National Development Plan, International Trade, US representatives visit Mexico to discuss USMCA’s approvals

National Development Plan & International Trade, US representatives visit Mexico to discuss USMCA-THE TRADING ROOM

19 Jul , 2019

The Trading Room

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National Development Plan & International Trade

Last Friday 12th of July, the Mexican National Development Plan (NDP) for 2019-2024 was published in the official gazette. The NDP is a document, prepared every six years by the new President and approved by the legislative branch, that aims to guide policymakers of the Federal Government in their decisions. Unlike the previous NDP 2013-2018, the new NDP is a short document that lacks data and strategies, lists the government programs and projects, and focuses on criticizing the recent history. We highlight the following from the NDP:

Trade: Trade was only mentioned in the “Foreign Affairs” section when addressing the US-Mexico relationship. It is unfortunate that the NDP does not include an explanation of the so-called three trade policy pillars: diversification, inclusion, and innovation.

WTO: The NDP mentions that Mexico will accept the decisions made by International Organizations, such as the WTO.

Customs: The NDP did not mention a customs policy.

Investment: The NDP states that the federal government will promote private investment, domestic and foreign, and that a “framework for legal certainty, honesty, transparency, and clear rules will be established[.]”; it is unclear what is the government’s strategy to establish said “framework”.

Taxes: The NDP mentions that taxes on fuels will not increase, but lacks to mention if other taxes will not be increased.

Regional Projects: The NDP lists the Mayan Train, Development Program for the Tehuantepec Isthmus (DPTI), and the Northern Border Free Trade Zone. As noted in our previous editions, the DPTI aims to modernize the Inter-oceanic Corridor between the states of Veracruz and Oaxaca, creating “free zones” to attract private investment, and lowering the income tax and VAT rates.

Agriculture: The PND announces several programs, but we highlight the support for sugarcane producers, the support price mechanism for corn, beans, wheat, rice and milk, and the creation of SEGALMEX.

Sources:

http://www.dof.gob.mx/nota_detalle.php?codigo=5565599&fecha=12/07/2019

US representatives visit Mexico to discuss USMCA

On Wednesday, the president of Mexico, AMLO, announced during his morning conference that he would meet this Friday with a delegation of US Congress representatives to discuss USMCA approval process.

As several news portals have reported, the House of Representatives will first receive and discuss USMCA and then the Senate, however, President Donald Trump has not yet submitted the agreement to Congress. Needless to say, Democratic representatives are showing concerns regarding the following matters: dispute resolution, provisions related to the pharmaceutical, environmental sector and the effective implementation of the labor reform. Therefore, the US delegation will meet officials from the Mexican Ministries of Economy, Foreign Affairs, Labor, and Environment.

It is interesting that the delegation of representatives has the concern that Mexico may block the establishment of panels from dispute resolution mechanisms like the US did in the past with NAFTA. Unlike CPTPP, USMCA does not clearly solve the possibility that a Party may block the establishment of a panel. Hence, we hope that the US representatives return convinced that Mexico is fully committed to complying with all of USMCA’s provisions.

Sources:

https://www.milenio.com/politica/amlo-hablara-legisladores-eu-viernes-t-mec

https://www.reuters.com/article/us-usa-trade-mexico-canada/trump-presses-for-usmca-passage-as-lighthizer-lawmakers-prepare-to-meet-idUSKCN1UA1YZ

https://www.dineroenimagen.com/economia/mexico-no-aceptara-cambios-al-t-mec-ya-esta-negociado/112186

https://www.wsj.com/articles/lighthizer-charms-congress-but-struggles-to-sell-usmca-11563355920

https://www.elfinanciero.com.mx/economia/amlo-se-reunira-esta-semana-con-representantes-democratas-y-republicanos

dispute settlement, environment, Investment, Labor Reform, Nacional Development Plan & International Trade, US representatives visit Mexico to discuss USMCA