Former Mexican Official Says Mexico Will Make Concessions in Auto ROO Case It Won

A former Mexican economy secretary, Ildefonso Guajardo, who oversaw the NAFTA renegotiation, said Mexico's current administration has not complied with the energy provisions in the trade agreement, and has "tried to disrupt trade in corn, using excuses of sanitary issues" and genetic modifications. He said in both cases, the trade disagreements "have become part of the full political negotiation" that includes migration and also includes fentanyl and security issues.

When we asked if Mexico has any leverage to get the U.S. to comply with the panel ruling on auto rules of origin (see 2301110058), Guajardo said: "Unfortunately, the lack of compliance of Canada in dairy, the lack of compliance of the U.S. on auto parts and the lack of compliance of Mexico in energy and now corn are definitely putting all agreements at risk."

He said his understanding is that Economy Secretary Raquel Buenrostro has said there is going to be an agreement on autos, "which is going to be terrible, because I believe ... probably we are going to make concessions that are not good for the Mexican auto industry, vis-a-vis getting some other things delayed."

He said that when trade issues are mixed with other political matters "the integrity of the agreement itself" is undermined. "Unfortunately, that is what we are witnessing," he added while speaking during an Aug. 16 event in Washington hosted by the Wilson Center. Guajardo was invited to speak at the think tank because he is part of a united opposition that is conducting an open primary to choose a candidate to run against President Andres Manuel Lopez Obrador's hand-chosen successor in 2024.

"Why are we in this situation? Because politically, for the Biden administration, it is more attractive for Andres Manuel Lopez Obrador to do the dirty job of retaining Central Americans on the border, without having capacities, budget, protection of human rights, and terrible conditions for migrants," he said.

Guajardo said he hopes the U.S. will ask for a panel to judge the defensibility of Mexico's decree on genetically modified corn and corn treated with glyphosate, and said he expects it may do so, because corn exports have a different political salience than energy investors' interests.

Guajardo said corn is produced in swing states, but only Iowa fits that description; other top states for corn exports to Mexico are either solidly Democratic, like Illinois, or solidly Republican, like Louisiana, Kansas, Nebraska and Missouri.

He added that energy investors' interests have been sacrificed in exchange for Mexico's collaboration in slowing the flow of Central American migrants who wish to reach the U.S. The government's resistance to allowing foreign-funded solar or wind projects doesn't just hurt those investors, Guajardo said, but could also prevent Mexico from continuing to capitalize on its attractiveness as an export platform for automakers.

"It's affecting the future of manufacturing in Mexico, because many of the ... automakers in Mexico have corporate obligations to become clean energy [consuming] factories within the next five to 10 years. And if we do not supply those energies, where do you think they are going to make the next localization decision? [It] is not going to be in Mexico."