Mexico

The Revival of Neoliberalism and the Power of Capital in Latin America

The pink tide in Latin America, which saw a slew of left leaders elected throughout the region during the first decade of the century, has pretty much come to an end.

Right wing presidents have been elected in Chile (2010 and 2017) and Argentina (2015). In Brazil, the political right gained executive power with the impeachment of left president Dilma Rousseff. This development was followed by the election of right populist, Jair Bolsonaro, as president in 2018. While a left president was recently re-elected in Ecuador, policies are becoming increasingly business friendly. The main outlier is Mexico, which recently elected left President Andrés Manuel López Obrador (AMLO). That government is already facing rising business opposition.

Reflections on the Mexican Election. AMLO: Between a Rock and a (Very) Hard Place

     Andrés Manuel López Obrador (AMLO) won the Mexican presidential election with a resounding majority of around 53 percent of votes cast—the highest since 1982 when the Institutional Revolutionary Party (PRI) was still able to manipulate electoral outcomes. Mexican public expectations are high and the problems that the country’s new president must deal with are enormous. Making his task more difficult is that fact that AMLO has a heterogeneous support base with the various groups having different interests and priorities.

Latin America and the U.S./China Trade Dispute: Caught between Statist and Free Market Capitalism

     During the past two decades, China’s rapid economic growth and pressing need for commodities has resulted in increased trade and investment in Latin America, along with expanded lending operations to fund important infrastructural projects. Meanwhile, the U.S. administration has largely neglected the region and at times shown outright disdain. Amid the current Chinese/American trade spat, President Donald Trump is visiting a South American country (Peru) for the first time this week where he is expected to warn Latin Americans against continued close trade ties with China. The question is: what does U.S. Chinese rivalry mean for Latin America? Under the current circumstances: perhaps some short-term gains for some countries, but in the longer-term, Latin America needs to find its own development path, one that is as independent as possible from both the ideologies and interests of these two powers. 

Round 7 of the NAFTA Negotiations and Mexican Politics

     Mexican, U.S., and Canadian negotiators are currently meeting in Mexico City for the seventh round of North American Free Trade (NAFTA) negotiations. This round will deal initially with the least contentious issues, thereby opening the way to tackling the most contentious one. With the Mexican presidential election on July 1 rapidly approaching, however, arriving at an agreement on a “modernized” NAFTA is looking increasingly problematic.

Exclusion and Migration in the 21st Century

     Much has been written on the fight of millions from Global South countries in recent years. The main drivers of this out-migration have been civil war and/or high levels of social deprivation. This flow of migrants has had profound political implications in the Global North where it has been linked to the rise of new populist movements and parties. Indeed, the Trump phenomenon has played on growing American xenophobia that has been deepened by economic instability, labor precariousness, and regional poverty--all of these features have characterized the current phase of U.S. capitalism. 

Justin’s Promise of an Inclusive and Fair NAFTA Deal: Not in the Real World of Neoliberal Capitalism

    NAFTA (North American Free Trade) re-negotiations are underway with Canadian Prime Minister Justin Trudeau visiting Washington and Mexico over the last week in an apparent effort to manage U.S. President Trump’s growing protectionist proclivities. The Canadian Prime Minister has called for stronger labor rights and environmental standards. He has also advocated for chapters protecting the rights of women and indigenous peoples. Improved labor standards means not just improved working conditions for Mexican workers but also better wages—this latter aimed at reducing the imbalance between Mexico’s cheap labor market and those of its northern neighbours, a disparity held to be in part responsible for the flow of American and Canadian firms southward. Trudeau’s pronouncements indicate recognition that NAFTA has not adequately taken into the account the interests of those who have been the “losers” in the agreement.

Mexico: Politics, Earthquakes, and NAFTA

      In Mexico, earthquakes and politics are closely intertwined. The country’s 1985 earthquake (centred in Mexico City with a magnitude of 8.1) left 10,000 dead and 30,000 injured. It proved to be a defining political moment in the country’s politics. The failure of the government of President Miguel Hurtado to respond to the devastation, including his refusal of outside assistance, prompted widespread grassroots social mobilization. Spontaneously, thousands of assistance groups organized themselves to come to the aid of earthquake victims. A great many of these newly formed civil society organizations, and their opposition to the government, has been fueled by its callousness in the face of the earthquake tragedy, and has formed the bases of a new political front (the National Democratic Front) that challenged the ruling party (the Institutionalized Revolutionary Party, PRI) in the 1988 presidential election.  It is widely believed that the PRI presidential candidate lost that election although the party managed to hang onto power. Faced with clear evidence of impending defeat, the government closed down the country’s computerized voting system, rejigged the vote tally, and declared victory. But Mexico’s transition to electoral democracy had begun. The use of electoral fraud gradually diminished as it became important to convince the country’s new NAFTA partners that Mexico was a worthy trade partner. By 1997, the ruling party had lost control of Congress and by 2000 the presidency. 

NAFTA and Improving Labor Standards in Mexico: You can’t get there from here

      NAFTA renegotiations are in full swing. The second round is currently underway in Mexico City with the main issue emerging as differential labor standards among the three countries. The main concern on the part of Canadian and U.S. negotiators and their respective trade union movements is the much lower wages and poorer working conditions in Mexico as compared to the other two countries. The argument of course is that lower pay and poor working conditions in Mexico are at the root of the flow of jobs southward, putting downward pressure on labor standards in the U.S. and Canada and swelling corporate profits. The argument that NAFTA has been a bad agreement for working people in all three countries is a compelling one. That being said, can a renegotiated NAFTA agreement do anything much to address workers’ plight in Mexico? Some observers are optimistic, even seeing Trump’s push for better wages and working conditions as potentially positive for Mexican workers. However, I have my doubts.

Donald Beware: Renegotiating NAFTA with Mexico will not be Easy

      On July 17, the Trump administration released a document outlining its negotiating objectives for the renegotiation of the North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico. The first round of the renegotiations will begin on August 16. While the U.S. administration claims that it has no deadline for the completion of talks, the reality is that the 2018 Mexican presidential election could make the achievement of U.S. goals considerably more difficult. However, renegotiations are very likely to be fraught with difficulties even before the new Mexican administration takes office in late 2018. 

Mexico’s Indigenous Woman Presidential Candidate: More than Symbolic

    On May 28, the EZLN (Zapatista National Liberation Army) and the Indigenous Council of Government (CIG), selected María de Jesús Patricio Martínez, an indigenous women from the Nahua community of the state of Jalisco, to run as their presidential candidate in the 2018 election. As she readily admits, she has no chance of winning. In fact, just obtaining the opportunity to run for the presidency will be a struggle since electoral law requires that an independent candidate obtain some 850,000 signatures across 17 of the country’s 32 states.

The Latin American Left: Set for a Resurgence?

      Only very recently, observers of Latin American politics were proclaiming the decline of the populist left “pink tide, the various regimes that had come to dominate politics in many countries of the region through much of the 2000s. In 2015 and 2016, centre right leaders obtained a string of notable victories. Mauricio Macri was elected president in Argentina, the opposition in Venezuela obtained a landslide victory in congressional elections, Workers Party President of Brazil, Dilma Rousseff was removed from power through impeachment proceedings, and President Evo Morales of Bolivia lost a referendum to allow him a fourth term as president. However, recent events suggest that the left remains tenaciously resilient.

Technology and Decent Employment: Latin America and Beyond

     Lack of employment opportunities has been a longstanding feature of most Latin American countries, including Mexico, and one of the key reasons for historically high levels of poverty, deprivation, corruption, crime, and political violence. Lack of sufficient decent employment is now a widely recognized problem in the United States—one of the crucial issues in the election of Donald Trump was the loss of jobs, particularly in the manufacturing sector.

The Globalization of Corruption, Unaccountable Elites, and Electoral Democracy

For much of the twentieth century, unaccountable governments, generally unresponsive to public demands, characterized most countries of Latin America. While from the mid-1980s, electoral democracies seemed to have put an end to the cycles of left populist authoritarian regimes and military dictatorships, authoritarian features (lack of accountability, the absence of the rule of law, etc.) have remained firmly entrenched.

The Trump Effect: Will Mexico’s Left Populist Leader Prevail in the 2018 Presidential Election?

     A growing number of U.S. observers are watching the impact of Donald Trump policy pronouncements on Mexican politics with considerable unease. Left populist leader, Andrés Manuel Lopez Obrador (or AMLO as he is widely known), currently the favoured candidate in the 2018 presidential election, has been variously characterized as a Mexican Donald Trump and as a Mexican Hugo Chavez. In some ways, these characterizations are apt. AMLO is a charismatic leader, who has regularly delivered tirades against free trade (including NAFTA), rigged elections, corruption in high places, and the country’s ruling elite, which he refers to as the “power mafia.” He voices strong opposition to U.S. Imperialism, a position that is proving particularly attractive given President Trump’s support for a wall along the Mexican U.S. border, his threat of a 20 percent tariff on goods coming from Mexico, and his promises to deport Mexicans working in the United States. President Trump’s recently leaked suggestion that the U.S. might send in its military to help the Mexican government round up its “bad hombres” is only the most recent offensive remark contributing to growing Mexican nationalist sentiment. 

Mexico and the Wall: Trade Deficit Figures as Fake Accounting in the Era of Economic Globalization

    In recent weeks, President Donald Trump has made much of the U.S. trade deficit with Mexico, arguing that Mexico has been on the winning side of the North American Free Trade Agreement (NAFTA). According to Trump, the U.S.’s 60 billion dollar a year trade deficit with Mexico demonstrates that most of the benefits of the agreement have flowed south. Indeed, given the apparent windfall accruing to Mexico, Trump has no qualms about demanding that Mexico pay for the wall he plans to build along the border. In a recent television interview (1), I suggested that a country like the U.S. could run a trade deficit for some considerable time without economic growth repercussions. Indeed, since the signing of NAFTA economic growth in the U.S. has been consistently better than Mexico’s. While it's important to acknowledge the fact that many workers in the U.S. have faced stagnant wages and job losses, Mexican workers have, on balance, fared even worse than their American counterparts. Hence, if workers in neither country have benefited, what does this trade imbalance between Mexico and the U.S. actually tell us? And, if workers in neither country have benefitted, who has? 

The Trump Era Begins: Will the Political Establishment (everywhere) Learn its Lessons?

    As Donald Trump assumes office as the 45th president of the United States, widespread pessimism about the impact of his presidency abounds. The Donald has not backed off from (what appeared at the time) to be his most extravagant campaign promises. He has ramped up his rhetoric against China and Mexico as at the root of the decline of American manufacturing. He has announced that he will re-negotiate NAFTA and, if America does not get what it wants, will abandon it. The U.S. will not enter the Trans Pacific Partnership (TPP) trade agreement. The era of pursing free trade agreements with the rest of the world is gone, at least for now. Instead, we can expect his administration to slap tariffs on products manufactured abroad by U.S. companies and re-exported to the U.S., particularly in those sectors where it appears that companies have changed production location for the sake of reducing the cost of labor. Many commentators recalling the prelude to the Great Depression of the early 1930s, have raised fears about a decent into the protectionist policies of the past, a sharp deterioration of economic growth, and the onset of a severe recession. Others have opined that companies will simply seek other ways of reducing costs (and maintaining profits) such as through the use of robot technology. In general, most political observers place a great deal of blame on Trump himself for stirring up anti-trade public sentiments. Others focus on the racist/anti-immigrant and misogynist predispositions of Trump supporters, arguing that he has fostered these attitudes and rendered them legitimate. 

The Global Economic Order and Exclusion in Mexico

    U.S. president-elect Donald Trump has targeted Mexico as one of the main sources of job losses in the U.S., leaving many people with the mistaken impression that countries such as Mexico have been the winners in the global competitive game. However, today’s liberal trade and investment order, as I suggested in an earlier blog post, has not, on balance, benefitted Mexico. From 1996 to 2015, the Mexican economy has grown at the average annual growth rate of only 1.2 percent. With such lacklustre growth, the country’s poverty rate increased by 2.9 percent between 2008 and 2014. Inequality has also risen. While the top 10 percent saw their incomes rise, the bottom 50% of the population either failed to see their situation improve, or saw it deteriorate. In 2012, the total household income of the bottom 10 percent of the population was substantially lower than it was in 2008, despite some slight improvement in 2010.

The TPP is Toast: This could be good news over the long term for Latin America.

    On Monday of last week, President-elect Donald Trump, outlining plans for his first 100 days in office, declared that he would withdraw the U.S. from the Trans-Pacific Partnership (TPP) trade deal and replace it with “fair” bilateral agreements. As the Japanese Prime Minister, Shinzo Abe, one of the 12 signatories to the deal, declared, the TPP “without the U.S, is meaningless.” The agreement aimed to lower barriers on trade and investment among twelve countries (bordering the Pacific Ocean: US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru), accounting for approximately 60 percent of the world economy and 40 percent of the world’s population. 

Mexico, Trade, and the U.S. Election - Winners and Losers

    Mexico’s political and economic leaders are clearly terrified about the prospects of a Trump election victory. However, they should probably not be too sanguine about a Clinton victory either—although Presidential candidate Hillary Clinton has rejected the idea of a wall along the Mexican/U.S. border, she has gone on record as supporting “a barrier to prevent illegal immigrants from coming in” (1). She, like Republican presidential candidate Donald Trump, also supports the renegotiation of the North American Free Trade Agreement (NAFTA). To many observers it appears that Mexico has much to lose should the US abandon its enthusiasm for free trade agreements. It has, but the agreement has already been very costly for Mexico.   

Latin America in the Wake of Brexit and Trump: Calamity or Opportunity?

    Britain’s exit from the European Union and Donald Trump’s candidacy for the U.S. presidency have dominated the media for some time now, with much of the coverage focusing on domestic and European Union impacts. While Brexit is a certainty, the popularity of Donald Trump, even should he not be elected president, may well usher in an era of greater U.S. isolation—Hillary Clinton has recently backed off from her earlier unconditional support for the TPP trade agreement. Only a handful of reports have explored the economic implications of these events for Latin America. Even fewer have explored the potential political fallout.