Revisiting Nafta: The Stakes for Key Industries

4/27/2017 New York Times

automobilePresident Trump may not be terminating the North American Free Trade Agreement, known as Nafta, but that doesn’t mean the deal is safe.

After telephone calls with President Enrique Peña Nieto of Mexico and Prime Minister Justin Trudeau of Canada on Wednesday, Mr. Trump said he would start the process of renegotiating Nafta, a treaty that he had scorned during his presidential campaign, calling it “the single worst trade deal” ever signed by the United States.

Whatever his criticisms, Nafta has had a major impact on the American economy in the decades since it was signed, and any renegotiation would affect certain industries.

Here are four potentially vulnerable sectors.

Perhaps no industry is more closely entwined with Nafta, or has more at stake if there is a drastic shift in trade policy, than the automotive sector.

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Mexico Can Seek Millions From U.S. In Dolphin-Safe Tuna Dispute, WTO Says

4/26/2017 NPR

tuna
Source: Mikko Koponen/Flickr

Mexico has long argued that U.S. labeling rules for dolphin-safe tuna unfairly restrict its access to the U.S. market. And in a decision Tuesday, the World Trade Organization agreed, saying Mexico may seek $163 million annually from the U.S. in retaliatory measures.

The controversial labeling rules, aimed at protecting dolphins from getting ensnared in fishing nets and killed, date back to 1990.

“The U.S. has long criticized Mexico’s fishing practices in Pacific waters, saying its use of nets and chasing dolphins to find large schools of lucrative yellow fin tuna greatly harms the mammals,” NPR’s Carrie Kahn reports from Mexico City.

“The U.S. allows the dolphin-safe label on tuna cans that meet its no-kill standards,” Carrie adds. “Mexico says it has brought down dolphin deaths to international standards but has long been refused the label.”

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Mexico’s Pemex will look to repeat new hedging program

4/26/2017 Reuters

Pemex LogoMexican state-owned oil company Pemex will consider repeating a recently instituted hedging program in future years, as it looks to firm up its balance sheet and avoid the need for surprise budget cuts, a top executive said late on Tuesday.

Petroleos Mexicanos [PEMX.UL], as the company is officially known, reported on Tuesday that it has hedged its output through December, the first time it has done so in 11 years, as an insurance policy against volatile oil prices.

The oil hedging program, which will run from May to December and guarantees a price of $42 per barrel for up to 409,000 barrels per day, will cost the company $133.5 million.

“It’s important to give the market certainty that faced with drops in oil prices Petroleos Mexicanos won’t have to cut its budget,” Chief Financial Officer Juan Pablo Newman told Reuters in an interview.

Last year, Pemex implemented about 100 billion pesos ($5.8 billion) in spending cuts, following cuts of some 62 billion pesos in 2015 due to falling crude prices.

The new Pemex hedge is separate from a much larger oil price hedge undertaken by the finance ministry.

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Teva looks to resume some production at Rimsa plant in Mexico

4/25/2017 Reuters

pharmaceuticalTeva Pharmaceutical Industries hopes to resume some production at its newly purchased Mexican plant in the coming months, but an overhaul needed to bring the factory up to speed will take a few years, the company said on Tuesday.

Teva, the world’s largest generic drugmaker, bought the Rimsa plant in 2016 in a $2.3 billion deal, only to shut it down immediately, saying the operation was overrun by improprieties. Rimsa’s previous owners, the Espinosa family, deny this, and the two sides are locked in a legal battle.

The prospect of starting production, albeit limited, is welcome news for Teva after a string of costly acquisitions, and delayed drug launches. These have sent Teva shares plummeting and led to calls for management and structural changes. CEO Erez Vigodman stepped down in February.

 

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Mexico’s Jobless Rate at Multiyear Low

4/21/2017 The Wall Street Journal

33343292040_4c09135b2e_kMexico’s unemployment rate held steady in March at a multiyear low amid solid job creation in the private sector, which kept supporting consumption growth.

Unemployment among Mexico’s 54 million workforce was 3.5% seasonally adjusted last month, practically unchanged from February even as more people sought work, the National Statistics Institute said Friday. Underemployment and informal employment both fell from the previous month.

The March job numbers were “unambiguously good,” suggesting the economy has strengthened in early 2017, against expectations, PNC’s economist Bill Adams said in a note.

“In January, Mexico had seemed at risk of a recession in early 2017, even if Mexico’s trade relations with the United States remained status quo, because of large increases in energy prices and interest rates, as well as sharp drops in business and consumer sentiment,” he said.

Employment growth has lowered the jobless rate to pre-2008 crisis levels, supporting household spending, although a recent uptick in inflation has led to declines in real wages as consumer prices outpaced average contract wage raises in the first three months of the year.

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Mexico’s Televisa signs deal with Telefonica to distribute content

4/20/2017 Reuters

televisaMexican broadcaster Televisa said on Thursday it had signed a deal with Spanish telecoms giant Telefonica that would give the mobile operator’s customers cheaper access to the broadcaster’s content carried on its digital platform Blim.

The deal allows Grupo Televisa SA to compete with Carlos Slim’s telecoms firm America Movil SAB de CV , whose Telcel mobile unit allows its clients access to entertainment offerings from Slim’s Claro digital video service.

Under the terms of the deal, customers of Movistar, Telefonica’s local unit, will have access to content carried on Televisa’s Blim platform at a preferential rate, according to a statement.

Televisa shares were down 1.79 percent at 95.88 pesos ($5.09) in early afternoon trading.

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Mexico’s Bimbo plans expansion in China, Asia, Middle East

4/19/2017 Reuters

bimboMexican breadmaker Grupo Bimbo (BIMBOA.MX) plans to grow in China in the short term with acquisitions, while also expanding in the rest of Asia and entering Middle Eastern markets, the company’s food business chief said on Wednesday.

Bimbo, which entered China in 2006 after buying the local assets of Spanish competitor Panrico, plans to expand in China through purchases of local companies, Bernardo Zermeno, the food business chief, told Reuters on the sidelines of an event in Mexico City.

“Bimbo will look for a consolidation that will allow for expansion,” he said.

Bimbo shares were up 0.60 percent in late afternoon trading at 45.44 pesos ($2.41).

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