Americans don’t know what’s being negotiated at their expense. The first round of re-negotiating the North American Free Trade Agreement between the US, Canada, and Mexico began on Wednesday and is scheduled to last through Sunday. And the one thing we know about it is this: Despite promises in March by US Trade Representative Robert Lighthizer (USTR) that the negotiations would be transparent, the USTR now considers the documents and negotiations ‘classified’ and they’ll be cloaked in secrecy. But corporate lobbyists have access. And they’re all over it. The Electronic Frontier Foundation put it this way: Once again, following the failed model of the Trans-Pacific Partnership (TPP), the USTR will be keeping the negotiating texts secret, and in an actual regression from the TPP will be holding no public stakeholder events alongside the first round. This may or may not set a precedent for future rounds, that will rotate between the three countries every few weeks thereafter, with a scheduled end date of mid-2018.
This post was published at Wolf Street by Wolf Richter ‘ Aug 19, 2017.
Will Spain’s central government blink (again)? By Don Quijones, Spain & Mexico, editor at WOLF STREET. Madrid’s standoff with Spain’s north eastern province of Catalonia, which plans to hold a forbidden referendum on national independence on October 1, grows more and more complex by the day. Just in the last week alone the following developments have taken place: Spain’s Civil Guard has raided Catalonia’s parliament and government HQ as part of its investigation into political corruption in the region. As new research has shown, this investigation forms part of a broader police operation that has served as a means for Spain’s governing People’s Party to spy on political rivals. Catalonia’s government has replaced the region’s chief of police with a die-hard separatist. It has also purged the cabinet of any members perceived as not fully committed to the separatist cause. Deloitte published its annual barometer of Spanish businesses according to which 74% of business leaders believe that the independence of Catalonia would do serious harm to Spain’s economy. Support in Catalonia for national independence is on the wain, according to a new poll, with 49% opposing independence, and just 41% favoring it. That said, only 67.5% of respondents said they still plan to vote on Oct. 1. Most of them will be nationalists. Madrid will do everything it can to stop them. The Rajoy government has warned this week that anyone who participates in the purchase of ballot boxes for the referendum could be criminally prosecuted.
This post was published at Wolf Street on Jul 23, 2017.
While tense trade negotiations between the US and Mexico over the price and quota for U. S. imports of Mexican sugar continue (a happy ending appears unlikely, especially after a Mexican sugar company on Friday called on the government to take action against American fructose producers and protect the local industry from US deals), a new protectionist measure involving sugar half way around the globe was unveiled on Monday when China – the world’s biggest importer of the sweet substance – said it will impose significant penalties on sugar imports following lobbying by domestic mills. According to the ruling first described by Reuters, up to a third of China’s annual sugar imports will be impacted by an extra tariff for the next three years on shipments that the government said had “seriously damaged” the domestic industry. The details: China currently allows just over 1.9 million tonnes of imports at a tariff of 15% as part of its commitment to the World Trade Organization. All imports above this amount are slapped with a 50% levy. After Monday’s ruling, the total sugar duty will nearly double, with Beijing imposing an additional 45% tax to these imports in the current fiscal year taking the total to 95%. This will fall to 90% next year and 85% a year later, China’s Commerce Ministry said in a statement. The ruling exempted 190 smaller countries and regions from the new duty, including smaller producers such as the Philippines, Pakistan and Myanmar.
This post was published at Zero Hedge on May 22, 2017.
Reporting from Lake Atitlan, Guatemala… Interpol helicopters swam through the darkness outside my room. Scattered booms of M-80s cracked and whipped the rushing winds in celebration of Semana Santa. Dogs roared. Other strange animals, of which your editor is not yet accustomed to, howled, hooted and growled in vain efforts, it seemed, to beat back the chaos. Saturday evening, as my driver, Ricardo, pulled into Panajachel (the ‘New York’ of Lake Atitlan), so did a swarm of Interpol officers. They came to capture the fugitive ex-governor of Veracruz, Javier Duarte de Ochoa. Coincidentally, those who conspired to help Duarte make his way to Lake Atitlan, according to authorities, did so from Mexico City… from where I just flew in. (For the record, I’ve never seen that man before in my life!) Six months ago, Duarte resigned from his position as governor of Veracruz to, according to him, ‘fight the corruption charges’ made against him. (Racketeering, theft, money laundering, bribery… you know, the usual) A few days later, he vanished without a trace.
On January 1, 1994, the North American Free Trade Agreement (NAFTA) officially came into effect, virtually eliminating all tariffs and trade restrictions between the United States, Canada, and Mexico. As Visual Capitalist’s Jeff Desjardins reminds readers: Bill Clinton, who lobbied extensively to get the deal done, said it would encourage other nations to work towards a broader world-trade pact. ‘NAFTA means jobs. American jobs, and good-paying American jobs,’ said Clinton, as he signed the document, ‘If I didn’t believe that, I wouldn’t support this agreement.’ Ross Perot had a contrary perspective. Lobbying heavily against the agreement, he noted that if it was ratified, Americans would hear a giant ‘sucking sound’ as jobs went south of the border to Mexico. IT’S A COMPLICATED WORLD Fast forward 20 years, and NAFTA is a hot-button issue again. Donald Trump has said he is working on ‘renegotiating’ the agreement, and many Americans are sympathetic to this course of action.
This post was published at Zero Hedge on Mar 29, 2017.
On January 1, 1994, the North American Free Trade Agreement (NAFTA) officially came into effect, virtually eliminating all tariffs and trade restrictions between the United States, Canada, and Mexico. Bill Clinton, who lobbied extensively to get the deal done, said it would encourage other nations to work towards a broader world-trade pact. ‘NAFTA means jobs. American jobs, and good-paying American jobs,’ said Clinton, as he signed the document, ‘If I didn’t believe that, I wouldn’t support this agreement.’ Ross Perot had a contrary perspective. Lobbying heavily against the agreement, he noted that if it was ratified, Americans would hear a giant ‘sucking sound’ as jobs went south of the border to Mexico. It’s a Complicated World Fast forward 20 years, and NAFTA is a hot-button issue again. Donald Trump has said he is working on ‘renegotiating’ the agreement, and many Americans are sympathetic to this course of action. However, coming to a decisive viewpoint on NAFTA’s success or failure can be difficult to achieve. Over two decades, the economic and political landscape has changed. China has risen and created a surplus of cheap labor, technology has changed massively, and central banks have kept the spigots on with QE and ultra-low interest rates. Deciphering what results have been the direct cause of NAFTA – and what is simply the result of a fast-changing world – is not quite straightforward.
Having already signed a (mostly symbolic) executive order on Obamacare on Friday night, urging US agencies to “waive, defer, grant exemptions from, or delay the implementation” of provisions deemed to impose fiscal burdens on states, companies or individuals, Trump is preparing to unload a volley of many more executive orders. Courtesy of Axios, which quotes “one of the best-wired Republican lobbyists in town”, here is a preview of the initial round of Trump executive actions, some of which may hit as soon as Sunday afternoon: Look for a possible hiring freeze at executive branch 5-year lobbying ban on transition and administration officials Mexico City policy, which prevents foreign NGOs from getting U. S. family planning money if they provide abortions with non-U. S. funds. (It’s already illegal to use U. S dollars on abortions.) Task the Defense Secretary and joint chiefs to come up with plan to eviscerate ISIS Report on readiness, and something cyber security related Border/immigration: Something on sanctuary cities, expand E-Verify, an extreme vetting proposal Trade: Withdraw from TPP and a thorough review of NAFTA Axios also notes that “the Mexico City executive order could come as soon as today.”
This post was published at Zero Hedge on Jan 22, 2017.
San Diego, CA – Long-simmering social tensions in Mexico are threatening to boil over as failing neoliberal reforms to the country’s formerly nationalized gas sector are compounded by open corruption, stagnant standards of living, and rampant inflation. The U. S. media has remained mostly mute on the situation in Mexico, even as the unfolding civil unrest has closed the U. S.-Mexico border in San Diego, California, several times in the past week. Ongoing ‘gasolinazo’ protests in Mexico over a 20 percent rise is gas prices have led to over 400 arrests, 250 looted stores, and six deaths. Roads are being blockaded, borders closed, and government buildings are being sacked. Protests have remained relatively peaceful overall, except for several isolated violent acts, which activists have blamed on government infiltrators. The few mainstream news reports that have covered the situation blame rising gas prices but fail to examine several other factors that are pushing Mexico to the brink of revolution.
In a few short hours we’ll be treated to the President-Elect’s much-anticipated first press conference. We’re not sure there’s been a more eagerly awaited event of its kind in memory. As Bloomberg’s Richard Breslow notes, global markets (ex-Mexico and Turkey) have ground to a halt. You can cut the anticipation with a knife. Will the powerful trends we’ve seen for the last two months continue? Or reverse with a vengeance? All will be revealed. And investors will know exactly which the best trades to set up their year are. Don’t get your hopes up. But who knows? It’s a must-listen in any case. Investors will do their best to focus on comments and policy prescriptions specifically aimed at various sectors of the S&P 500. There will be a natural tendency to try to ignore as unpricable potential policies that affect massively important geopolitical and international economic issues. That might work in trading the S&P financials index this afternoon. But perhaps not so well for the Asia dollar index, where the countries comprising that measure are already being forced to speculate on what the acronym might be for a China-led economic and security pact.
This post was published at Zero Hedge on Jan 11, 2017.
Marching with a boisterous but peaceful crowd through central Mexico City, Hctor Prez, a sales manager with an insurance company, rattled off a list of grievances to explain a wave of furious protests which erupted after a rise in the country’s government-set petrol price. ‘It’s not because we all have cars. When gasoline prices go up, everything else goes up: tortillas, public transportation, everything,’ said Prez. Pressed a little harder, he voiced another set of reasons for his discontent: President Enrique Pea Nieto and his Institutional Revolutionary party (PRI) justified an agenda of structural reforms with the promise of growth for all – but have instead presided over a stagnating economy. Meanwhile, a string of high-profile corruption scandals has heightened the perception that the while ordinary Mexicans have seen a gradual decline in spending power, the country’s politicians have grown rich.
Trump tweets of taxes at the southern border and the Peso plunges. Mexico has abundant petroleum, cheap labor and a preeminent location for global companies to reach the largest consumption market in the world. Yet they struggle with slow growth and massive corruption. To add insult to their injurious system, Mexico’s worst nightmare has now been elected next door with a vow to tax Mexico, penalize potentially any factory that locates there and to reverse the tide of illegal immigration. Not surprisingly, the Bearish sentiment is rising over the plight of the Peso as Trump tweets promise to indirectly punish their currency further in 2017. Look for depreciation of the Mexican currency (MXN) down to 23 to 24.4 per dollar (.0435 – .041 dollar/peso) with resistance near 20. Mexico is clearly one of the most affected followers of Trump Tweets as illustrated in the chart below.
The Risk of Contagion of a full-blown Mexican crisis is far greater today than it was during the Tequila Crisis 22 years ago. Things are rapidly going from bad to worse in Mexico. Hundreds of people were arrested and a handful of people killed over the past week as peaceful protests against the government’s hike of gasoline prices (by as much as 20% in some states) descended into widespread looting and rioting. The mood on the street was hardly helped when Mexico’s deeply unpopular president, Enrique Pea Nieto, tried to defend his actions by asking the public, ‘What would you have done?’ For a lot of people, the answer’s clear: a lot of things, very differently. Right at the top of the list would be launching an all-out war against the endemic culture of corruption plaguing virtually all levels of government. But now, time is fast running out as Mexico now faces a hideous constellation of threats and challenges, all at the same time.
Vice President-elect Mike Pence has no idea what the term ‘free market’ means, or at least, that is what his most recent statement would suggest. Defending President-elect Trump’s $7 million deal with Carrier, Pence recently stated, ‘the free market has been sorting it out and America’s been losing.’ RELATED: “Countless Ordinary Americans Benefit When Companies Move to Mexico“ While there have been some libertarian arguments made in defense of this new deal with Carrier, which will keep 1,000 jobs in the United States instead of moving them to Mexico, blaming the free market for a loss of American jobs is far-fetched, to say the least. RELATED: “In Defense of Trumps’ Deal with Carrier“ However, there is something even more disturbing about Pence’s belief that the free market has failed the American people: it shows a complete lack of understanding for what a free market really is. Surely, if Pence had a clear idea of what a free market economy actually entails, he would know that America, doesn’t actually have one. While still faring better than many other nations, America has become somewhat of a beacon of crony capitalism. From corporate bailouts to giant subsidies given to American companies which do not actually need these handouts, the United States does not have a great track record when it comes to keeping the government, and taxpayer dollars, out of big business.
Former Gov. Sarah Palin has criticized President-elect Donald Trump’s deal with the Carrier, in which as reported previously the air conditioner company would not outsource 1,100 workers to Mexico in exchange for $7 million in tax incentives over 10 years, saying that it yet another example of “corporate welfare.” The harsh criticism of Trump’s economic policy comes as she is reportedly under consideration to serve as Trump’s secretary of Veterans Affairs. Writing an op-ed in the Young Conservatives blog, Palin said that while he is excited for the Carrier employees whose jobs are staying in Indiana, saying the deal is “a relief for hundreds of workers… Merry Christmas Indiana!’, she then joins Bernie Sanders and other critics in vlasting the deal as ‘crony capitalism” and an example of the “hallmark of corruption” and “socialism“, adding the arrangement could set “inconsistent, unfair and illogical precedent.” Suggesting that the Trump deal is a carryover from the Obama administration’s “crony” ways of doing business, Palin wrote that ‘when government steps in arbitrarily with individual subsidies, favoring one business over others, it sets inconsistent, unfair, illogical precedent. Then, special interests creep in and manipulate markets. Republicans oppose this, remember?’ ‘Instead, we support competition on a level playing field, remember? Because we know special interest crony capitalism is on big fail.’ Palin then made a statement many conservatives and virtually all libertarians would agree with, saying that “however well meaning, burdensome federal government imposition is never the solution. Never. Not in our homes, not in our schools, not in churches, not in businesses.’
This post was published at Zero Hedge on Dec 3, 2016.
Donald Trump hasn’t yet made the move from Trump Tower to America’s most expensive public housing, but he was able to come through with one campaign promise this week by announcing a deal with Indiana-based Carrier Air Conditioning that will keep almost 1,000 jobs in the state. As reported, the deal seems largely focused on the State of Indiana offering millions in tax breaks and an understanding that the Trump administration will push for regulatory and corporate tax relief at the Federal level. While the jobs Carrier will be keeping in the US only makes up about a third of the jobs the company had planned to move to Mexico, the underlying deal seems to reflect a larger commitment to addressing the corporate tax and regulatory burdens that have long held back the American economy. While some have described Trump’s approach as crony capitalism, if the terms of the deal really are limited to tax relief, such claims are baseless. While it is true that tax breaks for specific companies are less ideal than across-the-board cuts (or outright abolishment) of business taxes, they should not be confused with taxpayer subsidies. As Matthew McCaffrey wrote last year defending tax credits for video game companies: Decades ago, economists like Mises and Rothbard were already arguing that tax breaks are not economically or ethically equivalent to receiving subsidies. Simply put, being permitted to keep your income is not the same as taking it from competitors. Exemptions and loopholes do not forcibly redistribute wealth; taxes and subsidies do, thereby benefiting some producers at the expense of others.
In terms of rhetoric, which has historically made major departures from actions, this campaign boils down the economic uncertainty that is enveloping this nation. With millions of people out of work, worried about finding employment or facing grave doubts about a future transformed by technological labor, Trump is honing in on the most psychologically pressing issues on the minds of the real Americans in flyover country. They are the ones who are feeling the hurt financially, not Wall Street. It is they who must be convinced to support the government again. The politics of Obama and Hillary have left large portions of the country feeling alienation, and angry at their government. That growing sense of dissatisfaction has been fueled by the unethical tactics of those in power. Lying and corruption has gone way too far. It has affected them personally. And whether Donald Trump will prove himself in hindsight or not, he is masterfully tapping into that sentiment in a way that Hillary Clinton cannot even pretend to attempt. Trump’s speech in front of the Economic Club of New York highlighted the choice between a declining welfare state and an economy that is booming and providing good paychecks. How does that sound to Ford workers who just lost another factory to Mexico? Or to the thousands of other rust belt Americans who face a similar predicament? As Real Clear Politics reported, :
This post was published at shtfplan on September 15th, 2016.
CEO Mark Fields told investors the move is part of plans to make production simpler and less expensive Ford plans to eventually shift all North American small-car production from the U. S. to Mexico, CEO Mark Fields told investors Tuesday, even though the company’s production investments in Mexico have become a lightning rod for controversy in the presidential election. ‘Over the next two to three years, we will have migrated all of our small-car production to Mexico and out of the United States,’ Fields said at a daylong investor conference in Dearborn. The news sparked a fresh round of criticism of Ford from Republican Presidential candidate Donald Trump, who was campaigning in Flint on Wednesday. ‘We shouldn’t allow it to happen. They’ll make their cars, they’ll employ thousands of people, not from this country, and they’ll sell their car across the border,’ Trump said during his visit. ‘When we send our jobs out of Michigan, we’re also sending our tax base.’ The impact on Ford’s U. S. employment will be minimal in the near-term. Ford already builds the Fiesta subcompact and the Fusion mid-size sedan in Mexico. There is an expectation that Ford will build a new Ranger mid-size pickup truck in Wayne and possibly a new Bronco compact sport-utility.
Two years ago, a California aluminum executive commissioned a pilot to fly over the Mexican town of San Jos Iturbide, at the foot of the Sierra Gorda mountains, and snap aerial photos of a remote desert factory. He made a startling discovery. Nearly one million metric tons of aluminum sat neatly stacked behind a fortress of barbed-wire fences. The stockpile, worth some $2 billion and representing roughly 6% of the world’s total inventory – enough to churn out 2.2 million Ford F-150s or 77 billion beer cans – quickly became an obsession for the U. S. aluminum industry. Now it is a new source of tension in U. S.-Chinese trade relations. U. S. executives contend that the mysterious cache was part of a brazen scheme by one of China’s richest men to game the global trade system. Aluminum-industry representative Jeff Henderson says he is convinced that China Zhongwang Holdings Ltd., a Chinese aluminum giant controlled by billionaire Liu Zhongtian, tried to evade U. S. tariffs by routing aluminum through Mexico to disguise its origins, a tactic known as transshipping. ‘My Moby-Dick has been Zhongwang,’ says Mr. Henderson, president of the Aluminum Extruders Council, a U. S. trade group. Mr. Liu, a member of China’s ruling Communist Party, denies any connection to the Mexican aluminum or transshipping. ‘These things have nothing to do with me,’ he said in a June interview at his company’s Liaoning, China, plant, where he lives in an apartment inside the factory. He said he wouldn’t know how to establish a business in Mexico, joking that ‘in that sort of place, there are a lot of killers with guns.’
An ISIS operative arrested and criminally charged in Ohio this month has confirmed that the terrorist group has cells in Mexico, according to federal authorities. Judicial Watch has reported this for years, documenting it in a series of articles as part of an ongoing investigation on the connection between drug cartels, corruption and terrorism on the southern border. In fact, last spring Judicial Watch broke a story about an ISIS camp just a few miles from El Paso, Texas in an area known as ‘Anapra’ situated just west of Ciudad Jurez in the Mexican state of Chihuahua. Though a number of high-level law enforcement, intelligence and military sources on both sides of the border have provided Judicial Watch with evidence that Islamic terrorist cells are operating in Mexico, the Obama administration has publicly denied it, both to Judicial Watch and in mainstream media outlets.
This post was published at Zero Hedge on Aug 14, 2016.
August 2016 – MEXICO – Earlier this year a top ranking Homeland Security official acknowledged that Mexican drug cartels were helping ISIS sneak across the southern border to scope out targets for terrorist attacks. ISIS operative Shaykh Mahmood Omar Khabir has reportedly been training militants near the US border near Ciudad Juarez for the past year. Khabir actually brags in an Italian newspaper article published last week that the border region is so open that he ‘could get in with a handful of men, and kill thousands of people in Texas or in Arizona in the space of a few hours.’ Today Judicial Watch confirmed reports that ISIS is operating in Mexico. Judicial Watch reported, via Free Republic: An ISIS operative arrested and criminally charged in Ohio this month has confirmed that the terrorist group has cells in Mexico, according to federal authorities. Judicial Watch has reported this for years, documenting it in a series of articles as part of an ongoing investigation on the connection between drug cartels, corruption and terrorism on the southern border. In fact, last spring Judicial Watch broke a story about an ISIS camp just a few miles from El Paso, Texas in an area known as ‘Anapra’ situated just west of Ciudad Jurez in the Mexican state of Chihuahua.