U.S. and Mexico: Solid dialogue, lots to do.

Since my last newsletter, there’s been no shortage of activity in U.S.- Mexico relations. At White and Case here in Mexico City, we continue to monitor in-country developments. And given our firm’s global reach, we are able to focus on changes affecting companies and markets worldwide. You may be interested in taking a look at our five big themes of change. 

Last week, the Biden administration announced that it would lift U.S. land border restrictions on vaccinated travelers. After more than a year of “non-essential” travel restrictions, this was long-anticipated news for U.S.- Mexico for frustrated border communities and suffering businesses. According to a Baker Institute estimate, Texas counties alone lost $4.9 billion in total GDP in 2020. Mexican Foreign Minister Marcelo Ebrard said that the end of restrictions will coincide with a push to reactivate the economy in its industrial northern states. 

After the third wave of the pandemic in August, cases and hospitalizations are steadily dropping on both sides of the border. This week, Mexico City was among 20 states determined to be low-risk green on the country’s epidemiological stoplight map. On a cautionary note, while Mexico has received more vaccine shipments from the U.S. than any other Latin American country, setbacks in logistics distribution have left its 41 percent full vaccination rate behind Argentina, Brazil, and Ecuador. 

On immigration, the number of migrant crossings remains high, and the Biden administration has responded with a mix of policies and enforcement. 

Despite lifting land border restrictions, the Biden administration will continue to use Title 42 of U.S. public health code to rapidly expel potential asylum seekers back to Mexico or their countries of origin. Several weeks ago, a district judge found the Department of Homeland Security’s expulsions of families under Title 42 unlawful, yet the appeals court ruled the administration could continue expulsions while the lawsuit proceeds.

Since September, the administration has used Title 42 to send thousands of Haitians back to Haiti, prompting criticism from a top State Department legal expert and the resignation of the special envoy to Haiti. As a growing number of Haitian and South American migrants arrive at the border, the State Department is reaching out to countries across the region to curb migration. 

In the next month, the Biden administration is prepared to restart the Trump-era Migrant Protection Protocols (MPP), after a district court ruled that the DHS improperly terminated the policy earlier this year. Under MPP, migrants and asylum seekers were returned back to Mexico to wait for their U.S. immigration cases and many were subjected to kidnapping, sexual assault, and other violent crimes. The administration is still negotiating re-implementation with Mexico. 

On energy, President Andrés Manuel López Obrador sent Congress a proposed constitutional amendment to increase state control of electricity generation, undoing many of the changes instituted by the 2013 energy reform. Analysts believe that such a move would make energy more expensive and less reliable for consumers. And Texas senators and members of Congress expressed concern in a letter that the proposal could violate key tenants of USMCA. For more on the proposal itself, I encourage you to take a look at the latest White and Case client alert.

The Biden administration continues to strive to institutionalize and broaden the bilateral relationship. This week, Biden’s climate czar John Kerry met in southern Mexico with López Obrador to discuss the U.S.’ renewable transition and climate change. Additionally, in my last newsletter, I wrote about the relaunch of the High Level Economic Dialogue that took place last month in Washington D.C. 

And on October 8th, the Biden and López Obrador administrations met again in Mexico City for the High Level Security Dialogue, this time with the challenge of rebuilding binational security cooperation that had been severely damaged by a fallout last year

After the meeting, the two governments announced the creation of the U.S.- Mexico Bicentennial Framework for Security, Public Health and Safe Communities. The new framework will include priorities such as preventing substance abuse, tackling transborder crime, improving investigations,and curbing the flow of illegal arms from the U.S. to Mexico. It is intended to replace the Merida Initiative, which provided Mexico with $3 billion in anti-drug and crime prevention financing since its launch in 2008.

While these discussions are a significant step forward for stalled binational security cooperation, it will likely be challenging for both governments to work out the specifics of the new framework and rebuild trust. 

On the economy, Mexico’s GDP is projected to grow by a more moderate 2.7 percent next year, after estimated GDP growth of over 6 percent in 2021. On a slightly more positive note, this recent Bloomberg piece argues that Mexico’s steady pace of growth could set it up for success similar to countries like Denmark.

And, finally, since Day of the Dead is just around the corner, I wanted to wrap up by sharing this piece about traditions in Mexico. It’s a great read brought to us by our friends at Texas Monthly. 

I imagine that with so much happening in binational relations, you’ll likely have questions on investments here in Mexico. If you do, please feel free to reach out or follow me on FacebookTwitter, or LinkedIn

Sincerely, 

Antonio Garza

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