International Trade

Mexico’s Upcoming Presidential Election and Potential Implications for NAFTA

Mexico’s political history until the middle of the 1990s was dominated by elections that were won almost exclusively by a single party – the PRI (Institutional Revolutionary Party). In 1994, despite the assassination of the PRI candidate, the party held onto the presidency by a hair’s width. That was also the year that Mexico entered the North Atlantic Free Trade Agreement (NAFTA). In 1997 the PRI lost control of the senate in the mid-term election, however, 2000 was the true watershed moment when National Action Party candidate, Vicente Fox, became President – a shift in party control that had been 70 years in the making. The successful transfer of power held in the 2006 election when Felipe Calderon, also a member of the National Action Party won the presidency. Calderon almost immediately deployed troops to combat the drug cartels in the north, triggering the drug war that continues to this day. In 2012, the PRI candidate Enrique Peña Nieto won continuing the drug war and overseeing the beginning of negotiations to revise NAFTA.

Mexico will hold presidential elections in July with a number of candidates in contention.  Three groups of political parties have created coalitions behind the three frontrunners. PAN and the PRD (Party of the Democratic Revolution) have gotten behind Ricardo Anaya; the PRI’s coalition supports José Antonio Meade; and Andrés Manuel López Obrador (AMLO) gathered his own coalition around the party he founded, MORENA.

AMLO is currently leading in the polls by 15 points. He is running on a nationalist/leftist platform supporting amnesty for drug cartel criminals, universal higher education, infrastructure development, social programs and fiscal responsibility. AMLO is also focusing on ending construction on the new Mexico City airport, one of the largest public works projects in recent history. Graciela Marquez, AMLO’s Economic Advisor has stated AMLO’s plan in office is one of budget transparency and prudent debt management. In prior presidential elections, he received backlash for criticizing NAFTA and currently wants to protect rural farmers from the cheaper agricultural imports from the U.S. AMLO’s ideas focus on balancing inequality and public investment to help the poor.

Ricardo Anaya is following AMLO at 30 percent in the polls. His candidacy is supported by an interesting coalition, NAP, a center-right organization and the PRD, AMLO’s former left-wing splinter group from PRI. If elected, this electoral coalition intends to be a coalition government. Their platform centers on opposition to AMLO and his protectionist attitudes.

Anaya’s primary policy positions are honesty, security, and equality. Anaya is taking the issue of corruption seriously, and plans on creating institutions that counter the culture of corruption in Mexico. The Anaya administration would create an independent prosecutor free from political influence to go after corrupt officials. He has also proposed the idea of “civil death” where an official found guilty of corruption can never hold office again. There would be penalties for the parties of corrupt officials as well, preventing them from running a candidate in the next election. This concept applies to government contractors too; those being found guilty of corruption would never be able to accept a government contract again. Anaya does not agree with the execution of the drug war, and is looking into ways to reduce violence. His current plans are to remove control of the police from the Ministry of the Interior and create an independent Civil Security Ministry. Anaya is also concerned with inequality and wants to advance a number of proposals for health, education, and public/private investment.

José Antonio Meade is a highly qualified government official with experience in multiple administrations across parties and across executive departments including stints as Secretary of Energy, Foreign Affairs, Social Development and Finance. As the candidate for PRI however, he has a stigma of 70 years of corruption and backroom dealing to overcome. His four policy objectives are security, the economy, quality of life and corruption.

Meade doesn’t believe the previous administrations’ approaches to the drug war have been effective. His plan is to change the architecture of the security forces, creating an independent non-political agency to enforce the law. He also wants to better equip and train the police for investigation and prevention, two areas where they are sorely lacking experience. The police have been used for suppression and intimidation (by the PRI) for so long they have lost their capabilities in the areas that are needed in effective law enforcement.

International trade is an important element of Meade’s plan to leverage Mexico’s power as a global manufacturer into more jobs for Mexicans. Meade has focused much of his outreach on disaffected groups integrating youth, women and many others that participate in the informal economy into his support base. Finally, Meade is looking for more government transparency with public officials making their financials public to see if there are inconsistencies from corrupt money sources. He also wants transparency in public contracts by making the bidding process a matter of public record for review by the citizenry.

Electoral outcomes in Mexico are likely to have a strong influence on NAFTA renegotiations which began in August 2017 and are ongoing. The stated views of all the candidates are similar. The sunset clause proposed by President Trump which would call for NAFTA renegotiation every five years is universally unpopular with the candidates as it would cause investor uncertainty. Given how long trade talks take, there would barely be any time between finishing negotiations for the last iteration and beginning the next negotiation round.

Anaya and Meade strongly support business interests both domestic and beyond Mexico’s borders and want to increase trade. They also support the current rules of origin and want to include immigration issues in NAFTA. AMLO has dropped much of his protectionist rhetoric of years past and wants to see the renegotiations through. He wants Mexico to be “open to global economic forces’ and wants to preserve the dispute resolution clauses in the NAFTA agreement.

While Meade and Anaya want the NAFTA negotiations concluded as soon as possible, AMLO would like to see the negotiations continued in December when the new president takes office. He clearly wants to have input˗ the question is what kind of input he wants to have.

In Depth: International Trade

International trade creates and supports millions of American jobs that offer higher than average wages and drive economic growth. As a testament to the strength of American entrepreneurship, the vast majority of U.S. exporters are not large corporations but small to medium-sized enterprises. Those that doubt the power of global…

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