TELECOMS IN MEXICO

Mexicox telecom

 

Last week, the House of Representatives approved the last set of regulations of the telecommunications reform launched by President Enrique Peña Nieto. This law is only part of structural changes that the current administration started in 2013. In recent visits to Mexico, the Managing Director of the IMF, Ms Christine Lagarde and the Secretary General of the OECD, Mr. Jose Angel Gurria praised the initiatives started by President Peña Nieto, with the support of the Pacto por México coalition (see previous post). Both representatives agreed that this will transform Mexico’s economy and will improve living standards in the medium term.

The main objective of the reform is to foster fair competition and to increase the productivity of the Mexican industry, especially of micro, small and medium enterprises (SMEs). According to the 2009 economic census (INEGI), SMEs represent 98% of the economic units, produce 52% of GDP and employ 72% of labour force in the country. This means that SMEs are the corner stone of the Mexican economy and therefore it is vital for the country to create conducive conditions for SMEs to flourish. In practical terms, the telecommunications reforms seeks to lower prices and increase quality and coverage of services.

The Senate passed the bill on the 4 July, while the House of Representatives ratified it on the 8 of July. In both chambers, PRD vote against it. Critics argue that there was not any real debate and that there are major gaps in the regulation. It is believed that major corporations were able to protect their interests and that is why the law took more than eight months to be finalised. However, the strength of the reform is that it is embedded article 6 of the National Constitution, which related to the freedom of speech.

While there are many other elements that can be highlighted, for those who have lived in Mexico would agree that these are significant steps that if fully implemented will bring large benefits to telecommunications users. So here are only a few of the practical aspects of the reform, but as experts would notice the extent and technical details of the reform are far beyond the scope of this post. To start the law establishes the Federal Institute of Telecommunications (Instituto Federal de Telecomunicaciones or IFETEL), replacing the old Federal Commission. IFETEL is an autonomous government body that will function as an anti-trust agency in the sector.

Regarding phone and mobile phone services we can underline the elimination of long distance call and roaming charges, refund of fees for early termination of contracts, mobile devices will be sold unlocked, possibility for mobile phone users to transfer their number across to the carrier of their choice. As for television and radio broadcasting, there will be two new national open television broadcasters and a new state radio and television broadcaster with national coverage and private televisions (pay TV) will be able to telecast free-to-air television for free. Moreover, parental services will be implemented to restrict adult content to young users, any discrimination based on gender or race will be monitored and sanctioned, access to people with disabilities will be enhanced and illegal use of personal data will be strictly penalised. For further details see here.

The success of the reform is still to be seen. Mexico’s telecommunication sector is dominated by few powerful actors, so the challenge for Peña Nieto administration is to actually ensure that the telecoms law is fully implemented and that hegemonic competitors are dismantled to allow fair competition in the sector. Nevertheless, right after the approval, telecommunications mogul Carlos Slim, unexpectedly announced that he will sell part of its business. It seems perhaps that dominant players are one step ahead of the game. Will the new IFETEL (and  Peña Nieto’s government) be up to the test?

The full text of the telecoms reform can be accessed here (Spanish version only).

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Renewed directions in Peruvian foreign policy

Incoming Peruvian foreign minister Gonzalo Gutiérrez recently gave a television interview mapping out some key priorities for Peruvian foreign policy.

The key points:
–Latin American integration is very important for Peru

–The Pacific Alliance is a critical structure, acting as a ‘trampoline’ for deeper engagement with the Asia-Pacific. The Pacific Alliance process is evolving well and will push new elements of trade regulation harmonization, worker mobility and education going forward.

–Exchange with Asia is critical for Peru’s future and trade agreements are already in place with China, Japan, Korea and Thailand.

–Work is progressing on eliminating Shengen Visa requirements for Peruvians, which the Chancellor takes as a sign that Peru is being seen as an emerging regional power in Latin America that merits the confidence of international partners, in this case specifically the European Union.

–The next big trade agreement priorities highlighted are the Trans-Pacific Partnership and an FTA of some form with India.

 

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LATIN AMERICAN DONORS’ DEVELOPMENT COOPERATION POLICIES

Last February, the Development Policy Centre at Crawford School of Public Policy of ANU hold the 2014 Australasian Aid and International Development Policy Workshop. The event had more than 50 papers spread over some 19 plenary and panel sessions, session topics include: changing aid frameworks, labour mobility, disaster management, health and aid, fragile states and governance, and more.

ANCLAS Deputy Director Dr. Sean Burges and Carmen Robledo, ANCLAS Associate and PhD candidate at the School of Politics of International Relations of ANU represented ANCLAS in the event.

Dr. Burges participated in the  a plenary panel session – Making their mark: the BRICS and aid with the presentation titled “Brazil’s international development cooperation: old and new motivations”. To read an abstract of Dr. Bruges’ presentation visit the DevPolicy blog.

Ms. Carmen Robledo participated in a panel on donors studies. Her presentation focused on the motivations driving developing assistance policies in Latin America. To see the slides of Carmen’s presentation click here and to read an abstract of this presentation see her contribution on the DevPolicy blog.

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MEASURING WELL-BEING IN A CONTINENT OF CONTRASTS

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A few days ago, Forbes magazine released the 2014 list of World’s billionaires. Seven Latin American billionaires made the top 100, with Mexican telecom tycoon Carlos Slim, in the second spot. In total, there are almost 100 billionaires in the continent and their combined fortunes add up to US$500 billion.  But on the other hand,  Latin America is still home of 160 million of poor, equivalent to 35% of the population in the region (World Bank data), despite intense governmental efforts to reduce poverty.

Furthermore, the OECD in the report How’s life in 2013 noted that countries, such as Mexico and Chile are way below the OECD average of GDP per capita and gini coefficient. However, the report also mentions that despite economic difficulties faced by the population, Brazil, Mexico and Chile have higher spreads of life satisfaction. In fact, out of range from 1 to 10, Mexico scored 7.3, Brazil got 6.7 and Chile scored 6.5 just below the 6.6 OECD average score.

The How’s life in 2013 report shows a new approach to quantify and understand poverty. At first well-being of population was measured only on the basis of material resources reflected on the GDP per capita. In the early 1990s, the UNDP Human Development Index (HDI) incorporated health and education. Today, several countries are shifting to more comprehensive forms of measurement. This new methodology seems to take on board the approach based on capabilities (functionings) that Amartya Sen fiercely defended.

In 2008, Mexico started using this method in its poverty measurements and included six basic social rights in the Law for Social Development. Also, Colombia, El Salvador and the Brazilian state of Minas Gerais have included multidimensional approaches to measure poverty. These governments sought to a better assessment of the capabilities and potential of citizens.

But what exactly is a multidimensional approach of poverty? Poverty itself has several aspects. Poverty measurements should include elements that could cause or further increase the situation of deprivation populations. El Salvador, for instance, identified eight dimensions to be observed and addressed as part of its poverty measurements: employment, housing, education, security, recreation, health, nutrition and income. Colombia chose to evaluate social and health conditions by measuring the following five conditions: education, childhood and youth, labour, health and access to household utilities. While Mexico selected educational, access to healthcare, social security, housing quality, access to basic services and nourishment. In turn, based on these elements the Mexican government classified deprivation in three categories: 1) food insecurity (extreme poverty), 2) obstacles to development of capabilities (access to education and health) and 3) material deprivation (access to adequate housing and transport).

This trend is not unique to Latin America; Bhutan, Malaysia and some areas in China have also adopted it. The most commonly known is the Gross National Happiness Index of Bhutan that includes nine dimensions.

The importance of a multidimensional poverty approach is based in the fact that it highlights aspects that are lagging behind and that require intervention. In other words, by having measurements of different dimensions of deprivation, decision-makers are able to identify elements that need immediate attention of public policies. Policy-makers can also observe progress of social policies and can reassess the continuation or reformulation of current strategies.

While developing countries have made significant efforts to better understand and find solutions to address poverty, results are meager and governments still face enormous challenges. The multidimensional index is a photographic representation of the reality of poverty. To change the socio-economic landscape of the continent of contrasts, coordinated public and private efforts, along with civil society engagement, are in most need to eradicate poverty and reduce inequality.

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LESSONS FROM MEXICAN ECONOMIC REFORMS.

John Kehoe, from the Australian Financial Review, published today an op-ed on the economic reforms undertaken by Mexican President Peña Nieto.  Kehoe highlights the political agreement reached among the three major parties (PRI, PAN, PRD) that have enable the current administration to pass the much needed reforms (previous post). Despite outstanding challenges to overcome, such as violence and corruption, Mexico earned ‘A’ grade sovereign rate from Moody’s credit rating agency as a result of such reforms.

 

Kehoe further notes Australian Treasurer Joe Hockey comments, on Mexico’s efforts to undertake domestic reforms to cope with global volatility. Last weekend in Sydney, G20 Finance Ministers and Central Bank Governors committed to promote a resilient financial system and to foster a conducive investment environment. The author concludes that Mexico, along with other developing countries, is in a much better position to fulfill the G20 commitments.

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Peña Nieto on the front cover of TIME magazine

TIME EPN

Last 16 February, Mexican President Enrique Peña Nieto made the front cover of TIME magazine. This issue spark off a heated debated in social media in Mexico, criticising Michael Crowley, the author, and TIME for allegedly “selling out” themselves to the Peña Nieto government.

As Crowley rightly points out, Peña Nieto only won the presidential election with 38% of the votes and therefore it is evident that his detractors react this way. I agree that perhaps the title of the story would have been better with an interrogation mark at the end: “SAVING MEXICO?”, but I must concede that the author presents both sides of the same coin. He highlights achievements and strengths of the country, but also points out the numerous challenges that the current government still has to overcome.

At the same time, I must recognise the sharp Mexican humor to transform the cover into this one.

In any case, I strongly invite you to read the article (or Spanish version) and make your own judgement.

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Looking back on 20 years of NAFTA: critical perspectives from Mexico

nafta-anniversary

On February 19th, the presidents of Canada, the United States and Mexico will meet in Toluca, Mexico (Peña Nieto’s heartland) to look back on the twenty years of the North American Free Trade Agreement (NAFTA, or TLCAN in its Spanish acronym). At the time, Mexican President Salinas had promised his citizens that with this agreement Mexico would finally take its place in the “First World.”

The Mexican Treasury (Secretaria de Hacienda) has published an overview of NAFTA, highlighting its positive aspects. According to its information, every minute, $2 million USD is traded between the three member countries of the agreement. But how much of this comprises Mexican products made in Mexico? Enrique Galvan Ochoa, a prominent Mexican commentarist, recently provided an overview on this issue on morning news radio MVS in Mexico. To start with, Galvan Ochoa highlights that Mexico still continues to export petroleum without processing it, and points out that in 20 years of NAFTA, Mexico has not built one refinery on its soil. Any refinery that is built in coming years will likely be done so with ownership by a foreign company, given the recent constitutional reform regarding PEMEX. Petroleum aside, the figures show that Mexico exports $328 billion USD worth of products each year. However it is important to note that of this total, only a third of these products are produced in Mexico, wheareas the rest of the earnings come from products that have been re-assembled using mostly foreign parts, and with some Mexican value-added. This sector, which is mostly made up of the ‘maquiladora’ style factories that populate the Mexico-US border, is the one that has grown the most from the NAFTA agreement.  According to the argument of Galvan-Ochoa, in order to remain as a developing country exporting crude oil and assembled factory products it was not necessary for Mexico to enter into NAFTA.  

When Mexico signed the NAFTA agreement, it meant opening its borders to imports from Canada and the US.  Mexico stands in 3rd place worldwide as an export destination for the US, and 5th for Canada. One of the interesting aspects regards food. Mexico now imports most of its food and sends its best quality corn to the United States, receiving sub-quality corn in return. 20 years ago you would have noticed that all the tacos in Mexico were made with white corn which is high in nutrients. These days you will find Mexicans often eating yellow corn tacos which are much less nutritious. The diets of Mexicans have changed radically with the advent of NAFTA, with processed products, red meat and soft drinks becoming a daily part of the Mexican diet, to the point where Mexico has now overtaken the US as the most obese country in the world. UN Special Rapporteur on the Right to Food, Olivier De Schutter, on a recent visit to Mexico in 2012, described Mexico as having been subjected to a “Coca-cola-nization” in the last 20 years.  

For other interesting commentaries on NAFTA, Jeff Faux from the Economic Policy Institute has published this critical article in the Huffington Post relating NAFTA to the escalation of Mexico’s drug war.  

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