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

1/18/2017 Forbes.com, 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 Wins: Anti-Corruption Reform Approved

7/12/2016 The Expert Take, By Viridiana Rios

expert I (2)Mexico just approved an anti-corruption reform that required changing 14 constitutional articles, drafting 2 new general laws, and reforming five more. This is not minor. The reform is, by far, the most encompassing system to identify and sanction corruption that the country has ever had and its effects will be felt quite soon.

In this text, I present the story of how Mexico got here and provide an assessment of the virtues and challenges of this change.

The Government tries to fight corruption

The need to create an entity to fight corruption was among Mexico’s policy priorities, at least rhetorically, since well before the arrival of Enrique Peña Nieto to the presidency.  However, the first of the 266 commitments that Peña Nieto had made during his campaign was to create a “National Anti-Corruption Commission” (NAC).

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Mexico’s Special Economic Zones: White Elephants?

By Viridiana Rios, Global Fellow, Mexico Institute

expert I (2)In June 2016, Mexico enacted a federal law to create Special Economic Zones (SEZ) in four of the poorest regions of the country. The initiative aims to reduce the markedly unequal levels of economic development inside Mexico, with a set of wealthy, internationally connected northern states, and an agricultural south that seems mired in perpetual underdevelopment.

Mexico will create its first Mexican SEZ in the Pacific port of Lázaro Cárdenas, on the border of the states of Michoacán and Guerrero, and the other three will follow at the Isthmus of Tehuantepec (Veracruz and Oaxaca states), Puerto Chiapas (Chiapas), and the Coatzacoalcos Corridor /Ciudad del Carmen (Campeche). The goal is to have at least one “anchor firm” operating in each SEZ by 2018, the last year of the current administration.

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Building Borders That Foster Security And Prosperity In North America

5/24/2016 Forbes

san-ysidro-border-crossing-by-flickr-user-otzbergBy Earl Anthony Wayne and Christopher Wilson

Canada, Mexico and the United States are collaborating to enhance security and foster prosperity at North America’s borders, while respecting each nation’s sovereignty.  Prime Minister Trudeau, President Peña Nieto and President Obama can give this effort a big boost when they meet for the North American Leaders Summit (NALS) on June 29 in Canada.  Given the contentious nature of the public and political debates about border security right now, it will be especially important for the leaders to articulate clearly what it means to build twenty-first century borders that are smart, effective, and meet both the security and competitiveness needs of North America. They should also bless a strong, substantive work agenda to make those objectives reality.

The three countries trade some $3.6 billion in goods and services each day.  Over a million citizens of the three nations cross the borders as part of their daily routine.  Border management tasks are enormous.  But, officials, the private sector and the many states, provinces and cities that benefit from border trade and travel see the tremendous value of a North America in which borders are places of connection and cooperation at least as much as division.  Around our borders, the three governments fight illicit activity; help our economies by facilitating legal trade and transit; and work to protect all three societies from threats ranging from terrorism to invasive species and diseases.

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Op-Ed | Getting North America Right

5/9/2016 Mexico Institute blog, Forbes.com

By Earl Anthony Wayne, Public Policy Fellow, Wilson Center

nafta (2)When the leaders of Canada, Mexico and the United States meet on June 29 for a North American Leaders Summit (NALS), they will have two big tasks: 1) to explain clearly why cooperation between the three countries is of great value; and 2) to give clear directions to their officials to do the hard technical work so that cooperation produces solid results for economic growth and competitiveness, for mutual security, for the shared continental environment, and for international cooperation where we can do more together than individually.

Since Mexico hosted the last so-called “Three Amigos” Summit in 2014, the tone in the U.S. domestic political debate has turned very critical of cooperation across the continent, whereas the actual collaboration and mutual understanding between the governments has improved.  The potential to help make all three countries more competitive in the world and to become a model for regional cooperation has increased, even as the electoral campaign attacks on the relationship with the United States’ two top export markets sharpened starkly.

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From Obstacle to Asset: Re-envisioning the U.S.-Mexico Border

4/19/2016 Forbes

By Christopher Wilson and Erik Lee

forbesThe U.S.-Mexico border has yet again made an appearance in the political theater of the U.S. presidential campaign, starring in its traditional supporting role as a stock villain character. Though the political dialogue sounds like a re-reading of a script written in the 1990s or early 2000s when Mexican migration peaked, the discussion on the ground in most—but not all—U.S.-Mexico border communities long ago moved on to regional economic development. It is a largely positive discussion that could not be more different than what we are hearing at the national level.

Throughout the border region, local leaders from the public and private sectors are asking themselves how they can form cross-border partnerships to leverage assets in their sister cities and strengthen their local economies. They are looking to create a border that connects the United States to Mexico at least as much as it divides our two nations. A close look at the economic data, however, reveals divergent local economies and major border barriers. In our recent report, Competitive Border Communities: Mapping and Developing U.S.-Mexico Transborder Industries, we found that while advanced manufacturing industries such as  aerospace, automotive and medical devices often predominate in Mexican border communities, RV parks, retail and freight transportation are often the most concentrated (and often low-paying) industries in U.S. border communities.

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Priorities for Mexico’s New U.S. Ambassador

4/14/2016 Forbes

By Duncan Wood and Viridiana Rios

forbesMexico has named their new ambassador to the United States, Carlos Manuel Sada Solana. The priority of the new ambassador is clear: to represent Mexico in a more constructive and positive manner, especially to the American people and the U.S. Congress, and to identify the Representatives and Senators that can have an influence on shaping such a positive image. This will be important not only in the context of this year’s presidential election, but also for the long-term health of the bilateral relationship.

The principal task of Ambassador Carlos Sada Solana should not be to respond in a direct manner to the current anti-Mexico discourse that is rampant during this electoral period, but rather to address this rhetoric in a strategic fashion. The importance of Mexico’s relationship with the United States should be emphasized along with the significant achievements that Mexico has had in recent years. This includes American endorsement of the reforms, the creation of the High Level Economic Dialogue (HLED or DEAN in Spanish), the development of intelligence cooperation, as well as bilateral efforts in energy, climate change, organized crime, and migration.

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