Warm Words

The 9-10 August summit in Mexico City saw President Barack Obama of the United States, Mexico's President Felipe Calderón, and Canada's Prime Minister Stephen Harper spend just four hours face-to-face. During that time they had a long list of issues to address. The more topical of these included the political situation in post-coup Honduras and ongoing efforts to counter the swine flu epidemic that is believed to have originated in Mexico. On the former issue, the leaders restated their demands that President Manuel Zelaya be reinstated, and detailed the measures they have taken to apply pressure. However, Obama pushed back against pressure to intervene more forcefully (including from Zelaya himself), pointing to decades of contentious U.S. activities in Latin America with questionable outcomes. Most of the U.S. pressure is being applied through the Organization of American States (OAS), and has seen the suspension of millions of dollars in aid and threats of more sanctions. The U.S. approach was warmly endorsed at the summit by Harper and Calderón. On swine flu, the three countries vowed to continue sharing information and widening their public information campaigns. The leaders acknowledged that the approaching winter months are set to see a dangerous resurgence. Another area where the three were happy to espouse the same line was on the economy, and efforts to counter the recession. "Aggressive, coordinated action" to restore growth was promised, but the statements were light on specifics. The domestic political situation in the United States loomed large over the summit, and Obama found himself fielding numerous media questions about his struggle to push through healthcare reforms.

Big Issues Remain

• Immigration: From Mexico's standpoint, one of the biggest issues is the future of U.S. immigration policy. Former president George W. Bush attempted to reform the system, but the effort came unstuck largely in the face of opposition from his fellow conservatives. Obama has also committed himself to reform, but he told his counterparts yesterday that the big push on this will have to wait until 2010 (even if draft legislation is published during 2009). Mexico is keenly interested in what form the reforms will take. Conservatives in the United States favour a harsh crackdown on illegal immigrants already in the United States as well as very stiff border security measures. Both have the potential to strain Mexico's economy and social fabric, limiting the economic benefits of its proximity to the massive U.S. economy. Obama is likely to favour a more nuanced solution not dissimilar to that advanced by Bush—a combination of relatively tough border measures with a route to legality for long-standing immigrants. The fine print of the measures as decided by Congress is critical for Mexico, however, and it will be lobbying hard in coming months. Obama was candid about the need for reform—"We have a broken immigration system. Nobody denies it."—but it is clear it will have to take its place in a queue that includes healthcare, energy reform, and new financial regulation. Immigration is also an irritant in Mexico-Canada relations. The latter has recently introduced new visa requirements on visiting Mexicans that have been criticised as too restrictive. Harper said that the new requirements were the only option he had pending changes to Canadian immigration laws. Calderón responded by warning that "Mexico certainly feels very bad about this decision, about this rejection".
• Trade Disputes: Under the terms of NAFTA, trade barriers have been greatly reduced between the three countries, but this does not mean there are no contentious trade disputes. One of these centres on the "Buy American" provision included in the U.S. economic stimulus package. This was inserted by Congress and stipulates that the stimulus funds are spent on U.S.-produced goods and services. This is understandably controversial for Canadian and Mexican suppliers, and is also widely criticised as impractical given the complexity and integration of supply chains. Obama listened to his counterparts' concerns, and said that he had not supported the provision, but made no promises to overturn it. Obama argued that it is a relatively small issue in the bigger trade picture, and pointed out that it is also temporary. Another key trade issue is continuing U.S. restrictions on Mexican trucks' cross-border access. NAFTA requires greater access, but the United States has cited various safety concerns for delaying this, much to Mexico's frustration. Obama again refused to make any firm commitments on the issue, although some changes are expected in due course.
• Drugs Violence: Under Obama the United States has moved towards a more multi-faceted and collaborative approach to dealing with surging drugs violence along the Mexican border, but concrete policy announcements have been few to date. Among other things, Mexico is pressing the United States to crack down more effectively on the southward flow of money and weapons, which are fuelling the violence. Mexico is also pressing the United States to release the latest instalment of the three-year US$1.4-billion Merida Initiative funds. This is designed to help the Mexican security forces, but has been held up over concerns that the army is committing human rights abuses in its violent crackdown. Again, Obama made no fresh commitments at the summit on these fronts, although he did pointedly congratulate Calderón for his "courageous" actions against the cartels.

Outlook and Implications

The summit was not expected to produce major new agreements, or indeed fireworks, and as such it lived up to expectations. It seems next year's gathering, by which time the United States should have clarified its immigration reform plans and efforts to combat the drugs violence, will be more productive. Now that Obama has backed away from his tough rhetoric, it seems NAFTA's survival is assured for the foreseeable future. The agreement is nonetheless still a work in progress, and it has yet to realise the ambitious goals set when it took effect fifteen years ago. Mexico has certainly benefited through an explosion of exports, but it still does not have the unfettered access to the Canadian and U.S. markets that it was led to expect. There have also been many losers in Mexico such as small farmers and suppliers unable to compete in the expanded, more competitive marketplace. Also, many employees in Mexican factories suffer poor compensation and conditions, and acute income disparities help explain the desperation of those who cross into the United States illegally. Canada and the United States have benefited too economically from closer integration under NAFTA, but in both protectionist sentiment remains strong and helps explain the failure to resolve long-standing grievances.

Global Insight (Reino Unido)