USMCA: A Holiday Season to Remember

December 31, 2019 will mark the end of another year and decade. Across the United States, Latin America, and the world, the 2010s were challenging times, with booms and busts, elections and impeachments, and unceasing volatility.

It was the decade of left and right populism, mass migration, large-scale corruption (and anti-corruption efforts), persistent inequality, and continuously weak rule of law in many countries. 

With so many issues, political engagement has been high, and protests have rocked capitals and street-corners in countries across Latin America. 

Since 2017, I’ve used the word uncertainty to describe the shifts that we’ve experienced. Today, there is still much of that same uncertain sentiment. Around the world, it feels as though a new conflict could erupt at any time. 

However, even with the ever-present volatility, we’ve also settled into a new realization over the past year. In the United States, we are entering Trump’s third year in office and, in Mexico, it will be López Obrador’s second year. Throughout 2019, we’ve gained a better sense of these two leaders governing styles, political instincts, and how they react to one another’s moves. It hasn’t created a relationship without tension, but we are no longer as likely to overreact to each daily development in the bilateral relationship. 

Recently, one of the positive shifts has been the conclusion of the U.S.-Mexico-Canada Trade Agreement (USMCA). On December 10th, Speaker Nancy Pelosi announced that House Democrats had successfully finished their negotiations with Trade Representative Robert Lighthizer.  

The Democrats had put the brakes on the agreement a few months back, pushing for greater environmental and labor provisions—with a special focus on raising wages in Mexico. Their backing—and the blessing of the AFL-CIO Labor Federation’s head—means that the revised USMCA is now poised to move forward.  

Mexico’s Senate passed the latest version last week and in the United States, the House is likely to pass the USMCA this week, although even this was not without a final hiccup. However, it will take a little longer to hit the Senate floor, as Mitch McConnell has said that the agreement won’t go for a vote until after the upcoming impeachment trial, likely sometime early 2020. 

As with most trade agreements, the USMCA has its share of winners and losers. The agreement is clearly a win for Trump and his negotiating team, which was able to overhaul a major trade agreement on favorable terms. It was also a win for House Democrats and labor rights organizations, which were able to get their top issues covered by the agreement.  

The Mexican business community and negotiators may have come out with a bit less than they’d hoped. They felt marginalized in the final stages of the trade discussion, and Mexican negotiators balked over some last minute changes, including U.S. labor inspectors to monitor Mexico’s compliance with the deal.  

The bilateral trade relationship too may not come out as smoothly as expected. Over the past years, we’ve seen that Trump uses trade issues to extract concessions from other countries, meaning that even with an agreement in place, it’s not necessarily going to be a smooth ride

The first year of López Obrador’s presidency has also been instructive in how his team aims to deal with these bilateral challenges along with domestic issues. On most things, López Obrador’s pragmatic outer bounds appear to be macroeconomic stability and smooth relations with the United States.  

However, López Obrador has been challenged by ongoing issues at home, with high homicide rates, widespread crime and insecurity, and a stagnant economy. Large scale anti-corruption measures, his signature campaign issue, have not materialized, despite ongoing investigations into former officials, and the country’s middle class remains increasingly concerned with rule of law. 

With so many issues coming up in 2020, the year will be nothing short of historic. In the United States, an impeachment trial is underway, a presidential election on the horizon, and there will likely be ongoing trade negotiations with China and other countries. In a region and world increasingly demanding changes on a range of issues. it will surely be a contentious, fast-paced year filled with more than its fair share of tension. And 2020 will also set the tone for the decade to come, one shrouded in uncertainty but with some sparks of hope.  

The protests and high levels of political engagement mean that leaders everywhere will continuously be challenged to do better and smart young people appear ready to take on today’s pressing challenges. It’s a big task, but I’m optimistic that things, however grudgingly at times, will move in a constructive direction. 

Here at White & Case in Mexico City, I continue to enjoy the blessing of working with some of the finest attorneys in the country; individuals who have been central to the ongoing trade discussions, provide leadership on energy and business issues, and have been consistently recognized regionally and around the world for their excellence.  

I hope you’ll feel free to call on me in 2020 if you’re in country, or simply want to talk Mexico. From mine to yours, I wish you a very Merry Christmas, a happy holiday season, and wonderful new year.  

Antonio Garza