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

Click to RSVP

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.

US Treasury Head Touts Trade, Security in Mexico Visit

9/29/16 ABC News

untitledU.S. Treasury Secretary Jacob Lew made a strong pitch for the Trans-Pacific Partnership trade pact during a visit to Mexico on Thursday. Lew strongly defended globalization, but acknowledged that “some industries, towns, and workers” in both the U.S. and Mexico “are feeling the stress of this change.”

Mexico was seen as a beneficiary of the 1994 North American Free Trade Agreement, and the pact has become an issue in this year’s U.S. presidential campaign. Lew acknowledged a lot of people still have to be won over, saying, “We must win the argument, one that is supported by the facts, that fair trade will grow both of our economies.”

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NAFTA in U.S. campaign spotlight

08/21/2016 The San Diego Union Tribune

NAFTA_logoSince passage of the North American Free Trade Agreement more than two decades ago, U.S.-Mexico trade has risen to unprecedented levels. Trucks cross into the United States laden with shipments of medical devices, electronics, cars, fruits and vegetables, while others roll south into Mexico with loads of U.S. electronic equipment, machinery, plastics and agricultural products.

NAFTA created new jobs, brought consumers a wider range of choices, increased the integration of the U.S. and Mexican economies and enhanced North America’s global competitiveness, supporters say. A report by the Wilson Center in Washington, D.C., states that six million U.S. jobs depend on trade with Mexico. A University of Chicago survey of top U.S. economists showed a majority agreeing that Americans have been better off under the treaty.

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The Hidden Costs of a Possible U.S.–Mexico Trade War

08/05/2016 Wharton, University of Pennsylvania

mexico-usa-flag-montageIn the race for the White House, both Republican Donald Trump and Democrat Hillary Clinton have incorporated skepticism about free-trade pacts into their presidential campaign platforms. While Trump has attracted more attention than Clinton by arguing that the U.S. should seriously consider pulling out of the three-nation North American Free Trade Agreement and the 164-nation World Trade Organization, both candidates have criticized the impact of NAFTA on U.S. jobs growth, and opposed U.S. membership in the Trans-Pacific Partnership (TPP) on the grounds that the 12-nation free-trade bloc, yet to be enacted, would have a harmful impact on U.S. economic growth and job creation.

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Moody’s Sees Mexico Prepared for External Shocks

08/02/2016 The Wall Street Journal

6732357797_64d2ba3cdc_mMEXICO CITY—Mexican economic growth faces headwinds from global market volatility, government spending cuts and higher local interest rates, although the country is fairly well equipped to handle shocks such as lower oil prices and higher U.S. interest rates, Moody’s Investors Service said Wednesday.

“Gross capital flows to emerging markets have started to revert in 2016; although the trend change has been gradual in the case of Mexico, external volatility continues to weigh on growth,” the ratings company said in a report.

A flexible exchange rate, foreign reserves around $177 billion and a recently renewed flexible credit line with the International Monetary Fund leave Mexico relatively well positioned to manage external shocks, Moody’s added.

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