As part of the implementation of the Treaty between Mexico, the United States, and Canada (T-MEC), the three countries are working on an environmental agenda that includes the implementation of five trilateral projects: preservation of grasslands and migratory birds, combating the illegal timber trade, nature-based solutions to address flooding in coastal cities, the transformation of recycling and solid waste management and, finally, the reduction of marine debris.
The five projects are aligned with the 2021-2025 Strategic Plan of the Commission for Environmental Cooperation (CEC), in order to "work together to address pressing regional and global trade and environment-related issues within the framework of a new trilateral free trade agreement.
According to the documents published on the CEC website, the three North American countries would be investing a total of three million 875 thousand Canadian dollars, which at the current exchange rate is equivalent to 62 million 143 thousand 449 Mexican pesos. The plans have a starting date of July of this year and with horizons ranging from June 2023 to June 2025. However, according to documents in the possession of El Sol de México, the governments of the three countries are still fine-tuning details.
In particular, they are commenting on suggestions made by the Joint Public Executive Committee (JPEC), a group of nine citizen environmental experts - three from each country - headed by Mexican academic Pedro Moctezuma Barragan, who is also the brother of Mexico's ambassador to the United States, Esteban Moctezuma.
The most recent report of the United Nations (UN) climate panel, published on Monday, revealed that the planet's temperature is inevitably heading towards the +1.5°C threshold by 2030, ten years earlier than estimated, with risks of "unprecedented" disasters and irreversible effects for centuries or millennia to come.
To address the phenomenon, the first trilateral project contemplated by Mexico, Canada, and the US is the conservation of grasslands (habitat of threatened or endangered species) and migratory birds. To halt or prevent their loss, the plan contemplates a budget of 450,000 Canadian dollars (7.2 million pesos) over three years.
Regarding this project, the expert committee asked for the inclusion of the private sector, farmers, local communities, and academics to learn about local contexts and contribute to education and public awareness. Mexico responded that it already contemplates the inclusion of social sectors. The JPAC also suggested including legal assistance to indigenous peoples to prevent the loss or misappropriation of their lands, which the United States rejected as "beyond the scope of a CEC-funded project".
The second plan focuses on strengthening the implementation of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) to prevent and reduce illegal trade in timber species. It covers both those that are endangered and those that are not yet endangered but are at risk from uncontrolled trade. It also seeks to protect species that are "similar in appearance" to those listed as endangered. This plan will cost 535,000 Canadian dollars (8.6 million pesos) and will last 24 months.
In the third place is the project to address flooding in coastal cities with nature-based solutions. These are based on the protection, restoration, and sustainable management of natural coastal environments. The program lasts 30 months and will cost 560,000 Canadian dollars (almost nine million pesos). Although the committee of experts suggested extending the program to communities located near other bodies of water, Mexico pointed out that there are budgetary limitations to do so.
Then there is the project for the transformation of recycling and solid waste management, planned to be carried out in four years and divided into two phases. The first consists of carrying out studies to identify opportunities for the recycling sector and to identify and encourage the participation of partners or allies interested in joint work related to this activity. In the second phase, the opportunities and technologies identified in the first phase studies will be pilot tested. It will cost 1,530 Canadian dollars (24.6 million pesos).
In this regard, the JPAC considered that the project does not address waste reduction. Mexico responded that the program focuses on waste recycling and not on reducing waste generation. It noted that actions could be incorporated for the second objective, such as consumer awareness campaigns and the manufacture of products with materials that can be recycled, reused, and recovered.
The last project consists of reducing marine debris. It will cost 800,000 Canadian dollars (12.8 million pesos) and will last 30 months. The Mexican government stressed that it is important to strengthen the systems for the collection and final disposal of urban solid waste, but it is necessary to increase the budgets of the local and federal authorities or, alternatively, the participation of private capital.
The environment ministers of Canada, the United States, and Mexico will meet on September 9 and 10 in Wilmington, North Carolina, at the CEC Council meeting to discuss the urgent environmental issues facing the region.
Mexico's trade with its T-MEC partners fell 4% in the first 6 months of its term
The COVID-19 pandemic caused the Treaty between Mexico, the United States, and Canada (T-MEC) to register divergent results six months after its entry into force. According to data from the Bank of Mexico, Mexico's trade exchange (exports plus imports) with its two North American trading partners amounted to 291 billion 446 million dollars during the second half of 2020, which meant a 4 percent annual drop compared to the same period in 2019.
The negative variation was largely due to the weakness of Mexico's domestic market. On the one hand, the value of exports with its T-MEC partners amounted to US$196.98 billion, which represented an increase of 0.7 percent compared to the second half of 2019. However, imports could not tell the same story, as the value of Mexican purchases was 94 billion 466 million dollars, which meant a 12.6 percent contraction compared to the same period last year.
Despite having a free trade agreement with both countries, the preference for the U.S. market continues to be overwhelming, since 96.8 percent of Mexican exports and 95.2 percent of Mexican imports were destined for the United States, while the rest corresponded to the country of the maple leaf.
During 2020, the United States remained Mexico's main trading partner, while Canada dropped from fourth to fifth place.
Yael Gutiérrez, Foreign Trade Manager at SGS Mexico, said that the first six months of the T-MEC have represented a challenge for Mexico's exporters and importers, as it is handled differently from what was observed in the North American Free Trade Agreement (NAFTA).
"COVID-19 caused a shake-up in international trade during 2020, however, our T-MEC partners and all countries internationally are aware that supporting foreign trade is a symbol of economic reactivation, so we expect a better 2021," he said. During 2020, Mexican exports to North America fell 9 percent, while imports fell by 18.3 percent.
Tensions between Mexico and the United States grow over union disputes and differences over T-MEC
New provisions in the free trade agreement between Mexico, the United States, and Canada (T-MEC) have generated new tensions between the countries and these are approaching a tipping point. Two allegations of labor rights abuses and union corruption in Mexico, as well as differences in interpretations of export rules of origin show contention between Mexico and the United States from what was negotiated under previous administrations in 2018.
Some 6,000 workers at the General Motors plant in Silao, Guanajuato, will vote this week for or against the collective bargaining agreement negotiated by one of the country's largest labor organizations, the Confederation of Mexican Workers (CTM) - marking, in turn, a milestone in Mexico's labor history. On Tuesday, the same day that the consultation begins in Guanajuato, the Secretary of Foreign Affairs, Marcelo Ebrard, announced that he will travel to Washington with the Secretary of Economy, Tatiana Clouthier, on September 9 as part of the High Level Economic Dialogue (HLED), headed there by Vice President Kamala Harris. The success of the consultation, measured by transparency and credibility, will lay the groundwork for these meetings.
Although the scope of the HLED goes beyond trade, "the T-MEC will be more than present at that meeting because of the magnitude it represents," says Ignacio Martínez Cortés, academic coordinator of UNAM's Laboratory of Trade, Economics, and Business (LACEN). "That is why it is very important that the union issue comes out as clean as possible so that the meeting does not have an open front," adds the international trade expert. Furthermore, if the consultation fails, the United States could impose a tariff of up to 25% on the Silao plant's production.
One of the biggest differences between the old NAFTA and the new T-MEC is the provisions offered to authorities to denounce labor abuses by unions. The T-MEC included the creation of the facility-specific Labor Rapid Response Mechanism (MLRR), a first-of-its-kind dispute resolution procedure. When, in May, U.S. authorities received information that the union workers at the General Motors plant in Silao were suffering "serious violations" of their rights, the U.S. used the mechanism to demand a consultation. The T-MEC also allowed for the presence of more foreign labor attachés.
The Silao case is the second complaint filed by the Joe Biden Administration accusing the union of a plant in Mexico of preventing workers from organizing in an alternative organization to their own. Another case is that of the company Tridonex, in Matamoros (Tamaulipas), which finally reached an agreement with the Biden Administration in which it committed to compensating 154 workers who were fired, as well as to guarantee the free association of workers, among other actions.
"The two cases that the United States initiated were found to be flawed and in both cases the Mexican Government took action," said Juan Carlos Baker, a consultant and one of the negotiators of the T-MEC under the previous Administration in Mexico. "This could be seen as a success, but there are also arguments and complaints that companies and unions in the United States do not have the same protection from their government as they do in Mexico," he adds.
On Sunday, two days before the vote in Silao, the CTM issued a statement accusing foreign unions of interfering in the process. "There has been, for several weeks, constant pressure from American unions on the Mexican authorities and on the workers of this auto plant to try to influence the result; therefore, we reject this interference," the communiqué notes.
To guarantee legitimacy, the vote will be observed by the National Electoral Institute (INE) as well as the International Labor Organization (ILO). The INE has been the target of attacks by Mexican President Andrés Manuel López Obrador, who, as recently as Monday, proposed in a press conference a reform to the institution, since "they are not democrats, they do not respect the will of the people, they do not act with rectitude, they do not apply that nothing is outside the law and nobody is above the law", he said, "therefore, they cannot be there, there has to be a change".
Mexico's Secretary Clouthier has expressed her disagreement with the way the United States is interpreting the rules of origin in the automotive sector, which define how much of the parts that make up an exported product must be produced in the country, versus imported from countries that do not belong to the T-MEC. In July, after a meeting with his U.S. and Canadian counterparts, Clouthier said that since the treaty came into operation both Canada and Mexico have expressed that the interpretation of the rules as being made by the Biden Administration "is not what we agreed to in terms of the T-MEC and we have asked for a review of this issue and for the interpretation to be what was agreed to."
Changes that were made to the T-MEC
U.S. unions accused NAFTA of stealing manufacturing jobs because Mexican labor is cheaper. Democrat Nancy Pelosi, Speaker of the House of Representatives, had warned that she would not admit the new agreement unless they provided guarantees that Mexico would meet labor standards.
After months of negotiations, Pelosi said Tuesday that the agreement was "infinitely better" than the original. The new text was also welcomed by the powerful AFL-CIO union whose president, Richard Trunka, said that for the first time there will be labor standards whose compliance can be monitored.
The new provisions will force Mexico to comply with labor reforms it has already approved and to allow verification of its labor standards for goods and services, under penalty of sanctions.
The verification will be carried out by "independent labor experts. Mexico did not allow factory inspections.
The Democrats insisted on including strict environmental standards and mechanisms to monitor compliance.
As with labor, the agreement creates "environmental aggregates" in Mexico City that will oversee its laws and regulations.
The revision of the text included the chapter on medicines.
The changes removed rules requiring the three partners to grant at least 10 years of exclusivity for biological drugs, which will facilitate the rapid entry of generics into the market and thus reduce prices.
From its entry into force, NAFTA boosted U.S. trade, helped stabilize Mexico's economy, and restructured the manufacturing sector into a tri-national production chain.
Some, including Trump, accuse NAFTA of destroying U.S. jobs, but more jobs were lost to technology.
And NAFTA gave a big boost to GDP that surpassed the jobs lost by the treaty, according to the Peterson Institute of Economics.
An analysis by the U.S. International Trade Commission said that in six years, the T-MEC will raise U.S. real GDP by 0.35 percent and generate 176,000 jobs, especially in the manufacturing sector.
The Commission believes that the new pact will increase U.S. imports from Canada and Mexico, and equally so exports to those markets.
In 2017 Canada and Mexico were among the United States' largest partners.
The United States exported goods worth 292 billion dollars to Canada and 243 billion dollars to Mexico in 2017.
In comparison, the United States exported to China, its third-largest customer, goods for only $130 million dollars.
Meanwhile, the leading global economy received products from Canada for $314 million dollars in 2017 and $299 million from Mexico.
Cars: higher wages
Car manufacturing was a key element. To be traded duty-free, T-Mec will require that 75 percent of the composition of the vehicles originate in the region, when under NAFTA the rate was 62.5 percent. Also, between 40 and 45 percent of it must be manufactured by operators who earn at least 16 dollars per hour.
Mexico has admitted to respecting the safety standards established by the United States, unless the Mexican authorities conclude that they are inferior to theirs.
At Canada's insistence, the United States agreed to maintain the system of dispute settlement among partners; formerly known as Chapter 19.
But some changes were made to the mechanism known as "Investor-State Dispute Settlement. Critics say this allows powerful companies and investors to override local laws or judgments through a mechanism that is not subject to arbitrations demanding accountability.
When NAFTA was born in 1994, digital trade hardly existed at all, but 25 years later it became a key negotiating factor for a new agreement. The T-MEC prohibits the application of customs duties to digitally distributed goods such as software, games, books, music, and films.
It also restricts the power of governments to force companies to reveal ownership of source code or impose restrictions on where data can be stored.
Included in the agreement is a provision that seems designed to prevent Mexico or Canada from seeking a better agreement with Beijing.
If a signatory seeks a free trade agreement with an economy not considered as "market" - read China - the other parties can cancel the trilateral agreement and establish a bilateral one.
The new agreement will be in force for 16 years but will be reviewed every six years. If the parties decide to renew it, it will be in force for another 16 years. But if a problem arises, a period of 10 years is opened to negotiate a solution and if it is not reached, the T-MEC will expire.