Trump, Mexico, and the TPP

The article “Mexico ready to discuss NAFTA with Trump, eyes non-US TPP” discusses Mexico and their actions with respect to the TPP post the Donald Trump vote. (http://www.reuters.com/article/us-usa-election-mexico-idUSKBN1352N0?il=0) Per the article “Mexico is willing to discuss NAFTA with U.S. President-elect Donald Trump but may seek to circumvent the United States on a broader trans-Pacific deal if necessary…”. The main mission of the discussions are to “persuade Trump how beneficial NAFTA… had been for North America”, and how “… the world is not competing by country, it’s competing by region…”. While currently no date has been established, both parties are anticipating one soon. “Mexico and the United States do about half a trillion dollars in trade every year, with the balance of commerce favoring the smaller country by tens of billions of dollars”. Despite this, Mexico is the US’s second-biggest foreign goods market after Canada. How will these negotiations play out? Only time will tell.

Mexico’s Procurement Commitments within the TPP

The article “TPP Procurement: Mexico’s Commitments” (http://trade.djaghe.com/) provides an excellent summary of Mexico’s procurement plans under the new Trans-Pacific Partnership agreement. The article divides these plans into five main segments which are thresholds, coverage of entities, coverage of goods and services, traditional measures, and permanent measures.

  1. Thresholds: Mexico has decided to mirror the procurement thresholds utilized under NAFTA, a few of which are $79507 for goods and services, as well as $10,335,931 for construction services.
  2. Coverage of Entities: Similar to the Thresholds section, Mexico has agreed to use the same coverages as are used under NAFTA. Additionally, as in NAFTA, Mexico will not cover any sub-central entities.
  3. Coverages of Goods and Services: Contrary to Coverage of Entities and Thresholds, Mexico will not follow their pre-arranged coverages of goods and services established under NAFTA, in which, as of 2005, utilizes a negative list of excluded services. Like most parties within the TPP, Mexico plans to use a positive list for goods purchased, while continuing to exclude the same services that are excluded under NAFTA.
  4. Transitional Measures: Mexico has stated they will utilize the same transitional measures that were applicable to NAFTA between 1994 and 2002. These transitional measures, however, do not apply to Canada, Japan and the US.
  5. Permanent Measures: Following after Transitional Measures, Mexico plans to mimic the permanent measures used under NAFTA that favor its domestic industry.

While more in-depth information is available in the article listed above, as well as through other sources, this provides a great overview of Mexico’s strategic plan within the TPP, as well as the similarities and differences from NAFTA.

South Korea, Mexico and the TPP

South Korea, one of Asia’s strongest countries, was not included in the TPP deal. South Korea has expressed interest in joining the Trans-Pacific Partnership, but until now has not been allowed access. However, as expressed in the recent article “South Korea, Mexico Agree to Restart Free Trade Discussions” (http://www.livingstonintl.com/international-regulatory-updates/south-korea-mexico-agree-to-restart-free-trade-discussions/) there have been recent talks of a trade deal between South Korea and Mexico. President Park Geun-hye visited Mexico in early April, and “hinted at an interest in developing an agreement with her country’s top Latin American trade partner. President Park was also quoted saying “I think it’s meaningful for South Korea and Mexico to sign a free trade agreement to expand trade investment and strengthen economic cooperation.” The logic behind her suggesting is that while Mexico is part of the TPP, the 12-nation trade agreement is still a long way away from being implemented. As stated in the article “with the status of the agreement gummed up in the U.S. Congress and no clear path in sight for the TPP, the Mexican government seems to have decided that a deal with South Korea is worth pursuing.” Once the TPP is implemented, Mexico will have access to various Asian markets, and a free trade agreement with South Korea may not be necessary. How will these trade negotiations affect South Korea’s chances of being admitted into the TPP? Will Mexico receive push-back from other TPP members for these recent negotiation talks? Will this delay the TPP adoption even further? In the case of South Korea, Mexico, and the other TPP members, only time will tell.

Mexico Reaping Rewards from the TPP

In the article “American Jobs Leaving for Mexico – Ford Motors Just Showed Us What the TPP Will Do to the US Economy” (http://www.dcclothesline.com/2016/02/11/american-jobs-leaving-for-mexico-ford-motors-just-showed-us-what-the-tpp-will-do-to-the-us-economy/) , a recent announcement from Ford Motors is discussed due to the TPP, as well as other future actions that TPP may cause. Per the article Ford Motor Company recently announced plans to manufacture 500,000 vehicles at a new facility in Mexico. This announcement comes at the heels of a similar announcement by General Motors, who announced a $5 billion investment to double its productions capacity in Mexico by the year 2018. Is this caused directly by the TPP? “While the TPP has been touted by politicians as an extraordinary benefit to the US, Mexico’s labor costs will instead help that country’s economy reap the rewards, already evidencing the enormous trade deal’s similarities to NAFTA(the North American Free Trade Agreement), which many have come to view as a disaster for the US”. According to the article, Ford’s announcement comes after negotiations by the United Auto Workers union for more expensive labor contracts. Incidentally, hourly rates in the US are already around five times greater than those in Mexico, and are expected to expand further in the future. Will this trend continue with other auto manufacturing companies? Will it extend to other manufacturing industries as well?

NAFTA on Steroids?

In an article (http://www.telesurtv.net/english/news/NAFTA-on-Steriods-National-Mexican-Union-Protests-TPP-20160130-0007.html) posted following a TPP negotiation team meeting in which Roberto Zapata, the head of the organization, stated that Mexico was ready to join the TPP, the Mexico National Workers Union have openly rejected the signing of the Trans-Pacific Partnership. “We say no because it was negotiated without consulting us, but also because it will bring serious consequences for Mexico, United States, Chile, Canada, and Peru.” Additionally, the protesters argued that only transnational corporations will benefit from the signing of the TPP. Additionally, two noble prize winners, Joseph Stiglitz and Paul Krugman, oppose the TPP because they argue “it has the potential to harm people’s quality of life and it is an agreement that has been negotiated in secret”. In reference to the 1994 free trade agreement that Mexico signed with the US and Canada that ended in “disaster for local agriculture”, this new TPP is a “NAFTA on steroids” and could “negatively impact food security and undermine Mexican farmers”. Are these arguments valid? What are the potential benefits for Mexican farmers that are not being recognized?

Mexico, Renewable Energy, and the TPP

With the emergence of the Trans-Pacific Partnership, or TPP, there has been both criticism and applause at the new reform and its current endeavors. The article, “The Future of Renewable Energy to TPP Countries” (https://www.commerce.gov/news/blog/2016/01/future-renewable-energy-tpp-countries) highlights one of the potential positive results from adopting the TPP. As stated in the article, “The renewable energy industry remains one of the most dynamic, fast-changing and transformative sectors of the global economy”. Per the article, it is estimated that 60% of “new generating capacity installed” over the next 25 years will be attributed to renewables. This estimation, if proven correct, could result in major economic successes for the TPP-participating countries, one of which is Mexico. While energy reforms make “projecting renewable energy exports to Mexico” difficult, it is potentially the most lucrative future prospect for US renewable energy exports. Currently, wind projects play a major role in the clean energy buildup within Mexico, they lack the full wind supply chain. Due to this, US suppliers are “well positioned to participate in this future growth”. Would it be more beneficial for Mexico to form export agreements with the US, or construct their own wind supply chain? Will labor rights end up playing an issue within this partnership?

Will the TPP Destroy Jobs in Mexico?

In a translated job article title “TPP Will Destroy Jobs in all Partner Countries”( http://www.pressreader.com/mexico/el-economista-mexico/20160119/281724088557322/TextView), future projections made by Tufts University are analyzed. One of the first and most impactful projections is that Mexico will lose 78,000 jobs within the first 10 years of being in the TPP, while still achieving a .98% growth within the same time period. In continuation, the article suggests that every member of the TPP would experience job loss to some degree as a “result of the application of the standards and trade liberalization that establishes the agreement”. The article projects that Mexico would rank second in jobs lost, losing only to the United States. Do these projections seem plausible? Would these countries agreed to the TPP if such job loss was imminent? If correct, what measures can be taken to counteract these negative outcomes?