LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Friday, June 26, 2020

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Friday, June 26, 2020

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Will the Pandemic Controversial New CEO, DevryBV Sustainable Strategies Penal Code Takes Joyce Chang Global Head of Research, Increase Migration Effect in Honduras JPMorgan Chase & Co. A new code, which has provisions Paula Cifuentes that include shortening sentences Director of Economic & Fiscal Affairs, in Latin America? for some corruption-related Latin America & Canada, Philip Morris International crimes, took effect in Honduras Marlene Fernández despite opposition lawmakers’ Corporate Vice President for last-minute attempts to scrap it. Government Relations, Page 2 Arcos Dorados Peter Hakim President Emeritus, BUSINESS Inter-American Dialogue Donna Hrinak Chile Regulator President, Boeing Latin America Files Charges Jon E. Huenemann Former Corporate and Against Codelco Government Senior Executive Chile’s environmental regulator James R. Jones said it had filed charges against Chairman, state mining company Codelco Monarch Global Strategies Countries in Latin America are bracing for higher levels of migration due to the Covid-19 pan- over a spill and contamination. Craig A. Kelly demic. Migrants in Mexico are pictured above. // File Photo: Mexican Government. Senior Director, Americas Page 2 Int’l Gov’t Relations, Exxon Mobil Chilean senators on June 8 reopened debate over legislation John Maisto POLITICAL Director, U.S. Education to increase restrictions on migration given concerns that the Finance Group country could see an influx of migrants after the coronavirus Mexico’s Covid Nicolás Mariscal Chairman, Q pandemic eases. A report by the Department of Migration Death Toll Exceeds Grupo Marhnos predicted that, without new restrictions, as many as 250,000 migrants 25,000, Finance Thomas F. McLarty III Chairman, could enter Chile annually as the country’s economy is expected to have Minister Positive McLarty Associates a quicker rebound than those of its neighbors. How likely are Chile and Mexico’s confirmed death toll Carlos Paz-Soldan Partner, other countries in the region to see a sharp rise in immigration levels, from Covid-19 has risen past DTB Associates, LLP and what factors will drive those flows? What pressures will an increase 25,000, and its number of con- Beatrice Rangel firmed cases surpassed 200,000. Director, in migrants put on the receiving nations? What should countries in the Finance Minister Arturo Herrera AMLA Consulting LLC region be doing now in order to prepare? said he tested positive with Jaana Remes “minor” symptoms. Partner, Page 2 McKinsey Global Institute Manuel Orozco, director of the Migration, Remittances and Ernesto Revilla Head of Latin American Development Program at the Inter-American Dialogue: “The Economics, Citi Chilean government’s reactions are not accidental, particular- Gustavo Roosen Chairman of the Board, ly because over the past five years, several South American Envases Venezolanos A countries have faced a significant wave of immigration amounting to Andrés Rozental at least five million people from fragile states such as Venezuela, Haiti, President, Rozental & Asociados Nicaragua and other Central American countries. Hence, they expect Shelly Shetty mobility to occur from other countries, but the severity of the economic Managing Director, Sovereigns Fitch Ratings impact of the pandemic is such that people won’t consider emigrating until the economic recovery begins. Other countries such as Peru, Ecuador, Costa Rica, Panama and Colombia were already exploring ways to restrict migration prior to the pandemic, and their fears have now heightened. The Herrera // File Photo: Mexican timing to restrict migration may serve to quiet populist adventures, but Government. Continued on page 2

POLITICAL NEWS Herrera was in contact with President Andrés NEWS BRIEFS Manuel López Obrador, who has refused to Mexico’s Covid Death wear a face mask, the Associated Press re- Brazilian University ported. So far, Herrera is Mexico’s highest-level in Talks to Test Potential Toll Surpasses 25,000, cabinet member to have tested positive for the novel coronavirus. The head of Mexico’s Social Coronavirus Vaccine Finance Chief Positive Security Institute previously tested positive but Brazil’s Federal University of São Paulo is later returned to work. in talks to test a possible Covid-19 vaccine Mexico’s confirmed death toll from Covid-19 developed by researchers in Italy, Reuters re- surpassed 25,000, and its number of confirmed Controversial New ported Thursday. Brazil, which has the world’s cases of the disease exceeded 200,000 on second-highest number of confirmed cases Thursday, the Associated Press reported. The Penal Code Takes and deaths from the disease, after the United country’s health department reported 6,104 States, has become a main front in the race for new infections in the previous 24 hours, one Effect in Honduras a vaccine. The researchers from Italy’s Lazzaro of the highest daily increases so far during Spallanzani National Institute want to conduct A controversial new penal code, which among midstage trials and Phase III studies that From this moment, other things shortens sentences for some would involve thousands of Brazilians, said the I will be in corruption-related crimes, took effect in Brazilian university’s president, Soraya Smaili. Honduras on Thursday despite last-minute quarantine...” efforts by opposition lawmakers to repeal it, — Arturo Herrera the Associated Press reported. The new code Peru Bans Mass sparked public debate in the Central Ameri- the pandemic. Mexico also recorded 736 new can country, with some arguing it’s a needed Gatherings at Least deaths on Thursday. In the Americas, only the modernization while critics blast as it a step Until Fourth Quarter United States and Brazil have higher total death backward in the fight against corruption, EFE Peruvian President Martín Vizcarra said tolls. Also on Thursday, Mexican Finance Minis- reported. The previous penal code had been in Thursday that mass gatherings in the Andean ter Arturo Herrera confirmed that he had tested place for 30 years, and although Congress had nation will remain prohibited until at least the positive for the disease, Reuters reported. In amended it several times, those additions had last quarter of this year, state-run news agency a posting on Twitter, Herrera said he had only created more problems, including dispropor- Andina reported. Vizcarra also announced “minor” symptoms. “From this moment, I will tional penalties and clashes with existing that the government’s Council of Ministers is be in quarantine and continue working from my legislation, according to some lawmakers, El to meet today to discuss the measures that house,” said Herrera. It is unclear how recently Heraldo reported. Civic groups and interna- will be implemented starting July 1, as the country’s state of national emergency is set to FEATURED Q&A / Continued from page 1 end on June 30.

the main challenge is to focus on cooper- programs on migrant economic and social ation among countries to address the root integration, accompanied by economic stabi- causes of migration in those fragile states lization plans in the migrant host countries, Chile Environmental while also recognizing that migrant integra- leveraging remittances, nostalgic trade, and Regulator Files Charges tion in the Americas is a necessary step to investment as a means to mitigate and break address many of the vulnerabilities these the cycles of fragility in the region.” Against Codelco migrants face. The countries hit hardest by Chile’s environmental regulator on Thursday the pandemic are also those most affected Liliana Meza, professor in the said it had filed charges against state mining by the macroeconomic impact, and migrant masters in migration stud- company Codelco over a 2016 tailing spill as host countries, including Chile, are in a ies program at Universidad well as river and estuary contamination at its position to deal in an organized fashion with A Iberoamericana in Mexico City: Andina mine in an area near Santiago, Reuters the foreign labor force to prevent massive “The financial crisis of 2009-2010 can help reported. The Environmental Superintendent, outflows in the years to come. Cooperation us understand the probable consequences or SMA, said it had received several public includes greater engagement of interna- of the current health crisis on migration complaints over a tailings or mining waste spill tional development institutions to devise flows that enter and leave Mexico, although in April 2016 and of alleged contamination Continued on page 4 in estuary and river water by waste that the company had discharged.

COPYRIGHT © 2020, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Friday, June 26, 2020 tional watchdogs have criticized the reforms as they were passed while a number of current THE DIALOGUE CONTINUES and former legislators were under investigation for alleged corruption. Criminal attorney and former federal lawmaker Rasel Tomé said all of Will the USMCA Function the crimes that the new penal code lowers the Well Amid the Pandemic? sentences for are those committed by corrupt officials, the AP reported. Among the crimes The United States-Mexico-Can- some Mexican auto workers. In order to with reduced sentences are those involving the ada Agreement, or USMCA, is qualify for preferential tariff treatment, the misuse of public funds, abuse of authority, in- set to enter into force on July 1, threshold for materials sourced in North fluence trafficking, fraud and illicit enrichment. Q prompting automakers in Mex- America increases from 62.7 percent under The government of President Juan Orlando ico to rush to meet new regional content NAFTA to 75 percent in auto manufactur- Hernández earlier this year did not renew rules while facing additional challenges ing. In addition, 70 percent of the steel and an OAS-sponsored anti-corruption mission’s brought on by the coronavirus pandemic. aluminum used in a vehicle must originate mandate, effectively ousting the agency, known How well will the USMCA function in the in the region. Perhaps a greater challenge as MACCIH. present regional economic context? How might arise from rules of origin covering prepared are different sectors in the three labor. The agreement demands that 40-45 countries, including Mexico’s auto industry, percent of labor involved in producing vehi- ECONOMIC NEWS for changes under the new trade deal given cles must be paid more than $16 per hour, as the current circumstances? To what extent an attempt to reduce the wage gap between U.S. Says Venezuela does the USMCA provide an opportunity to the United States and Mexico. In light of the help the three North American economies coronavirus situation, automakers are likely Allies Should Boost recover quickly from the aftermath of the to request an extension, as they have had to Covid-19 health crisis? channel resources and efforts to buffer the Humanitarian Aid economic impact and not necessarily toward Nicolás Mariscal, member of preparing for USMCA. The deal will create The United States on Thursday called on Rus- the Advisor board and chairman more jobs, strengthen labor protections sia and China to provide more humanitarian aid of Grupo Marhnos in Mexico and increase trade flow among the three to Venezuela in its fight against the Covid-19 City: “The change from NAFTA countries. New sectors such as e-commerce pandemic, Reuters reported. The Andean A to the USMCA draws challenges that add to and some aspects such as intellectual prop- nation has so far reported more than 4,000 disruptions from the Covid-19 pandemic. Lo- erty will benefit, and they happen to be key cases of the novel coronavirus and 35 deaths. gistics and transportation companies have aspects in the new reality post-pandemic. The United States’ special envoy to Venezuela, recently had to make adjustments to meet The recovery showcases that now, more than compliance standards and to adapt to the ever, the region should strive to increase new reality brought by the virus. Regardless cooperation and collaboration toward pros- of the sector, various supply chains will be perity and integration, and the USMCA might affected by shipping hindrances. On top of be the answer.” responding to the confinement measures and the economic struggle derived from the crisis, companies at the forefront of trilateral EDITOR’S NOTE: The comment above is trade need to prepare for the modernized a continuation of the Q&A published in version of the deal. The agreement changes Wednesday’s issue of the Advisor. rules on auto manufacturing that will benefit Abrams // File Photo: U.S. State Department. U.S. job creation and increase salaries for Elliott Abrams, said Thursday that Venezuela had also jailed doctors and journalists for try- contribute more on the humanitarian side. sent a third shipment of humanitarian aid to ing to expose the true extent of infections. “We There has been, I believe, some contributions help Venezuela deal with the health crisis, the do think the numbers are tragically a good deal of goods with respect to Covid-19 by Russia Voice of America reported. The aid included higher,” Abrams said during a diplomatic event and China.” However, he said “the scale, the 90 tons of medicine, sanitation and water sup- by the U.S. mission to the United Nations in dollar amount of this aid, is really quite low in plies, bringing the total U.N. humanitarian aid Geneva. Referring to China and Russia, Abrams comparison to the needs.” The United Nations to Venezuela to nearly 200 tons since the start said the United States “would like to see them Children’s Fund, or Unicef, earlier this month of the coronavirus outbreak.

FEATURED Q&A / Continued from page 2 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2020 we must recognize that the economic crisis from sending communities reveals a shifting associated with the coronavirus has hit the immigration calculus. Veteran immigrants Erik Brand economies of the region more deeply. To with savings and few roots here are contem- Publisher [email protected] begin, let us remember that, with the 2009 plating returning home, exhausted by living crisis, around one million Mexicans returned in the shadows, fearful of dying in the United Gene Kuleta Editor to their country of origin as one of the most States and increasingly unable to make [email protected] affected groups in the United States. This ends meet. Prospective migrants are putting Anastasia Chacón González return represented a huge challenge for plans on hold, reluctant to risk everything to Reporter & Associate Editor Mexican authorities, who could hardly cope [email protected] with the massive arrival of their compatriots. With Covid, we can foresee another exodus The coronavirus is

from the United States, and the consequent creating a countervail- Michael Shifter, President repercussions in Mexico. The effect of the ing set of pressures Rebecca Bill Chavez, Nonresident Senior Fellow Covid-19 crisis in Mexico is anticipated to be on migration from Sergio Bitar, Nonresident Senior Fellow of incalculable proportions, so it is probable Central America.” Joan Caivano, Director, Special Projects that this flow will exceed the economy’s — Anita Isaacs Michael Camilleri, Director, Rule of Law Program capacity to absorb it. However, I foresee Kevin Casas-Zamora, Nonresident Senior Fellow that there will also be expelling pressures in Héctor Castro Vizcarra, Nonresident Senior Fellow Mexico, making it likely that emigration will arrive in a United States mired in a prolonged Julia Dias Leite, Nonresident Senior Fellow once again become a topic on the national recession. On the other hand, the incentives Ariel Fiszbein, Director, Education Program agenda. In this flow, I especially believe that to migrate are bound to increase. The virus Peter Hakim, President Emeritus less-educated Mexicans will be affected is devastating poorer communities in the Nora Lustig, Nonresident Senior Fellow because they can hardly adapt to a new region. Lacking basic health care and unable Margaret Myers, Director, Asia and Latin America Program reality of advanced technology. Finally, I to afford to quarantine, they are also reeling Manuel Orozco, Director, Migration, also think the closure of the borders in the from a steep decline in remittances from Remittances & Development United States and the economic pressures belt-tightening migrant relatives and their Xiaoyu Pu, Nonresident Senior Fellow in Central America will drive the arrival of traditional abandonment by a corrupt and Jeffrey Puryear, Senior Fellow more immigrants to the country, which will indifferent state. Heightening the prospect Mateo Samper, Nonresident Senior Fellow exacerbate the challenge that Mexican of intensified violence, organized crime and Tamar Solnik, Director, Finance & Administration authorities will face in coping with the flow gangs will step ever more clearly into the Lisa Viscidi, Director, Energy Program of return migrants.” breach, seething popular frustration: anger Denisse Yanovich, Director of Development and could bubble over; and political leaders will External Relations Anita Isaacs, professor of flex their authoritarian muscles. Barring Latin America Advisor is published every political science at Haverford concerted action to address the economic, business day, except for major U.S. holidays, College: “The coronavirus is social and political impacts of the pandemic, by the Inter-American Dialogue at 1155 15th Street NW, Suite 800 A creating a countervailing set it’s just a question of time until the United Washington, DC 20005 of pressures on migration from Central States faces a new surge in undocumented www.thedialogue.org America. On the one hand, it is likely that the migration from the region.” ISSN 2163-7962 pandemic could induce a lull in migration Subscription inquiries are welcomed at from Central America. My research with The Advisor welcomes comments on its Q&A [email protected]

undocumented Central Americans living in section. Readers can write editor Gene Kuleta The opinions expressed by the members of the Board of the United States and poorer Guatemalans at [email protected]. Advisors and by guest commentators do not necessarily represent those of the publisher. The analysis is the sole view of each commentator and does not necessarily represent the views of their respective employers or firms. The information in this report has been obtained from reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have any questions relating to the contents of this publication, contact the editorial offices of the Inter-American Dialogue. Contents of this report may not be reproduced, stored in a retrieval system, or transmitted without prior written permission from the publisher.