Economy

Why The NAFTA Reboot Is A Raw Deal For Mexico

Proposed changes to the trilateral trade accord could scare off investors, hurt Mexican automakers, and sour relations with Canada, analyst Luis Rubio argues.

At a car assembly line in Puebla, Mexico
At a car assembly line in Puebla, Mexico
Luis Rubio

-Analysis-

MEXICO CITY — As lawyers sometimes say: "Better a bad settlement than a good fight!" I imagine that's what Mexican negotiators were thinking while haggling with their U.S. counterparts over a trade deal — the revised North American Free-Trade Agreement (NAFTA) — that negates the reasons Mexico signed on to the accord in the first place. The best we can hope for now is that U.S. lawmakers reject the deal so that the status quo will prevail.

From what we know of the new pact, it contains two major concessions on our part. First, it puts a cap on vehicle exports, and therefore threatens to limit growth possibilities for Mexico's most dynamic industry. Technically speaking, we can still export cars outside the new FTA (Free Trade Accord) and just pay the tariffs. But there is undoubtedly a risk that when this treaty is up for review, six years from now, the Americans will interpret the export quota as an absolute limit, not one within the bounds of the accord. And so in that sense, we're risking this entire pillar of Mexican industry.

Second, what for us is the heart of NAFTA — Chapter 11 — has been weakened almost to the point of nullification. Chapter 11 spells out rules for resolving differences and is the foundation NAFTA's success for a simple reason: It protects investors from arbitrary government decisions or unjustified expropriations. The mechanism creates proceedings to resolve disputes in an environment free of political influence. It was Chapter 11 that motivated Mexico to first negotiate the trade deal with the United States, back in the 1990s.

We're risking this entire pillar of Mexican industry.

Originally and essentially, NAFTA was conceived with political, not strictly economic, objectives. A reliable instrument was needed that was immune to political pressures and constant changes, and able to raise investment conditions in Mexico to international standards. Within this framework alone, and with the security it provided, the country managed to attract the investments that contributed so much to its modernization in recent decades. Through Chapter 11, NAFTA takes politics out of investment decisions — hence its importance and popularity.

The revised rules on resolving disputes protect services but leave industry in the lurch. Our negotiators from the Secretariat of Economy know as much. They also understand how vital Chapter 11 is to NAFTA. It would seem, therefore, that the decision to accept the changes was not theirs, but rather the product of political calculations that transcend any desire to maintain the country's stability and economic viability.

Trade big and small at the Mexico-U.S. border — Photo: Roberto E. Rosales/Albuquerque Journal/ZUMA

In addition — and this does not necessarily reflect the Mexican government's preference — the way this phase was handled has alienated the other bloc member, Canada, and presented it with an ultimatum: Either accept the deal as it is or be left out.

Just as Chapter 11 is crucial to Mexico, for Canada it is Chapter 19, which regulates dumping. Mexico agreed to eliminate this chapter, threatening Canada's interests and with it the trilateral relationship as a whole. The move puts Canada at a difficult juncture, and its ruling coalition may even collapse, should it accept the terms imposed by negotiations with Mexico.

There are circumstances, clearly, that forced Mexico into these negotiations. The mechanism (namely the Trans-Pacific Partnership) that was supposed to update the treaty without provoking the negative passions associated with the acronym "NAFTA" collapsed the day Donald Trump entered the White House. Revisions, in other words, were due to happen one way or the other. The hope, though, was to upgrade NAFTA, to improve it. Instead, we've backtracked.

The move puts Canada at a difficult juncture.

The revisions raise a number of unanswered questions, starting with the Canada conundrum and whether it will even be possible to present the U.S. Congress with a bilateral deal, given that NAFTA was originally authorized as a trilateral accord. Are there enough votes in Congress for one, or two, bilateral accords, considering the divergent interests of America's southern and northern neighbors? Also, how badly will this accord hurt Mexico"s relations with Canada. And finally, how many changes might the U.S. Congress — under pressure, no doubt, from car makers and service-sector corporations — insert into the draft U.S.-Mexico accord?

All of that begs the question of why Mexico would accept such a scenario. Two possible explanations come to mind: The first is that the negotiators are confident that third parties working through the U.S. Congress will defend our interests and preserve NAFTA's essential core. They chose, in other words, to take a "calculated" leap into the unknown. The second is that they simply wanted to spare the outgoing administration one last defeat. Either way, what they have done is strip NAFTA of its greatest virtue — its apolitical character — and replace it with something that smacks of politics.

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Geopolitics

How Thailand's Lèse-Majesté Law Is Used To Stifle All Protest

Once meant to protect the royal family, the century-old law has become a tool for the military-led government in Bangkok to stamp out all dissent. A new report outlines the abuses.

Pro-Democracy protest at The Criminal Court in Bangkok, Thailand

Laura Valentina Cortés Sierra

"We need to reform the institution of the monarchy in Thailand. It is the root of the problem." Those words, from Thai student activist Juthatip Sirikan, are a clear expression of the growing youth-led movement that is challenging the legitimacy of the government and demanding deep political changes in the Southeast Asian nation. Yet those very same words could also send Sirikan to jail.

Thailand's Criminal Code 'Lèse-Majesté' Article 112 imposes jail terms for defaming, insulting, or threatening the monarchy, with sentences of three to 15 years. This law has been present in Thai politics since 1908, though applied sparingly, only when direct verbal or written attacks against members of the royal family.


But after the May 2014 military coup d'état, Thailand experienced the first wave of lèse-majesté arrests, prosecutions, and detentions of at least 127 individuals arrested in a much wider interpretation of the law.

The recent report 'Second Wave: The Return of Lèse-Majesté in Thailand', documents how the Thai government has "used and abused Article 112 of the Criminal Code to target pro-democracy activists and protesters in relation to their online political expression and participation in peaceful pro-democracy demonstrations."

Criticism of any 'royal project'

The investigation shows 124 individuals, including at least eight minors, have been charged with lèse-majesté between November 2020 and August 2021. Nineteen of them served jail time. The new wave of charges is cited as a response to the rising pro-democracy protests across Thailand over the past year.

Juthatip Sirikan explains that the law is now being applied in such a broad way that people are not allowed to question government budgets and expenditure if they have any relationship with the royal family, which stifles criticism of the most basic government decision-making since there are an estimated 5,000 ongoing "royal" projects. "Article 112 of lèse-majesté could be the key (factor) in Thailand's political problems" the young activist argues.

In 2020 the Move Forward opposition party questioned royal spending paid by government departments, including nearly 3 billion baht (89,874,174 USD) from the Defense Ministry and Thai police for royal security, and 7 billion baht budgeted for royal development projects, as well as 38 planes and helicopters for the monarchy. Previously, on June 16, 2018, it was revealed that Thailand's Crown Property Bureau transferred its entire portfolio to the new King Maha Vajiralongkorn.

photo of graffiti of 112 crossed out on sidewalk

Protestors In Bangkok Call For Political Prisoner Release

Peerapon Boonyakiat/SOPA Images via ZUMA Wire

Freedom of speech at stake

"Article 112 shuts down all freedom of speech in this country", says Sirikan. "Even the political parties fear to touch the subject, so it blocks most things. This country cannot move anywhere if we still have this law."

The student activist herself was charged with lèse-majesté in September 2020, after simply citing a list of public documents that refer to royal family expenditure. Sirikan comes from a family that has faced the consequences of decades of political repression. Her grandfather, Tiang Sirikhan was a journalist and politician who openly protested against Thailand's involvement in World War II. He was accused of being a Communist and abducted in 1952. According to Sirikhan's family, he was killed by the state.

The new report was conducted by The International Federation for Human Rights (FIDH), Thai Lawyer for Human Rights (TLHR), and Internet Law Reform Dialogue (iLaw). It accuses Thai authorities of an increasingly broad interpretation of Article 112, to the point of "absurdity," including charges against people for criticizing the government's COVID-19 vaccine management, wearing crop tops, insulting the previous monarch, or quoting a United Nations statement about Article 112.

Juthatip Sirikan speaks in front of democracy monument.

Shift to social media

While in the past the Article was only used against people who spoke about the royals, it's now being used as an alibi for more general political repression — which has also spurred more open campaigning to abolish it. Sirikan recounts recent cases of police charging people for spreading paint near the picture of the king during a protest, or even just for having a picture of the king as phone wallpaper.

The more than a century-old law is now largely playing out online, where much of today's protest takes place in Thailand. Sirikan says people are willing to go further on social media to expose information such as how the king intervenes in politics and the monarchy's accumulation of wealth, information the mainstream media rarely reports on them.

Not surprisingly, however, social media is heavily monitored and the military is involved in Intelligence operations and cyber attacks against human rights defenders and critics of any kind. In October 2020, Twitter took down 926 accounts, linked to the army and the government, which promoted themselves and attacked political opposition, and this June, Google removed two Maps with pictures, names, and addresses, of more than 400 people who were accused of insulting the Thai monarchy. "They are trying to control the internet as well," Sirikan says. "They are trying to censor every content that they find a threat".

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