The U.S.-Mexico Relationship, With Shannon K. O’Neil

Shannon K. O’Neil, CFR’s vice president, deputy director of studies and Nelson and David Rockefeller senior fellow for Latin America studies, sits down with James M. Lindsay to discuss recent developments in Mexico and U.S.-Mexico relations.

February 22, 2022 — 33:43 min
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Host

James M. Lindsay

Senior Vice President, Director of Studies, and Maurice R. Greenberg Chair Full Bio

Episode Guests

Shannon K. O'Neil

Vice President, Deputy Director of Studies, and Nelson and David Rockefeller Senior Fellow for Latin America Studies

Show Notes

Shannon K. O’Neil, CFR’s vice president, deputy director of studies and Nelson and David Rockefeller senior fellow for Latin America studies, sits down with James M. Lindsay to discuss recent developments in Mexico and U.S.-Mexico relations.

 

Books Mentioned on the Podcast

 

Shannon O’Neil, Two Nations Indivisible: Mexico, the United Staes, and the Road Ahead (2013)

 

Articles Mentioned

 

Edward Alden, “Decades Late, NAFTA’s Promise on Workers’ Rights Comes Good,” Foreign Policy via CFR.org, February 8, 2022

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Transcript

James Lindsay:

Welcome to The President's Inbox, a CFR podcast about the foreign policy challenges facing the United States. I'm Jim Lindsay, Director of Studies at the Council on Foreign Relations. This week's topic is Mexico. With me to discuss recent developments in Mexico, in US-Mexico relations is Shannon O'Neil. Shannon is Vice President, Deputy Director of Studies and Nelson and David Rockefeller Senior Fellow for Latin America Studies at CFR. She is an expert in Mexico, Latin America, more broadly US-Mexico relations and immigration among other topics. She is the author of Two Nations Indivisible: Mexico, the United States, and the Road Ahead, which is both engaging and informative. Her newest book, The Globalization Myth: Why Regions Matter, will be published this fall. Shannon, thanks for joining me.

Shannon O'Neil:

Always a pleasure. Thanks for having me.

James Lindsay:

Well, we have lots to talk about. COVID, the economy, energy, drug cartels and immigration all come to mind, but let's start with politics. President Andres López Obrador or AMLO as he is frequently called, took office just over three years ago. He ran a populous campaign, pledging to fight corruption and reduce poverty. He is now halfway through his six year term. What has his presidency meant for Mexico?

Shannon O'Neil:

So as you say, AMLO came in with big promises as how he was going to change Mexico. He was going to take on corruption, he was going to reduce poverty, he was going to reduce violence. And in general, he promised to serve those in Mexico, who felt like they had been left out or left behind over these last number of decades. And here we are three plus years into his term of a six year term, and those promises really have not been fulfilled.

Shannon O'Neil:

You look at the economic side of things and the economy was already stagnating and even had dipped into recession before any of us were talking about COVID. We look at the president's actions around COVID and he took a very different path than most of his neighbors, or that we did here in the United States. He was both more open in terms of people moving around and businesses staying open. So this is not a country that you need a PCR or any kind of test to go visit. But he was also much more stingy frankly, on the fiscal side. So there really was no economic stimulus to help people or businesses deal with the virus if they got sick or if they had to close their doors.

Shannon O'Neil:

So what we have seen over these last two years, the first year was, stagnation, recession on its own in Mexico for a variety of reasons. These last two years through COVID. We have also seen both a big decline in GDP, more than many of his neighbors, and a much slower recovery in GDP in terms of getting back on its feet. And really when you look at the numbers and so the economy, the only part of the economy that is growing is the export oriented economy. So the United States and you know the significant GDP boom we have seen here in the United States, has drawn that part of Mexico's economy along, as it's part of North America supply chains and the like. But the rest of the economy, the domestic economy, has remained really weak and tepid. So we haven't seen a real improvement there and because of that, many millions have fallen into poverty. So he hasn't improved that side, in fact it's gotten much worse over these last three years.

James Lindsay:

So should I conclude on the basis of that review, Shannon, that AMLO is very unpopular. His public opinion approval ratings are in the low, if not single digits?

Shannon O'Neil:

Indeed they are not, he has remained quite popular.

James Lindsay:

So explain that to me.

Shannon O'Neil:

So we have seen him stay around somewhere around 60% of Mexicans give or take, believe in this president and see him as quite popular. I would say two things there. One is this isn't all that different than former Mexican presidents. So if you look at President Zedillo in the late '90's, you look at President Fox in the early 2000's. You look at Calderon who followed him in the later 2000's. All of them, about three years into their term about the midterm side, had similar approval ratings. So it's not all that different given Mexicans history. The other thing is when you look at opinion polls, when you ask, "Do you like the president and do you support the President López Obrador?" The number is around 60%. When you ask, "Do you believe in the policies of the president? Do you think he handled COVID well? Do you think the economy is going well? Do you like the way that he's dealt with issues, social issues and the other issues?" There the numbers are much, much lower. So the policies, Mexicans disapprove of. The president himself, as a person, there's a lot of support for him.

James Lindsay:

Why do you think that is?

Shannon O'Neil:

I think there's a few reasons. One is AMLO is, particularly for the broader Mexican population, he is approachable. He is relatable. He is permanently campaigning. Every morning, he has a two-plus hour press conference where he speaks directly to people that's carried by all the television networks where people get their news. Most Mexicans don't get their news from Twitter or the opinion pages of newspapers. They get it from TV and AMLO is there, and he speaks directly to them every day. He also is out on the road all of the time. He's not hanging out in the presidential palace. He's not hanging out having government meetings, actually running the government. He's out there campaigning, meeting with people, being out on the street. So there's a connection that Mexicans feel with him. That is something and he does it very well, he's a great politician.

Shannon O'Neil:

The other side of it is Mexico, really today, for a number of reasons has no coherent political opposition. So given since his election over these last three years, the opposing parties have not really been able to regroup from their losses that they faced in the presidential election in 2018. And so he don't really have an alternative right now, stepping up to provide you someone else to look at or some other kind of party you know to follow. And that is another reason why I do think he personally has remained popular.

James Lindsay:

Why do you think it is that the opposition hasn't been able to get its sea legs? I mean, Mexico does not lack for political parties. You have the PRI which dominated Mexican politics for a very long time. You have the PAN, which was a party of President Fox. You have the PRD. So there are lots of political groups out there who are active, but they don't seem to have gained traction.

Shannon O'Neil:

So there are two reasons I would say that we don't see a very coherent opposition. Though we have seen some movement, I would say in the midterms, you saw some coalitions across parties and politicians that were effective at the state level in various elections. But overall you don't see a coherent national opposition. I think two reasons. One is lots of those parties that you mentioned were part of the old system that voters voted against, that AMLO campaigned against. In fact, he calls them the PRIAN, which is a combination of the PRI and the PAN. So painting all of that opposition, as all of them are corrupt, all of them are part of this system that I am here to change. And in fact, he talks about this change, he's dubbed it the fourth transformation, and really wants to fundamentally shift what Mexico's about, how it's politics, economics, society work.

Shannon O'Neil:

So part of it is that there's this legacy that he's painted very well of them being part of this old system that everybody wants to get rid of. Even many people who used to support them, want to get rid of. You know everyone from you know lower classes, working classes up to intelligentsia, others want to get rid of. So that's part of it. The other is that AMLO has actually used the tools of the state to undermine any outside politicians, opposition politicians, that seem to be gaining traction. So one of the most high profile aspects of this, is his fight with Ricardo Anaya. Ricardo Anaya was is a Panista so he comes from the PAN. He ran for president against AMLO in the last election. And right now, if you look at opinion polls, he is the opposition candidate that has the most traction, name recognition and the like.

Shannon O'Neil:

So López Obrador, his government, his attorney general has brought a case against Ricardo Anaya, saying that he received bribes under the last administration to vote for the energy reform. Now, when you look at the initial case, lots of the details make no sense. He's supposedly received a bribe in the basement of the house of representatives when he wasn't any longer a member of the House of Representatives, so he couldn't have been there. And there's a lot of other issues. And in fact, just in the last week, the case against Emilio Lozoya, who's the former head of Pemex, the state owned enterprise, who's the one who supposedly paid him the bribe, that case came out and there is no mention of him ever giving any money. And the case against Lozoya, that any of that money went to anyone else, in fact, the case presents it as he and his family kept all of the money. Still, the AMLO government is pursuing this case against Ricardo Anaya, even though the basis of the case that he received money from this person, this other case says that he didn't receive it.

Shannon O'Neil:

So, anyway, that's a long way of saying that he's going after anyone who might be able to stand up against him. So one is, these parties have been discredited because of their former many bad behavior and participation in a corrupt system. But also those who might come out against him, he has gone after using the tools of the state in, frankly, undemocratic ways.

James Lindsay:

Where do you see this headed going forward because AMLO can, under the Mexican constitution, serve only one term? He seems to dominate his party of the Morena Party, where is this headed?

Shannon O'Neil:

So this is really the big question. His ability to win in 2018 after, this was his third run for the presidential office. In part it was creating an umbrella organization that brought together all sorts of you know political cats and dogs. It had everyone from The Communist Party to a party that is a conservative evangelical party and lots in between. So it really is a very broad brush that he has been able to keep together because of his charisma, because of his force and because of his influence in the larger Mexican political scene. And the real question is, can he pass those coattails or that power onto a successor? And there are few that are vying for that. One is the current Governor of the City of Mexico. She is in the race. So too is, hopeful for it, is the current foreign minister, as well as a couple people that are in the Congress.

Shannon O'Neil:

The question here is, can it pass it along? And he is doing his best to do so. In fact, I think many of the moves he's making is to make sure that his successor will win the 2024 elections. But there's a question there, because none of them are AMLO. And back to the initial sort of layout of who's popular, what is popular. AMLO is popular, but his party and his politics and his policies are not popular. And that is what we will see as we get toward 2024, when the next election will happen, whether he can still control the political table and put his chosen candidate into the presidential palace again.

James Lindsay:

It's very hard generally to transfer charisma to someone else. And AMLO, my sense is, has a lot of charisma in the Mexican context. Let's talk about some specific challenges that Mexico faces that AMLO, certainly when he was campaigning talked about, and that is corruption. Has he made progress in peeling back corruption?

Shannon O'Neil:

The short answer I say is no. And in fact, we've seen a couple very high profile cases come out in recent months. The most recent is questions about a quite, it seems lavish, lifestyle his son was living in Houston. A million dollar mansion, driving a very fancy Mercedes and unclear where/what salary was paying. For one, if he was paying rent with his wife and then two, what were the funds that were used for this, in terms of his professional role in earnings. So that touches very close, but we have also seen cabinet members, others within the administration, in deals, in different kinds of relationships that seem less than savory. And overall, this is an administration that has moved from doing more open, transparent contracting and the like for government services, to making them much more opaque, no bid contracts. And in some cases putting the control of big infrastructure projects under the military, for a number of reasons, but in part, because the military budget is not revealed or made transparent due to, quote-unquote, national security reasons.

Shannon O'Neil:

So we have seen here corruption, in some places it's hard to know because you can't get the information the way you used to be able to get it in Mexico, because Mexico has a freedom information act, and in fact an agency that would allow reporters or others to go and see what contracts were happening in your neighborhood and see who bid on them and what the price was. Fewer of those are happening now in the public realm. It's harder to get that information. But we have seen cases that intrepid journalists and others are out there uncovering, that look less than savory in many of these contracts. So the short answer is, no, it doesn't seem cleaner than it was before.

James Lindsay:

Now you mentioned that the Mexican economy has had a rough time over the last several years and a big part of that has to do with COVID. I think some of the numbers I've seen suggested that Mexico's GDP has fallen by six percentage points or so. But I'm curious, and just looking at ALMO's approach to the economy as you detailed in Two Nations Indivisible; what we had witnessed in Mexico was sort of an opening up of its economy, moving away from state intervention and among other things, a major landmark constitutional change, sort of open up the energy sector. Has AMLO continued those trends or tried to reverse them?

Shannon O'Neil:

AMLO has been working very hard to reverse that opening that happened. So right now, the biggest aspect of this, which is under very heated debate is what is going to happen to the energy sector. So the President has put in forth to the Congress, a constitutional reform that would return much of the control of the electricity sector and of the energy sector to state owned hands, back to Pemex and back to CFE, which is the Federal Electoral Commission. This is a real challenge for a number of reasons. One is neither of these public entities have shown in the past their ability to expand reserves and production and distribution and the like. Two, both of these are fairly indebted organizations. So there's a question about where the money is going to come. They don't have the expertise, nor do they have the money.

Shannon O'Neil:

But the other issue is that almost a decade ago, Mexico passed a different constitutional reform to open it up to private sector investment. So you have almost a decade worth of private investments and actions, both by Mexican companies, as well as by US, European and other international companies that have gone into Mexico. And there's a real question about what happens to that domestic and foreign direct investment into this sector. And that, at least on the international side, then falls within a lot of international treaties and trade treaties. So with the United States and Canada, that's the USMCA, the US-Mexican-Canadian free trade agreement, with the EU there are other agreements there. So their companies would be covered potentially in terms of international arbitration and the like, if these things were rolled back. There's a question about whether this will pass the Congress. They're debating it right now. And the current Congressional session goes through the end of April. So we'll see in the next few months, whether or not we see this. But it would be a big setback in terms of the energy sector and his openness, but also as you were mentioning, this return to state control of that sector.

Shannon O'Neil:

And there are other sectors too, where he has intervened and tried to direct it, whether it is the agricultural sector, he has this idea of self sufficiency in various agricultural products and basic food products. He's pulled back in a number of other areas as well, particularly where there's a lot of foreign influence. He's talked about, for instance, in terms of the banking sector, trying to get more domestic players and a bigger percentage for domestic banks versus international banks. But the energy sector really is at the crux of this. Does that return to full state control?

James Lindsay:

And what is driving this on behalf of AMLO? Is it just particular idiosyncratic views he has on economics? Is it because it plays into a longer historical narrative about Mexico having been dominated by outside interest? What's the political context in which this is happening?

Shannon O'Neil:

So I think in part it is AMLO's origin story and his political formation. And he came of age in Mexico in the 1970s. And this was a time when Mexico found one of the most prolific oil fields in the world called Cantarell, and it became a real energy and oil power in that time. And that was what fueled the government, but also fueled Mexican growth at the time. So I think the lesson AMLO took from his growing up and learning was, that oil can save Mexico, oil can bring prosperity, but it has to be controlled by the state. So I think that's part is his political formation and the way he thinks about things.

Shannon O'Neil:

The other side, though, of this is when you are building a political project, when you have a big political ambition, as he does I believe, and one that is based on systems of patronage and bringing in various voters through social programs and the like you need money. And a state own enterprise is one that you can take money from, especially if it is natural resources. And we see this in countries all around the world. These are state coffers. And, so I think that is the other aspect there is to fund what he wants to do on the political realm and continue his legacy and make sure his successor is appointed as the next president. He needs to be able to build these patronage networks and seize, in my view, these state-owned enterprises, particularly in the energy sector as a way to do so.

James Lindsay:

Well, obviously other big issues that AMLO has to deal with would involve drug trafficking and also immigration. And that raises the issue of US-Mexican relations, which I think would also be influenced by what happens in the energy sector. So maybe you can give us just an overview of the current status of relations between Washington and Mexico City?

Shannon O'Neil:

Washington and Mexico City right now have a somewhat tense relationship, for a number of reasons. One is that there are a lot of issues on the table where we see conflicts. Right now, we see the number of people coming to the US southern border has been growing and is reaching record levels. That includes Central Americans, but it also includes a number of growing number of Mexicans who are leaving their country, as well as what the customs and border patrol call, "other than Mexicans." So these are Haitians and Venezuelans and Nigerians and people from all over the world who are using the US southern border to come into the United States. So managing all of those people has been a huge challenge for the Biden administration, as we well know, and it doesn't look too slow, much less stop. And so that is an issue. How do you manage these people, particularly trying to manage them in a humane way? So there's conflicts there on how we do that.

Shannon O'Neil:

The other issue of which there is great concern on the US side, is the security issue and the ties to drug trafficking. And one of the biggest changes we've seen over the last five-plus years is a move out of, or at least US consumption of what you would call biologic drugs. So those are based on plants, whether it's heroin or it's cocaine or marijuana and the like, into synthetics and here particularly methamphetamine as well as fentanyl. And so last year over a hundred thousand Americans died of overdoses, primarily of meth and fentanyl. And much of this is coming through Mexico. The precursors imported from Asia, often China, but made in Mexico and coming into the United States from Mexico.

Shannon O'Neil:

So this too is a challenge, as there's new drugs that are much more deadly in the United States and Mexico is part of that. And working with Mexico to dismantle those labs and those drug cartels that bring these drugs into the United States is also an issue. And there have been tensions on how to manage that. AMLO has had a very hands off approach to drug cartels and other organized crimes so far within Mexico, and to record levels of violence that are not abating in Mexico. And that has been a challenge on both sides of the border, since much of that can carry over into the United States.

James Lindsay:

In your estimation, Shannon, how has the Biden administration approached the relationship? Joe Biden came into office talking about repairing damage done with countries all around the world. He talked about ambitious plans for rejuvenating, not just Mexico, but Central and Latin America more broadly. Have any of those plans materialized?

Shannon O'Neil:

Well, the interesting thing about US-Mexico relationship is under the Trump administration, Trump and AMLO got along quite well actually. And partly because the US-Mexico relationship narrowed, it narrowed to a couple of individuals. So you know Jared Kushner and just a couple people on the Mexican side were really the interlocutors talking about it. So it wasn't this very broad US government, all these different agencies involved in the day to day of it. And two, it really focused on this exchange of can you deal with and stop migration. And that's really what the administration on the US side cared about. And all of the other issues were pretty much left alone, and that was something AMLO was quite happy with.

Shannon O'Neil:

The Biden administration has tried to expand that relationship because there are a lot of really important issues on the table. There are energies, there's security, there's the environment, there's labor, there's democratic checks and balances, there's governance, and all kinds of things that are important to the Biden administration. And so as they have tried to expand that back and forth and the cooperation or discussion, there have been tensions because the López Obrador administration is less interested in making those bilateral issues. They see many of those as domestic issues. As we talked about in energy, they see energy as a domestic issue that they want to control. US companies that are down there are less amenable to that point of view.

Shannon O'Neil:

So I think we are seeing a broader, intenser relationships than that we did in the past. And so far, the Biden administration has tried to do this mostly behind doors, to have frank discussions behind doors between people and see if they can on both sides and see if they can solve the problems that way. As we've seen, that doesn't seem to be working at least in some areas of the relationship. And we are starting to see administrative officials step out and say more things publicly. For instance, the energy secretary was down there just a month or so ago, and she had some pointed words about the reform of the energy sector and what that would mean for US-Mexico cooperation overall, as well as for just the legal rules within Mexico's trade agreement with the United States.

James Lindsay:

Do you see that public criticism as having a chance to move AMLO? Or are we just going to get tenser relations between Washington and Mexico City?

Shannon O'Neil:

I think there are some fundamental things here that AMLO does not want the United States involved in. And in fact, I think there are many things that AMLO does not want the United States involved in. So whether the criticism or discussion is opened up behind closed doors or out in the public, I'm not sure there really is any sort of compromise or resolution that both sides would be happy with. Nevertheless, those are real issues that our two countries need to work on together. So I think we will continue to see closed door discussions, but I do think we'll start to see more of it come out in the public.

Shannon O'Neil:

And I would say, as we all know here in the United States, it's not just the president, it's not just the administration that guides US-Mexico policy. In fact, Congress has a huge role to play because so many constituencies all around the United States are touched by Mexico. They either are along the border, in those states, or they have commerce, they have people, they have communities, they have other reasons, they have security reasons and drug reasons, that they care about what's happening in Mexico. So we have seen in the last few months, and particularly in the last month or so, a real stepped up action from members of Congress from the democratic side, from the Republican side, people writing letters to the administration, hearings being held. So I do think we are going to start seeing a more public facing approach to Mexico, wherever it comes from within the US government.

James Lindsay:

Let's drill down on a couple of these issues. And let's begin with immigration because obviously, as you've alluded to already, immigration has been a big issue for the Biden administration. We are seeing record numbers of people approaching, or coming across, the southern border and then subsequently being apprehended. What kind of collaboration do we have between Washington and Mexico City on the immigration issue? My recollection is that Donald Trump and AMLO worked out a deal in which people got pushed back across to the Mexican side of the border. How is that working today?

Shannon O'Neil:

So under the Trump administration, there were sort of two ways that migrants were sent back into Mexico. One was a COVID health regulation, which did not allow people in because of COVID restrictions. And then the other was a program called, was dubbed, the Remain in Mexico program, which would... Mexico took those people back so they could await their asylum hearings in Mexico, and then come over when their court date or conversation was about to happen. Both of those still remain in place. The Biden administration tried to get rid of the Remain in Mexico program, but the court system in the United States stopped them from doing so. And that is now still working its way through an appeals process, but for the moment it remains in place. And the other is, since the CDC is changing guidance on COVID here, there are also cases against this Title 42, which is the health protocols, and that will probably disappear in the coming months as well.

Shannon O'Neil:

So when that happens, there will be a real question about what happens with migrants. Right now, many are being sent back to Mexico to remain in Mexico, but that may no longer happen to the extent that it has been. So the Biden administration will be left in this quandary where it has been trying to build up its capacity to process asylum and other cases at the border, because we saw at the end of the Trump administration, a quite anemic system of courts and lawyers and processing facilities and the like for these individuals, or families, as the case may be. So while they're building that up we're seeing an increasing flow that will come over.

Shannon O'Neil:

Now, Mexico itself has been struggling with the number of migrants that are coming into Mexico and many claiming asylum and/or trying to stay in Mexico itself. And one of the things the López Obrador administration did very early on in the name of austerity, was cut the budgets of all the migration institutes or internal agencies and the asylum agency. So they're working with very limited funds, as they see a huge exponential increase in the number of cases happen there. The UN is helping them with some funding, and others, but it has been a big challenge for Mexico to try to absorb. They are absorbing many people as we are also absorbing many people.

James Lindsay:

Just speaking on the issue of the southern border of the United States, Shannon. Is there any chance that AMLO could reach a point where he says, "We're not going to accept you returning people to us."

Shannon O'Neil:

There's a possibility he could do that, and the Biden administration has already started, for those that are not Mexicans, has already started often returning people to their countries, not through Mexico but through other means; so transporting them back. And in fact, Biden administration just recently signed an agreement with Columbia, that Venezuelans that had been in Columbia, but then come to the southern border, would be sent back to Columbia. So they are looking for other places for migrants that come to the border that won't be allowed to stay in the United States.

Shannon O'Neil:

But this has been the big issue, as we see all of these issues on the US-Mexico agenda. The question is, does migration dominate and you need cooperation on migration to the detriment of these other issues that also matter for the United States, particularly in the medium to long term, if not the immediate, urgent, of what's happening at the southern border. And how do you balance all of those things in terms of... and I think that is the big question.

Shannon O'Neil:

The other challenge, frankly, about the people who show up at the border is, the biggest category for the last almost 18 months has been Mexicans. And under Mexican law and the constitution, the Mexican government cannot stop Mexicans from leaving Mexico. So they can't...They will take those people back because they're Mexicans, if the US sends them back, but they can't stop them from leaving. So that is not something that, whether he wanted to or not, AMLO can enforce.

James Lindsay:

And presumably we're seeing an uptick in Mexican entry into the United States because economic conditions are so poor in Mexico. And obviously with so many Mexicans in the United States, Mexican Americans, there's also the pull factor to go work with people you know, who may have come from your village or town, or you're related to. I want to actually shift gears here and talk a little bit about trade, Shannon, because when I was introducing you and I talked about your areas of expertise, I didn't mention that you know a lot about trade, you know a lot about supply chains. And obviously the United States and Mexico have a very important economic relationship. There's a lot of goods that go back and forth across the border and you know that the one bright spot in the Mexican economy recently has been selling stuff to the United States. And that obviously brings up NAFTA and its successor agreement, the USMCA. What is your sense of how the USMCA has worked after a lot of arm-twisting and agonizing went into its ultimate passage.

Shannon O'Neil:

So the USMCA kept most of what was good about NAFTA and what had, over 25 years, created regional supply chains that allowed companies to make things across the border and then sell things on both sides of the borders. So that part was protected. It changed some of the rules around the car industry, the auto industry, which is an important North American industry and made it more North American, or encouraged it to be more North American than not. I think the biggest changes we saw in the USMCA have been on labor and environment. And so in the original NAFTA, there were side agreements that involved labor rights and environmental issues, but they didn't really have any teeth. And the latest agreement, the current agreement, actually has teeth. And we have an administration and a USTR that has focused a lot of energy and time on enforcing those teeth.

Shannon O'Neil:

So for instance on the labor side, the labor has a fast track action mechanism where if you feel like labor rights are being violated in any of the countries, but here in Mexico, then the US can bring a case and sort o force changes in Mexico. And we have seen cases actually come to fruition. So for instance, there's a GM plant in the north of Mexico, where there are different labor unions fighting for control and deciding who would be the labor union to represent the workers in that particular plant. The old labor union that had been there for a long time, that had one of these sweetheart contracts that probably didn't help the workers, was trying to hold onto its control of the plant. And it looked like they had fudged the ballots at one point, so they had to do it again. And the independent labor union actually won the election. So there are things in this new agreement that could bring real change, and we're starting to see it on a plant by plant basis. But I think that could be much broader.

Shannon O'Neil:

That is a big difference from the original NAFTA. And, frankly, I do think the lesson we will see the United States take from that, and because trade has become a suspect across both parties, it's Democrats and Republicans, is that future trade agreements and maybe perhaps trade agreements we already have, will start to incorporate these mechanisms because they've been seen to work in the north American context. We will start seeing these ways of going after or protecting broader, higher level labor rights as well as environmental rights, that weren't in the previous trade agreements that the US has signed.

James Lindsay:

I'll just note in passing that our colleague Ted Alden wrote a piece for Foreign Policy on the vote at the GM plant in Mexico, and the potential consequences. It has, partly by justifying the view taken by many elements of the democratic party, that trade agreements have to have tough labor regulations as well as environmental things. So.

Shannon O'Neil:

It's a great piece.

James Lindsay:

It is a very good piece. I want to close our conversation Shannon, by coming to a topic of your next book, which is talking about regionalism. Because there's been a lot of talk over several decades that the United States would benefit from having greater North American integration and that it would behoove us and we would become more prosperous if we were to do so. And people point to the European Union integration you have there, much higher levels of trade, as you look toward east and Southeast Asia. What is your assessment of the prospects for regionalism in North America going forward, given where we are politically right here today? Where AMLO is and what he is trying to do and who he hopes to appoint as the successor. Also given sort of the state of play of politics here in the United States, as you point out, there are a lot of powerful interests right now that are dead set against developing trade deals and the like.

Shannon O'Neil:

So to me, the really unfortunate aspect of the moment today is that at a time when regionalism and bringing North America together would empower the United States and make it more globally competitive. And also at a time when we are seeing shifts in global supply chains, whether due to COVID or whether due to US-China rivalries and worries about technology control and the like. Where we seeing these things happen, the ability and capacity of North America to come together is ever further away. A big part of that is AMLO. This is a president who's fundamentally uninterested in integrating with its neighbors, in fact integrating with the world at all. His biggest policies are pulling back. He's going to be energy self-sufficient, he's going to be food self-sufficient. He is less interested in the international side, in fact he's only been outside of the country, I think, once since he was elected three years ago, and that was to come up to the United States and sign the USMCA.

Shannon O'Neil:

So in part you have a Mexico that's pulling away. And as you rightly note here in the United States, we also are looking very inward and that's across the political divide. Republicans and Democrats are less interested in the world, there's lot talk of re-shoring and on-shoring and bringing things back here. And there's reasons for some of that there, but what we will find is we're unable to do things alone that are cheaper, faster, and better. And so while some things should and could be done here in the United States, we do need to look globally. And if we want to provide good jobs, we need to sell to all those billions of customers that are out there, not just to Americans, because that's a much bigger pie than the 300 plus million Americans that are here today.

Shannon O'Neil:

So as we look at this, I see the importance of a region, the importance of making things with neighbors or with other countries is as important or more important than it is in the past. But the reality of it and the politics of it, in Mexico, in the United States, I think to a lesser extent Canada, who's still willing, but I think the politics make it all the harder. Unfortunately.

James Lindsay:

On that sobering note, I'll close up the President's Inbox for this week. My guest has been Shannon O'Neil, Vice President, Deputy Director of Studies and Nelson and David Rockefeller Senior Fellow for Latin America Studies at CFR. Shannon, first, thanks for joining me for this conversation. Second, you have to promise to come back on when your book gets out. We can delve a bit deeper into this issue of regionalism and why it makes sense for the United States.

Shannon O'Neil:

Thanks so much, Jim, and look forward to coming back.

James Lindsay:

Please subscribe to the President's Inbox in Apple Podcast, Spotify, or wherever you listen. You leave us a review, they help us get noticed and improve the show. You can find the books and articles mentioned in this episode, as well as a transcript of our conversation, on the podcast page for the President's Inbox on cfr.org. As always, opinions expressed on the President's Inbox are solely those of the host or our guests, not of CFR, which takes no institutional positions on matters of policy. Today's episode was produced by Zoe Collis with senior producer, Jeremy Sherlick. Zoe also did double duty as our recording engineer. Thank you, Zoe. Special thanks go out to Margaret Gach for her assistance. This is Jim Lindsay. Thanks for listening.

 

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