, “I hope there won’t be a fence here too long.”

There were no criticisms of Pat Nixon’s statements and actions-at least as indicated by press coverage.

Quid pro quo… or expats beware.

29 January 2017

Three members of the Mexican Congress have an answer to U.S. President Donald Trump’s funding plan for his wall on the southern U.S. border.

If Trump applies taxes to Mexican imports to the U.S. or to remittances sent home by Mexicans living in the U.S., the congressmen say they will introduce legislation to confiscate property owned by U.S. citizens in Mexico. A less draconian option, they say, is to attach liens to the property to repay the government for losses from the Trump taxes.

U.S. citizens — not counting U.S.-based corporations — own an estimated $20 billion in Mexican real estate.

(From Cuenca Highlife… an on-line publication specifically for expats in Ecuador, but recommended reading for those interested in expat issues in Latin America in general).

I tend to think that while there will be some overt “anti-gringoism” as a result of Trump, I’d expect official response to be more in the nature of shorter visitor visas, probably higher visa fees, and perhaps a tightening of requirements for  hiring foreign workers, as well as applying as a foreigner for some government programs like Seguro Popular and IMSS.  And more reluctance on the part of local authorities to give in to demands by foreign residents for public improvements that benefit their own neighborhoods as opposed to less serviced areas:  things like street lighting and pothole repair.

Any violence would be more likely directed at US branded properties (even if Mexican owned franchises, McDonald’s or Walmart, for example) than at individuals.  Unless they’re doing something stupid like LOUDLY praising Cheeto Benito, or being drunk and disorderly with the expectation that they are entitled to special treatment because of their nationality and racial identification.

MAD… mutually assured deflection

28 January 2017

Neither Trump nor Peña Nieto are popular presidents. Laura Carlsen speculate on Democracy Now that ratcheting up the rhetorical war between the United States and Mexico may have political benefits for both weak presidents:

LAURA CARLSEN: […] as political analysts, as people who analyze international relations, I know that we’ve had to start thinking in different ways with this Trump presidency, because there’s this psychological factor, you know, this macho, bullying personality that indicates that they’re not always rational considerations that come into play, such as provoking an international crisis with a close ally, a neighbor and the third-largest trade partner.

So, here he comes in, polls showing from 32 percent to maybe the 40s, lowest approval rating of an incoming president in recent history. What does a weak president do in that situation? He picks a fight, and especially if his name is Donald Trump and he is who he is. So, picking a fight with Mexico, though, is what is probably the bizarre factor, of course, for us who analyze this relationship, because, again, it is an ally. However, it mobilizes his base. It’s been his wedge issue since the beginning of his campaign. It increases this racist environment. And it makes him look strong.

Now, he’s also picked a fight with one of the weakest presidents in the world. President Enrique Peña Nieto has an approval rating now of 12 percent, according to some polls. So he’s between a rock and a hard place. He has his entire population saying, “You have to stand up to the United States,” and a huge opposition movement. There are people calling for his resignation in the streets of Mexico, a news item that’s—that doesn’t come out, with everything else that’s happening in the Trump administration. And then he has this necessity among the Mexican elite, his own group, really, to maintain a relationship almost at any cost with the United States. So, the situation, with all these factors coming into play, and especially the unstable actions and personality of Donald Trump thrown into the mix, has created a very uncertain environment, in which we’re already feeling the impact with the drop in the peso, and a lot of uncertainty regarding investment and other economic and political factors here in Mexico.

Not since 1914

27 January 2017

I want to let it sink in for a day or so before I comment at any length, but given the topsy-turvy, on-again-off again, Trump threats towards Mexico (and migrants), I’ve never seen a situation like this where every political party in Congress, the cabinet, the state governors, and the business establishment were meeting today to work out a united response to US economic threats.

Additionally, the Catholic Bishops and peasant groups were also considering their positions, while UNASUR has offered its assistance and “solidarity” with Mexico. Presidents from across the political spectrum in Latin America, from Brazil’s extreme neo-liberal Temer, to Bolivia’s Evo Morales, are condemning the United States and, in Morales’ case, making the same argument as much of the business establishment here in Mexico, that it’s time to reconfigure the export economy: 80% of Mexican exports going to the United States having proven “problematic” and a situation that needs changed.

Why I don’t live at the beach now

26 January 2017

(Apologies to Emma Lazarus)




Not like the bronzed beauties of tour brochures,

With well-knits limbs emerging from the sea to land;

Here at our sea-washed, sunset gates are planned

A host of bars, sea-food joints and tourist stands.

In the twilight, the sun-burnt tourists waddle ashore

to eat and drink, eat and drink… and drink some more

We bid them welcome; our mild servers withstand

The raucous gringo accents, as the beer they pour.

“Keep your loud ways, your foreign tongue!” we sneer

With silent lips. “Give me retirees, snow-birds

With humongous asses, yearning for cheap beer,

Wretches who refuse to use our words.

Send these, the clueless toss-pots to me,

We pad the tab: “For you, gringo, almost free!”