Monthly Archives: February 2014

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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Filed under Foreign investment, Global Governance, Macroeconomics, Mexico, News brief, Uncategorized

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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Filed under Corruption, Democracy, Development, Foreign investment, Macroeconomics, Mexico, News brief, Security, Uncategorized

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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Excellent article on current troubles in Brazil’s Foreign Ministry

Brazilian academic Guilherme Casarões has just published an excellent article on the current troubles in the Brazilian foreign ministry, Itamaraty. It is carried by the Cairo Review of Global Affairs.

 

Itamaraty has had a bit of a rough year, which has resulted in sustained pillorying in the press, almost substantive criticism in Congress (this is highly unusual), some rather divisive internal arguments, and relations with the presidency that are best described as ‘professional’. Debate on what is going on, why it is happening and where things are headed rages in Brazil. Casarões’s article is one of the best yet (particularly in English) contextualizing the current institutional ructions in Rio Branco’s House. Very worth a read.

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