The View from Mexico | Border Adjustment Tax: Economic Impact & WTO Consistency

1/18/2017, Mexico Institute Blog

By Luis de la Calle

Donald Trump has been elected U.S. President as disrupter in chief; somebody that can get things done and change the status quo.

One of the centerpieces of his program appears to be a complete revamp of the U.S. tax system. “I understand the tax laws better than almost anyone. And that is why I am one that can truly fix them,” he said several times in debates and rallies. The idea is to end up with a system that favors investment on infrastructure and capital goods.

His background as a developer and his penchant for not paying taxes have led him to believe that the best way to promote growth and generate government revenue is taxing consumption rather than investment. Furthermore, his infrastructure ambitions need significant private investment funds that might only come with a favorable regime. The idea is to prompt firms and banks holding more than a trillion dollars in cash to put it to work.

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Mexico braces for weak growth, high inflation as Trump takes office: Reuters Poll

1/18/2017 Reuters

Arrow Graph by Flickr user nDevilTV’s economy is set to grow at the slowest pace in four years in 2017, a Reuters poll showed on Wednesday, after the election of Donald Trump to the White House upended relations with its biggest trade partner and foreign investor.

The full impact of a Trump presidency remains unclear to economists, as many said they were waiting for Trump’s first 100 days in office to see if he makes good on promises to build a border wall and raise trade tariffs.

Forecasts for economic growth elsewhere in Latin America were also revised down for most countries, the poll showed, projecting a slower recovery for a region that has struggled in recent years to keep a fast pace of growth amid low commodity prices and heightened market volatility.

Mexico’s economy is expected to grow 1.7 percent in 2017, according to the median of 23 forecasts, down from 2.3 percent in an October poll and after an estimated expansion of 2.0 percent in 2016.

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Advocates: Asylum-Seekers Are Being Turned Away at Border

1/18/2017 New York Times

San_ysidro_border_pedsSAN DIEGO — Immigrant advocacy groups said Tuesday that U.S. Customs and Border Protection officers are allegedly turning away asylum-seekers before their claims can be heard, violating obligations under U.S. and international law.

The groups said they began fielding reports in the summer that border crossers entering the country from Mexico were being told that they couldn’t seek asylum, that they needed visas, or that that they first had to petition Mexican authorities for relief. Under U.S. law, any foreigner may claim asylum.

Many are left with the impression that the U.S. is no longer considering asylum requests, according to the complaint filed Friday to the U.S. Department of Homeland Security’s inspector general. Six groups, including the American Immigration Lawyers Association, American Civil Liberties Union and American Immigration Council, urged an investigation “to fully address this alarming new trend.”

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Trump administration will press Canada, Mexico to reopen NAFTA

1/18/2017 CBC News

flags 3 countriesThe man U.S. president-elect Donald Trump has tapped to reshape the country’s trade policy will soon send a letter to Canadian and Mexican officials urging them to reopen NAFTA talks, according to a report.

The Globe and Mail says Wilbur Ross will want to discuss country of origin rules and the independent dispute-settlement mechanism that are key features of the 1994 free trade agreement.

Ross is under questioning on Wednesday by U.S. lawmakers at his confirmation hearing for secretary of commerce, and was asked from the outset about his views on trade with Canada and Mexico.

“NAFTA is logically the first thing for us to deal with,” Ross said. “We ought to solidify relationships in the best way we can in our own territory before we go off to other jurisdictions,” Ross said, referring to China, a frequent target of Trump’s ire for allegedly unfair trade practices.

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US, Mexico, Cuba ready to sign ‘Doughnut Hole’ deal in Gulf waters

1/18/2017 Reuters

gulf-of-mexico-map1The United States, Mexico and Cuba are ready to sign an agreement determining the territorial water limits in the Eastern Gap of the Gulf of Mexico, three diplomatic officials familiar with the matter said on Tuesday.

The talks on the agreement concluded at the end of 2016 after trilateral discussions began mid-last year, and the plan is to sign the accord before U.S. President-elect Donald Trump takes office on Jan. 20, the three officials said.

One of the three, who were speaking on condition of anonymity, said the deal could be signed on Wednesday.

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Donald Trump’s Mexico-bashing hurts American interests too

1/18/2017 Financial Times

mexico-usa-flag-montageLike many neighbours, the US and Mexico have a long and contentious history. In the 19th century, Mexico lost vast territories to the north. In the 20th century, Mexico nationalised US energy companies in the south. As recently as 1979, one Mexican president spoke of the countries’ “open hostility”. The North American Free Trade Agreement, signed a quarter of a century ago, helped heal many of these wounds.

Indeed, although Donald Trump has called it the “worst trade deal in history”, Nafta’s successes are now taken for granted. US companies are used to friendly treatment in Mexico. Soaring bilateral trade has turned Mexico into the US’s second-biggest export market, equal to the Chinese, Japanese, German and UK markets combined. Mexico and the US also work closely together on migration, drug and security issues — including in 2011 thwarting an alleged Iranian plot to kill the Saudi ambassador in Washington. Yet Mr Trump’s Mexico-bashing, perhaps his most consistent policy platform, threatens to end this co-operation. Ironically, that would frustrate the president-elect’s desire to make America “great” by imperilling thousands of jobs and harming US interests.

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At least four killed in gunfight in Mexico’s Cancun

1/18/2017 Reuters

gun - crime sceneAt least four people were killed after gunmen opened fire at government offices in the Mexican beach resort of Cancun on Tuesday, a day after at least five people died in a shooting at a music festival nearby.

Rodolfo del Angel Campos, chief of police for the state of Quintana Roo, said gunfire broke out at the state attorney general’s office in Cancun, a city that is one of the most popular seaside destinations for foreign tourists in Mexico.

Police intervened, and the alarm was sounded, activating federal police and the armed forces, del Angel said, adding that other installations were also attacked. Television broadcast outbreaks of afternoon gunfire in Cancun.

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