In the office of the United States trade representative, Katherine Tai, the first two robust lawsuits against the Mexican government for non-compliance with the USMCA are already being prepared. This is what top-level sources reveal to me.
The government of our neighbor to the north has taken note of the hostility of the Mexican president towards US companies. The reading made by President Joe Biden’s commercial team is that even though López Obrador’s energy counter-reform was not approved, there are violations of contracts, non-compliance, threats of expropriation, impediments to cooperation, and in general, an anti- that violates the United States-Mexico-Canada Treaty. That is why the Office of the Trade Representative (USTR, for its acronym in English) has chosen, among a handful of files that it had at hand to proceed against Mexico, the two that seem easier to win in a panel of the USMCA.
If the final decision to proceed against Mexico is made in the coming weeks, grave danger and high cost could be unleashed:
The serious danger is that the USMCA itself contemplates that the country that feels attacked can unilaterally impose tariffs on the alleged aggressor country. And you don’t have to wait 18 months for arbitration to do so. You can do it right away. In the event that it loses the arbitration, it would have to reimburse the cost paid to the accused country. This opens the door for the Biden administration to impose tariffs that can be very painful for the Mexican economy which has not found a path to recovery after the pandemic.
The high cost is the opportunity that Mexico is missing to take advantage of China’s problems with the United States. America is short of chips. They could be doing it in Mexico. The United States is suffering in its supply chains from Chinese defaults. Mexico could become the supplier. Mexico has the trade agreement and has the geographical position. What it does not have is a government that understands these advantages and presents itself to the world as attractive for private investment. Rather, it is presented as a threat that sees foreign investors as invaders and domestic investors as corrupt, a nation that can change the rules according to the presidential whim of the situation. Mexico is letting go cartloads of dollars in investments, which are jobs and improvement of the country’s economic conditions.
Could Mexico stop these two complaints in the USMCA? Sure. Sending friendly signals to the United States. A walk by Biden and AMLO through the White House rose garden and a couple of economic sanctions on Russia (which cost Mexico nothing because that country is not relevant in our economy) could change the perception of our main trading partner and strategic neighbor. On the contrary, López Obrador has not stopped sending hostile signals to Biden. He said that he gave him the same treatment as Putin, he has refused to condemn the Russian dictator for his invasion, he does not join the economic sanctions and on top of that, on Friday, when they spoke on the phone, he advocated the dictatorships of Cuba and Venezuela.