Lopez Obrador stays put on NAFTA
New Mexican president says listing new issues would be ‘disruptive’
WASHINGTON— Mexico’s next president is a fiery left-wing populist and nationalist who says he won’t be Donald Trump’s “pinata” and says he will bring “profound” change to his country.
But he also says he won’t change anything much about NAFTA negotiations.
Andres Manuel Lopez Obrador, a longtime NAFTA critic turned recent NAFTA supporter, has worked since last year to reassure proponents of the North American free-trade pact. Since his landslide election on Sunday, his team has gone further.
In interviews this week, his chief negotiator, Jesus Seade, has said they will make no new demands of the U.S. and Canada.
“I do have ideas on things to explore to try to find a movement that’s maybe satisfactory to both sides, but not new demands, I mean not bringing in new issues … that would be very disruptive and it’s not in our interest,” Seade, a former World Trade Organization economist, told Inside U.S. Trade. “No new demands, and the flip side of that — no rejections of positions taken up [until] now by the Mexican side.”
The negotiations have been stalled over contentious demands from the Trump administration. One of the biggest disagreements is over a Trump proposal to exempt a North American car from tariffs only if a certain percentage is produced by workers earning a wage much higher than workers currently earn in Mexico.
Some analysts had speculated that Lopez Obrador might be more accommodating to this proposal than the current president, business-friendly Enrique Pena Nieto, since Lopez Obrador campaigned on raising wages for low-paid Mexican workers. But Seade, like Pena Nieto’s officials, said a trade deal should not be used to force wage hikes on particular sectors.
Pena Nieto has largely chosen to play down Trump’s insults of his country. Lopez Obrador, known for his combative rhetoric, wrote a book called Listen Up, Trump, and he vowed during his campaign to push back forcefully.
But he has struck a more conciliatory note since his victory, telling Televisa, “We are not going to fight.” He also said he would act with “prudence” in response to inflammatory tweets.
“Lopez Obrador’s skin is much thicker than Pena Nieto’s,” said Horacio A. Lopez-Portillo, a trade lawyer at Vazquez Tercero & Zepeda in Mexico. “I think he’s too much of a pragmatist to let himself be swayed by something crass or something offensive.”
Lopez Obrador, widely called AMLO, is known for his invective against political elites and corporate tycoons he says have been part of a corrupt “mafia of power.” But he showed a pragmatic side as mayor of Mexico City from 2000 to 2005, partnering with a billionaire on a major redevelopment project. He has promised not to expropriate property or nationalize companies.
“He may use sharp rhetoric, but he is very pragmatic and measured as a political leader. Are we likely to have unpredictability? Absolutely, but that will be coming from the U.S.,” said Harley Shaiken, chair of the Center for Latin American Studies at the University of California, Berkeley.
Lopez Obrador’s party, the National Regeneration Movement (Morena), will control both houses of Congress. Many Mexican business leaders, foreign investors and outside analysts remain skeptical of his professed moderation.
“Right now he has maintained a moderate tone, he has been conciliatory. But the real question is: is this really just a discourse or has Lopez Obrador changed his views? And my fear is that it is the former rather than the latter,” said Hugo Perezcano, an official at Mexico’s economy ministry for 20 years who is now deputy director of economic law at the Cen- tre for International Governance Innovation. Perezcano argued Lopez Obrador will be less inclined to fight for the preservation of NAFTA than Pena Nieto is. “If ultimately the NAFTA fails and he can blame Trump for it, I don’t see that that would be a result Lopez Obrador would find as terrible as the current administration seems to have found,” he said.
Despite Seade’s insistence that Lopez Obrador will not make new NAFTA demands, Lopez Obrador has not renounced campaign promises on agriculture and energy that may sit uneasily with the U.S. and Canada.
Lopez Obrador’s base includes farmers and ex-farmers who have suffered as U.S. imports have spiked under NAFTA. During the campaign, he pledged to increase Mexico’s agricultural self-sufficiency by imposing price floors for homegrown corn, beans and other key items.
“His whole economic platform is oriented toward reinvigorating the domestic mar- ket, which feels it’s been abandoned, and the countryside, including with government programs — some of which could possibly be prohibited under NAFTA,” said Laura Carlsen, Mexico City-based director of the Americas program at the left-leaning Center for International Policy.
In 2017, Lopez Obrador told the Wall Street Journal that NAFTA must “include migration issues.” Trump also says he wants to include immigration issues in NAFTA, but from an opposite, anti-immigration perspective.
Carlsen said it would be a “big disappointment” if Lopez Obrador did not raise labour mobility issues. She added: “Of course, if they did bring it up, and talk about it, they would get nowhere.”
Lopez Obrador does not take office until Dec. 1. Before that, some of his negotiators will join Pena Nieto’s NAFTA team. With the U.S. congressional midterms in November, it appears unlikely a deal will be struck before Lopez Obrador’s inauguration.