Kill Nafta? It’s Not as Easy as Trump Might Think

11/14/2017 Bloomberg

U.S. President Donald Trump repeatedly blasts the North American Free Trade Agreement and threatens to terminate the 1994 accord if talks to rewrite it don’t go his way. With the fifth round of negotiations set to resume on Nov. 15, Canada, Mexico and the U.S. remain deeply divided in five areas, including how to settle disputes and the amount of U.S. content in auto production. The terms of the Nafta treaty offer Trump an exit path, but considering the many complications involved, would he really pull the plug?

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Mexico readying economic response if U.S. exits NAFTA

11/13/2017 Reuters

Mexico’s government is preparing a macroeconomic response in case U.S. President Donald Trump makes good on threats to quit the North American Free Trade Agreement (NAFTA), an event which could wreak havoc on the Mexican economy and hurt the peso.

Mexico’s Foreign Minister Luis Videgaray said on Monday the government and central bank were preparing a plan to address the possibility of a future without NAFTA, but gave few details.

The government has said it is examining how it could adjust Mexican legislation to give investors certainty about their investments if the almost 24-year-old NAFTA collapses.

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Mexico Tech Industry Benefits From U.S. Anti-Immigration Stance

10/17/2017 Reuters

Amazon, Facebook and other U.S. tech companies are expanding operations south of the border as Mexico works to capitalize on the Trump administration’s anti-immigration stance.

Since the beginning of the year, Amazon.com Inc has opened a new engineering office in Mexico City, while Facebook Inc has partnered with local groups to develop technical talent in the region.

Oracle Corp plans to expand its offices in the Pacific coast state of Jalisco, local officials said, possibly bringing hundreds of jobs.

In Guadalajara, Jalisco’s capital, a new group devoted to recruiting startups expects to have 10 new companies in the region by year-end, with another 60 in the pipeline. And the landlord of choice for many startups, the shared-office juggernaut WeWork, said it has opened five locations and now serves 6,000 workers after debuting in Mexico City last September.

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Hurricane Nate shuts down about 90% of Gulf of Mexico oil production

10/9/2017 CNBC

Oil production slowed to a trickle in the Gulf of Mexico this weekend as energy companies turned off the taps and evacuated workers in preparation for Hurricane Nate.

More than 92 percent of crude output was offline in the nation’s offshore production hub as of Sunday morning, according to the U.S. Bureau of Safety and Environmental Enforcement. Energy companies also “shut in” nearly 78 percent of natural gas production, the bureau estimated, based on reports from companies.

The storm developed into a hurricane on Friday night and strengthened as it passed through the central Gulf of Mexico, before making landfall near the mouth of the Mississippi River. U.S. producers shut down about 300 of the 737 offshore platforms in the Gulf of Mexico to avoid potential damage.

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Commentary | Why renegotiating NAFTA will expand economic growth

7/27/2017 The San Diego Union-Tribune

By Earl Anthony Wayne, Global Fellow & Advisory Board Member, Mexico Institute

NAFTA 2.0 is a big opportunity for San Diego and the entire U.S.-Mexico border region. With a good “modernization” of the 1993 treaty, the U.S.-Mexico border can expand economic growth and continue to be one of the most dynamic regions in North America. Elected officials and business groups from the border region should organize to weigh in regularly with the government negotiating teams and elected representatives in the months ahead to assure a good outcome.

Voices from the border cities and states must be well organized to have their voices heard in Washington and in Mexico City. Happily, San Diego and Tijuana are hosting mayors from throughout the region for the Border Mayors Association Binational Summit this week. This is an important opportunity for mayors to pursue a shared agenda.

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EVENT ON MONDAY | The State of Mexico’s Economy

mexican pesosWHEN: Monday, January 9, 1:30-3:00pm

WHERE: 6th Floor Board Room, Wilson Center, Washington, DC

Click to RSVP

The Wilson Center’s Mexico Institute is pleased to invite you to an event with the International Monetary Fund’s Mexico team, who will present the conclusions of the recently-completed 2016 Article IV consultation with Mexico.

Mexico’s economy has been growing at a moderate pace, inflation is low, and the unemployment rate has been declining. Fiscal consolidation has begun and the financial system remains strong and resilient to severe shocks. It would be critical to adhere to the planned fiscal consolidation to put the public debt ratio on a downward path, and take steps to strengthen the commitment framework for fiscal policy. Steadfast implementation of the plan to reform PEMEX and strengthen its financial viability is also important. Future monetary policy decisions should continue to be guided by the objective of keeping inflation expectations anchored, while clear communication by the central bank is critical. The exchange rate should continue to act as the key shock absorber to help the economy adjust to external shocks. Significant progress has been achieved in strengthening financial sector prudential oversight but some gaps remain, especially in the governance framework of CNBV and IPAB. On the structural front, strengthening the rule of law and boosting female labor supply would boost potential output and reduce inequality and poverty. Going forward, Mexico will need to navigate an uncertain and complex external environment, with elevated risks of protectionism and heightened global financial market volatility.

Speakers

Robert Rennhack
Deputy Director, Western Hemisphere Department, IMF

Costas Christou
Advisor, Western Hemisphere Department, IMF

Alex Klemm
Senior Economist, Western Hemisphere Department, IMF

Damien Puy
Economist,Western Hemisphere Department, IMF

Fabian Valencia
Senior Economist, Western Hemisphere Department, IMF

Commentator

Christopher Wilson
Deputy Director, Mexico Institute, Wilson Center

Moderator

Duncan Wood
Director, Mexico Institute, Wilson Center

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To BNP, Mexico Is Too Optimistic About Growth as Debt Balloons

10/28/16 Bloomberg

4350685550_dbd28c7e50.jpgMexico’s economic projections are way too rosy for BNP Paribas SA. Marcelo Carvalho, an economist at the bank, says Mexico will grow by just 1.5 percent in 2017, the weakest in five years. It’s well below growth of as much as 3 percent forecast in a budget approved by lawmakers last week.

Carvalho isn’t alone. Economists at Barclays Plc to Nomura Holdings Inc. are concerned that Mexico’s longer-term growth estimates may also be unrealistic, threatening to undermine the government’s pledge to stem a debt spiral. S&P Global Ratings and Moody’s Investors Service have already placed their credit ratings for Mexico on negative watch, citing rising indebtedness.

 “A combination of slower growth, higher interest rates, and fiscal disappointment is not good for the debt dynamics and could increase chances of a rating downgrade,” said BNP’s Carvalho.