Analysts: USMCA Likely to Pass in Mexico Despite Some Questions in the Senate | Insidetrade.Com

11/5/2018 Analysts: USMCA likely to pass in Mexico despite some questions in the Senate | InsideTrade.com

DAILY NEWS Analysts: USMCA likely to pass in Mexico despite some questions in the Senate

November 05, 2018 at 11:00 AM

The Mexican Senate likely will approve the U.S.-Mexico-Canada Agreement despite a lack of cohesion in the incoming president's party, Morena, which has control of the body, analysts said.

When president-elect Andrés Manuel López Obrador is sworn into office on Dec. 1, he will install an administration made up “naturally” of leftists, but also of former Institutional Revolutionary Party (PRI) and National Acton Party (PAN) members, leaving observers uncertain how AMLO will govern, a Mexico analyst told Inside U.S. Trade.

“Morena is not necessarily a movement that brings together one ideology or one position, it is a mix of legislators or government officials that come from different factions of the Mexican political circles, so it is still very much uncertain as to what that ideological position will look like -- if it exists,” the analyst said.

The Mexican Senate, which will have the final say on the ratification of USMCA, is “a ragtag bunch of rebels,” said Duncan Wood, director of the Wilson Center's Mexican Institute. “They have really little that bind them together and many things that pull them apart.”

“I know that it’s called a party, but it isn't, the best description of it is a zoo with lots of different animals in it. People from PAN, PRD, former communists, ideologues -- it’s a mish-mash of people that AMLO has not yet been able to mobilize as a homogeneous political force,” Andrés Rozental, the former Mexican deputy minister of foreign relations, told Inside U.S. Trade.

However, USMCA is one issue on which Morena members, as well as officials in the opposition parties, PRI and PAN, have maintained a largely unified front, analysts said.

“I would be very surprised if AMLO cannot get congressional support for the treaty given that he is just starting his term and that it is a priority for him,” Anthony Wayne, a former U.S. ambassador to Mexico, told Inside U.S. Trade.

AMLO is also sure to get the support of the opposition parties in addition to Morena's, analysts said.

“It will not only pass with directly two-thirds [of the vote], it will pass with considerably more than that,” Rozental said.

For one, PRI is the party that negotiated the deal during President Enrique Peña Nieto's final days in office, making it unlikely that its members will oppose it, Rozental said.

“The PAN is freer to make debate and ask questions, because they didn’t really participate in this, but I don’t suspect either the PAN or PRI will formally oppose it,” Rozental added.

Additionally, Morena's counter-parties hold few seats in the Senate. The PAN holds 24 of 128 seats, and the PRI holds just 14. Morena and the Labor Party, which together make up a leftist coalition, hold 70 senatorial seats.

“If it was the case that Morena was deeply divided on the agreement, then it would matter that you had the PRI and the PAN's support, but if you look at it, they are overwhelmingly in favor so it’s not a problem,” Wood said.

Another reason USMCA has garnered support across party lines and is likely to pass is because in Mexico there is a feeling among lawmakers that any deal is better than no deal, Wood and Rozental said. https://insidetrade.com/daily-news/analysts-usmca-likely-pass-mexico-despite-some-questions-senate 1/3 11/5/2018 Analysts: USMCA likely to pass in Mexico despite some questions in the Senate | InsideTrade.com The Mexican Senate only has the authority to either ratify or reject the treaty, not modify it.

“In Mexico we were faced with the alternative of no NAFTA, no T-MEC, no nothing. That alternative scared everybody here a great deal and I think that at the end of the day everybody breathed a sigh of relief when the thing was agreed,” Rozental said, using the Spanish abbreviation for the deal.

Wood said AMLO “recognizes that this treaty is an existential issue for Mexico. That if it wasn’t to be approved if it was delayed somehow because of parliamentary debate then that’s bad for Mexico.”

Meanwhile, outside of the government, Cuauhtémoc Cárdenas, who helped establish the Party of the Democratic Revolution (PRD) along with AMLO, has voiced strong opposition to the deal. Last month, Cuauhtémoc Cárdenas said on Twitter that USMCA cancels the possibility of Mexico modifying its regulations in telecommunications, transportation, infrastructure and hydrocarbons. “It is a shameless cession of sovereignty that the Mexican Senate should not ratify,” according to an informal translation of Cuauhtémoc Cárdenas' tweet.

Cuauhtémoc Cárdenas is not fully supportive of AMLO, sources told Inside U.S. Trade, pointing to Cuauhtémoc Cárdenas' rejection of a position in AMLO's administration. Yet, Cuauhtémoc Cárdenas' son, Lázaro Cárdenas, is now AMLOS' chief consultant.

There are "lots" of political consultations between Lázaro Cárdenas and his father that are taken seriously by Lázaro Cárdenas, sources said. "AMLO realizes that Cuauhtémoc Cardenas still has enormous influence within the party," Wood said.

"Lopez Obrador very much wanted to have a Cárdenas on his team so he invited Lázaro to be his chief adviser, but the fact of the matter is that the relationship between Cuauhtémoc and AMLO is not good," Rozental said.

But USMCA analysts said they were skeptical this dynamic would prevent USMCA from passing the Senate.

“[AMLO] has almost two thirds of the Senate so he is going to make the decision and since he participated in the process of the negotiation I don't think there's the slightest doubt that it's going to be passed,” Luis Rubio, the former chairman of the Mexican Council on Foreign Relations, told Inside U.S. Trade.

Still, Rozental said, “as a matter of balance within the discussion and making sure that this doesn’t get swept away with unanimous consent,” some issues will be more closely scrutinized than others. He named USMCA auto rules of origin and President Trump's Section 232 tariffs as two examples. “There will still be a substantive discussion about the treaty once people have actually read it and analyzed it,” he added.

Aliza Chelminsky, the director of the Mexican Senate's Gilberto Bosques Center for International Studies, told Inside U.S. Trade “the general feeling” in the Senate is that that the treaty “needs to be analyzed in depth."

Officially, the Senate will start reviewing the treaty once it is signed at the end of November and once the president sends it to the body, Chelminsky said.

But currently the Gilberto Bosques Center is hosting a series of “preparatory panels” ahead of the signing where experts, such as Wood and Rozental, have sat on.

“The idea is for senators and their staff members to get a hold of the contents of the treaty and there is also a group that has been appointed to study the treaty,” Chelminsky said.

As to when the treaty could become official, Wood suggested that Mexico and Canada hope to get it signed and ratified as soon as possible so “the pressure increases on the United States to get it ratified as well because everyone is concerned that after the midterms it won’t get ratified in the U.S.”

But Rozental said he insisted in testimony before the Mexican Senate last week that Mexico should not formally approve it until the U.S. Congress has done so. He cited concerns with the midterm elections in the U.S. and the strong chance that the Democrats take control in the House, which could throw a wrench into the administration's trade plans.

“I believe strongly that the debate in the United States is going to be a difficult one and therefore we should not rush ahead to ratify this until we’re sure that the United States Congress has done so as well and the Canadian government,” Rozental said. “I am forecasting that this will not happen until well into next year or even maybe into the second half of next year.” https://insidetrade.com/daily-news/analysts-usmca-likely-pass-mexico-despite-some-questions-senate 2/3 11/5/2018 Analysts: USMCA likely to pass in Mexico despite some questions in the Senate | InsideTrade.com

Mexico is pressuring the Trump administration to lift its Section 232 tariffs on Mexican steel and aluminum before the deal is signed. Mexican officials have said the tariffs are not "in the spirit" of the deal and have hinted that the duties could prevent them from signing the pact. -- Maria Curi ([email protected])

Related News | Mexico | North American Free Trade Agreement |

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