32
“Security and crime costs are immense from a social and business perspective,” observes Enrique Dussel Peters, economics professor at the Universidad Nacional Autonoma de Mexico (UNAM). “Organised crime in Mexico and most of Latin America, however, is a regional problem and particularly related to the US. Unless the region as a whole, including the US, acknowledges it as such, there are few chances for starting to solve it in the long term. Organised crime includes not only money and drugs, but also arms, persons and body parts, and it’s a two-way street mainly with the US.”
In August, US and Mexican law enforcement authorities announced a joint venture, setting up a team based in Chicago targeting the leaders and finances of drug cartels that ship opioids into the United States. But, earlier in the year, business leaders in Mexico’s powerful Consejo Coordinador Empresarial (CCE) business lobby issued a statement that “the high levels of violence have become the greatest obstacle to (economic) activity.” This came on the back of Mexican dairy producer Grupo Lala shutting a distribution centre in the northern state of Tamaulipas and the world’s biggest Coke bottler, Coca-Cola Femsa, indefinitely closing a 160-employee distribution centre in southwestern Guerrero state.
NEIGHBOURLY RELATIONS
To outsiders, it can appear bizarre that the richest country in the world cannot work closely with its neighbour to resolve crime and other drug-related matters. But Mexico’s relationship with the US has been troubled since even before the Mexican War of 1847, which saw Mexico lose about one-third of its territory to the US. When Donald Trump took over in Washington DC, there was a noticeable cooling-off in diplomatic relations and the language, at least from the US side, hit a new low. In principle, of course, Mexico’s proximity to the US represents an enormous opportunity in terms of value-added employment, learning processes and general development.
AP RIL 20 19
ABOVE FROM LEFT: Monte Alban, a pre-Columbian archaeological site near Oaxaca, flourished from 500BC to 850AD; the vibrantly coloured embroidery of a traditional huipil garment; and the striking architecture of Mexico City’s Museo Soumaya houses an impressive art collection that spans almost ten centuries
The problem, says Professor Dussel Peters, is that the North American Free Trade Agreement (NAFTA), signed in 1994 by the US, Canada and Mexico, has been at best uneven and, in some sectors, totally ineffectual.
“NAFTA has substantially polarised Mexico’s economy, in that only a small group of households, firms, regions and global value chains have integrated through exports to the
US, while the vast majority have not.” According to Peters, the newly renegotiated NAFTA,
now known as the United States-Mexico-Canada Agreement, or USMCA, which was formally agreed on October 1, has few new and relevant topics. In fact, the most significant aspect of the agreement is that it was signed at all. The most surprising issue of the USMCA, Peters says,
“is that it does not counter the increasing disintegration within NAFTA”. According to Peters, intra-NAFTA trade increased from 42 per cent in 1994 to 46 per cent in 2001, but dropped to 39 per cent in 2017, a fall particularly noticeable in global value chains, such as auto parts and automobiles. He concludes: “The main challenges for NAFTA are not intra-NAFTA issues, but those that lie beyond NAFTA members, particularly with Asia and China.”
Surprising no one, Trump claimed a US victory on the
deal, but some observers believe it will be good for Mexico and will lead to increased trade volumes within the three countries. USMCA also ended months of uncertainty that compelled Mexico’s central bank to maintain high interest rates in case of a run on the peso. The country is now able to loosen monetary policy, giving a short-term boost to GDP that’s already expected to grow by 3 per cent in 2018.
FRESH THINKING
On July 1, 2018, Mexico elected a new president, Andres Manuel Lopez Obrador, a former mayor of
bus ine s s tr a v el ler .c om
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68
