Mexico is gearing up for what is anticipated to be a challenging and prolonged renegotiation process regarding its trilateral trade agreement with the United States and Canada, known as the USMCA.
Recent developments suggest that the Trump administration may view this process as an opportunity for leverage, particularly given their identification of over 50 barriers that could yield economic and political gains.
During U.S. Secretary of State Marco Rubio’s recent visit to Mexico, President Claudia Sheinbaum acknowledged the need for a thorough review of existing disagreements between the three nations.
She highlighted her negotiating team’s commitment to raising objections if the discussions favor the U.S. and Canada disproportionately.
The United States has raised multiple complaints concerning Mexico’s energy policies, citing favoritism toward state-owned enterprises like Pemex and the Federal Electricity Commission (CFE), which they argue contradicts the intentions of the USMCA by limiting private sector participation.
Other U.S. concerns include delays in health permit approvals that impede the entry of U.S. products, inconsistent customs procedures, and increasing protectionism towards domestic industries.
Additionally, the U.S. has highlighted concerns regarding intellectual property rights, naming various markets in Mexico, such as El Santuario and San Juan de Dios in Guadalajara, as notorious for counterfeiting and piracy.
According to USMCA regulations, both parties must conduct public consultations about the agreement’s strengths and weaknesses with their relevant industrial sectors. These consultations are set to begin this fall, with hearings scheduled around October.
One key date in this renegotiation is July 1, 2026, when it will be decided whether the treaty’s validity will be extended for an additional 16 years or terminated in 2036.
Economy Secretary Marcelo Ebrard has emphasized that his office has been addressing these issues since September. Meanwhile, President Donald Trump has expressed a desire for a comprehensive review of the treaty, despite the original terms stipulating focus only on specific areas that require attention.
Héctor Magaña, a coordinator at the Center for Research in Economics and Business at the Tecnológico de Monterrey, described the stakes involved in this negotiation.
He indicated that if conducted constructively, the renegotiation could enhance trade relations by resolving existing tensions in critical areas like energy, agriculture, and the digital economy.
However, he also cautioned that increased tensions could risk eroding trust among the partners.
Trump’s history of leveraging tariffs as a negotiating tool raises the specter of potential trade conflicts, which could have severe implications in the absence of an agreement.
Magaña pointed out that despite the contentious atmosphere, there are indications that the desire for continued economic integration in North America will prevail.
Both Mexico and Canada are demonstrating a readiness to adjust their policies to stay aligned with their trade obligations while defending their regulatory sovereignty.
Amidst these tensions, Trump’s administration appears to be coupling trade negotiations with broader political issues, particularly immigration and security concerns.
With a significant $172 billion trade deficit with the United States expected in 2024, Trump is linking trade concessions to a range of issues, creating additional pressure for Sheinbaum’s administration.
In this context, Bradesco BBI highlighted the challenge Sheinbaum faces in navigating negotiations while protecting Mexican sovereignty and the principles of the Fourth Transformation.
The visit by Rubio also underscored the historical cooperation regarding anti-drug initiatives, with U.S. officials stating that drug cartels extend their operations across North America, involving countries like China and Canada.
The need to maintain strong commercial connections was also evident during the discussions.
In a significant development following the meeting, President Sheinbaum suggested the possibility of imposing tariffs on imports from nations outside the USMCA, including China.
While it remains unclear whether this move is in direct response to American pressure, the measure could create favorable conditions for Mexico in the USMCA negotiations.
Magaña noted that such a step could align with U.S. desires for open competition against Chinese trade practices, offering both countries a potential negotiating advantage moving forward.
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