This week, President Trump announced what he called a “handshake deal” with Mexico’s President Enrique Peña Nieto (and with the acquiescence of President-elect Andrés Manuel López Obrador, who wanted the deal done before he comes into office on December 1st) on NAFTA 2.0.
The US president claims that, what he calls the "United States-Mexico Trade Agreement” (and not NAFTA 2.0), “will be a big hit” for the US. Free traders disagree, seeing its new regulations as sand in the trade gears. But the revamped North America Free Trade Agreement — that Canada may sign on to as soon as Friday — is really "a great deal for Mexico.” The US government is trying to use this deal to stick it to China, and Mexico is hoping to collect the windfall.
The biggest single deal in the agreement is that 40-45% of autos must be made by companies whose workers earn at least $16/hour, and that 75% of autos must be made in North America. As China-watcher Chris Balding points out:
This limits the scope for assembly in Mexico with Chinese components, favoring higher-value parts from manufacturers covered by the agreement… The origin requirement is clearly aimed at countries that either trans-ship or use Mexico as an assembly center.
Mexico will likely benefit by moving up the value-added chain in the automotive sector. This will benefit the burgeoning auto hubs in Puebla and the Bajío.
Former US Treasury spokesman Tony Fratto notes that the US government’s "intention to muscle the North American automakers to focus on a now stagnant — and possibly shrinking — US market is myopic in the extreme.” While US vehicle sales have been steady at 17m for the past 20 year, vehicle sales in China have doubled in the past decade to 30m a year, and will continue to grow. By focusing on North American production and content, NAFTA 2.0 will make US automakers less competitive on the global market.
The intellectual property and digital services clauses are also aimed at long-standing concerns that the US has with China, on copyright, pirating, and the "disclosure of proprietary computer source code and algorithms” to host country governments. While these won’t really change the US-Mexico agricultural relationship, the US will use them in other bilateral agreements its pursuing.
The Trump administration’s willingness to do trade deals as a "strategic commitment ... in the face of a rising China” makes the decision to pull out of the Trans-Pacific Partnership — that contains most of the same provisions and include Mexico and Canada as two of its largest members — all the more bizarre in hindsight. While the current US government has indicated it will never admit it is wrong, should we hope this is a sign that the TPP will be reconsidered?
Perú aspira a modernizar su TLC con China tras ocho años— Agencia Andina
Canciller Popolizio inicia hoy visita a China— El Peruano
China y Perú actualizarán su TLC— América Economía
Peruvian Foreign Minister Néstor Popolizio travelled to Beijing this week to meet with Foreign Minister Wang Yi and Vice President Wang Qishan. Both sides have agreed to move forward on updating their free trade agreement to an "FTA 2.0."
Mexico government seeking companies for Alibaba e-commerce deal— Channel News Asia
Él, que sabe todo sobre Alibaba, te pide voltear a China— El Financiero
More about the follow-up on Alibaba’s 2017 MOU with Mexico. While there was a lot of optimism about the opportunity, now looks like not much has come of it, and both sides are looking for reasons why.
Following on March’s Chile value-added deal, Korea’s POSCO continues to look at lithium in Latin America, buying lithium mining rights in Argentina from Australia’s Galaxy Resources for $280m. POSCO also says that it will build a lithium plant in Argentina to produce 25,000 tonnes a year starting in 2021.
Empresa china firma acuerdo con Acepar— ABC Color
Henan Complant Mechanical & Electrical Equipment Group Co Ltd (HCME) has agreed to lease the Aceros del Paraguay (Acepar) steel mill for 20 years for $116m, replacing Brazil’s Vetorial, which left last year. However details have not been released on the lease.
Empresa china Cofco Meat importa cerdo desde Chile y Europa— El Economista América
EU discute TLCAN con México y tiene pleito comercial con China— El Heraldo de México
Um mundo multipolar— Estadão
The trade war continues. Thanks to global trade uncertainty, Latin America is expected to grow more slowly this year - from 2.2% to 1.5%. COFCO looks to Chile to replace US pork. At least Korea, Brazil, and Argentina have received exemption from the US’ aluminum and steel tariffs.
Estados Unidos está preocupado por cercanía de China con El Salvador— Mercado Militar
The US disapproves of El Salvador recognizing Beijing, and warns Honduras not to try anything similar.
Obstacles to Japanese Investment in Latin America— Wilson Center
Our friends at the Wilson Center’s Latin America Program are holding an event next Friday. If you’re in DC, see you there!
China — LAC
¿Que los chinos se tomaron América Latina?— El Espectador
Chin-stroking on whether China is taking over Latin America.
Argentina begins its shipments of soybean oil to China.
Brazilian Agriculture Minister Blairo Maggi says that the country is considering referring China’s chicken anti-dumping measures to the World Trade Organization.
Beginning next year, Argentina and Chile will recognize each other’s visas for tourists from China.
Venezuela y China blindan relaciones bilaterales— Vice Presidencia de Venezuela
Chinese Deputy Foreign Minister Qin Gang met with Venezuelan Assistant Foreign Minster for Asia Rubén Darío Molina.
A profile of the "Alpaca del Perú” store that opened in Beijing last year.
Chinese Ambassador Zhang Run has officially arrived in the Dominican Republic.
Exportación Alimentos a la República Popular China— Cofepris Arn/Youtube
Asia, opción para diversificar el comercio agroalimentario mexicano: CEDRSSA— Mi Punto de Vista
Mexico sent more avocados to China in the first six months of 2018 than in all of 2017.
China continues to drive Chilean wine exports, up 20% over the past year.
Cerezas argentinas se abren camino hacia el mercado chino— Macro Trade News
Chinese inspectors headed to Argentina to approve cherries for export.
Huawei, ZTE, and Xiaomi are al looking to expand in Latin America.
Honduras sells 10 containers of chicken to the US every week. It wants to sell as many to China.
Uruguay y la Franja y la Ruta— El Observador
Chinese Ambassador Wang Gang extols the benefits of Uruguay’s joining the BRI.
The Curitiba branch of the World Trade Center Business Club held an event with its Harbin partners.
UNAM’s Enrique Dussel Peters says Latin America wants BRI-eligible infrastructure projects.
Algunos aspectos de una agenda positiva— MDZ Online
Argentina’s strategy for growth needs to take China into account.
Next week, Folha de São Paulo is hosting its first Brazil-China Seminar - go check it out.
Tren fabricado en China entrará en operación en Argentina— People’s Daily
The CRRC freight trains for the Belgrano line in Argentina have arrived, and will be a key part of Argentina’s eventual participation in the BRI.
Powerchina and Shanghai Electric Power Construction Co. Ltd (SEPC) are moving forward on construction of the Cauchari solar farm.
Chinese demand is driving Argentine beef exports.
Tamaulipas Governor Francisco García Cabeza de Vaca hosted Chinese Ambassador to Mexico Qiu Xiaoqi.
Korea — LAC
Me gustaría concretar un TLC con México: Kim Sang-il— El Economista
Korean Ambassador Kim Sang-il says he wants a free trade agreement with Mexico.
México revisa contrato siderúrgico con Corea del Sur— Minería en Línea
Steelmakers Ternium México and Altos Hornos de México (Ahmsa) have asked the Secretariat of Economy to tighten quotas on steel imports from POSCO and Hyundai Husco.
Piura wants help from Korea’s Ministry of Land, Infrastructure and Transport (MOLIT) to become a smart city.
Japan — LAC
Argentine lemons are sailing back to Japan, with the first ones arriving in Yokohama this month.
India — LAC
The investigation arm of India’s Commerce Ministry — the Directorate General of Trade Remedies (DGTR) — is looking into whether Brazilian and Chinese firms are dumping “high speed steel of non-cobalt grade” onto the market.
ASEAN & Oceania — LAC
SQM tips lithium prices to fall on surging Australian exports— Australian Financial Review
Chile’s SQM points to surging lithium exports from Australia as likely to drive prices lower for the rest of the year.
GCC — LAC
We didn’t see anything this week — what did we miss?