U.S. and Mexico Reach Agreement on Sugar Dispute

June 5, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

U.S. and Mexico have reached an agreement in the dispute over sugar trade today, according to sources (Reuters). The agreement will prevent a trade war in which the U.S. would have imposed steep tariffs on Mexican sugar imports and Mexico would have responded with equal tariffs on U.S. high-fructose corn syrup.

Details of the agreement are not yet public, but sources indicate the deal was made to benefit both countries. According to the Juan Cortina Gallardo, the president of Mexico’s sugar chamber, the managing of the sugar agreement will set a precedent for how further negotiations will play out (The New York Times). Since NAFTA was first negotiated in the early 1990s, the sugar industry has been the most contentious issue in U.S.-Mexico trade relations.

The current agreement will modify a 2014 agreement in which quotas and a price floor on Mexican sugar acted as an alternative solution to antidumping and antisubsidy duties. U.S. sugar companies had argued that the agreement was not doing enough to counter “unfairly subsidized” Mexican sugar companies, who could sell sugar in the U.S. at a price domestic companies could not compete with.

Stay up to date with the details of the agreement and other international trade news by following Mercatura Global on Twitter.

Commerce Secretary Ross Wants NAFTA Renegotiation by January

June 1, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

U.S. Secretary of Commerce Wilbur Ross indicated Wednesday that the best time period to complete the North American Free Trade Agreement’s negotiation is by early January. By setting this window, the Trump Administration hopes to have the renegotiation done before both Mexico’s general elections and the 2018 U.S. Congressional elections (Reuters).

According to Ross, Mexico’s elections will make the approval of NAFTA more complicated because it needs Mexican congressional approval. Mexican Economy Minister Ildefonso Guajardo also urged for a final deal by the end of this year (Bloomberg). In the U.S., presidential powers to negotiate trade deals that can accepted or rejected by Congress without amendments expires in July 2018, justifying the urgency of the Trump Administration

Ross also said Wednesday that the Commerce Department would impose anti-dumping and anti-subsidy duties on Mexican sugar and Canadian softwood lumber as part of the renegotiations if settlements over the disputes are not achieved. The Mexican government subsidies sugar companies and Canadian lumber producers utilize government-owned land to produce, making it difficult for U.S. competitors to compete in both industries. Ross hopes to resolve both of these issues before the official modernization of NAFTA.

NAFTA negotiations will formally begin around August 16, following a 90-day period of domestic consultations with U.S. lawmakers, industry, and the public.

Stay up to date with all trade news, including updates on NAFTA, by following Mercatura Global on Twitter. As an advocate of free trade, Mercatura Global can counsel your company on how best to enter international markets and increase your export revenue. To develop your market entry strategy and identify strategic partners, contact Mercatura Global today.

Robert Lighthizer to be Sworn in as U.S. Trade Representative Today

May 15, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

Robert Lighthizer will be sworn in at U.S. Trade Representative at 3pm today. The occasion comes after a months-long confirmation process, in which he was finally confirmed by an 82-14 Senate vote last Thursday.

Despite the overwhelming consensus, two notable Republicans, John McCain of Arizona and Ben Sasse of Nebraska, voted against his confirmation due to Lighthizer’s stance on the North American Free Trade Agreement (NAFTA). According to the GOP Senators, they do not believe Lighthizer understands “the North American Free Trade Agreement’s positive economic benefits to our respective states and the nation as a whole” (U.S. News & World Report). They claimed to fear Lighthizer did not appreciate the jobs created by NAFTA and worried he would not be a champion of U.S. agriculture.

The delay on Lighthizer’s confirmation has hindered President Trump’s trade agenda, especially in regard to his goal of renegotiating NAFTA. Before this formal process begins, the Trump administration must send a declaration letter to Congress detailing its intention to initiate negotiations in 90 days (Reuters). Renegotiations would likely focus on Mexico, as the U.S. trade deficit with Mexico has ballooned since the establishment of NAFTA in 1994 and has been largely criticized by the President.

In addition to renegotiating NAFTA, Lighthizer is expected to tackle other trade issues detailed by the Trump administration. This includes establishing bilateral trade deals with allies like the United Kingdom and Japan, and take a tougher stance on China (Politico). Future trade policy will have an “America First” focus, with the goal of bringing back manufacturing and other industrial jobs back to the U.S.

After Lighthizer is sworn in today, the Trump administration will be able to begin acting on measures outlined in President’s campaign. This could mean a lot of changes for trade. To stay up to date with all things related to trade, follow Mercatura Global on Twitter.

Trump Administration with Seemingly Softer Stance on NAFTA

April 4, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

A White House draft circulating around Congress reportedly details only minor changes to the North American Free Trade Agreement (NAFTA). According to the Wall Street Journal, the proposed NAFTA alterations as mainly “modest” changes while keeping most of NAFTA’s controversial provisions the same.

There were two specific changes outlined by the draft proposal. The first proposal would allow member nations to levy tariffs on imports they consider to cause “serious injury” or “threat of serious injury” to domestic outfits (US News). This proposal could be potentially leveraged against Mexican imports that contribute to the U.S. deficit in goods trade.

A second proposal refers to a section of NAFTA that requires member governments to consider companies based in their foreign counterparts for “public sector procurement” projects such as infrastructure ventures. Under current NAFTA provisions, foreign suppliers are guaranteed to be treated no less favorably than domestic companies competing for the same procurement opportunities (International Trade Administration). With the new provision, rules would be established that require government procurement to be conducted consistent with U.S. law and the administration’s policy.

The letter also supposedly call for leveling the playing field in tax treatment, expanding opportunities for agriculture, and creating stricter intellectual property enforcement and digital protection.

It is likely that this draft will be altered further before any formal NAFTA negotiations, which would be initiated through a formal 9-day notice of President Trump’s intent to revisit the deal. To stay up to date on the future of NAFTA and U.S. trade policy, follow Mercatura Global on Twitter.

U.S. Oil Exports Boom as CERAweek Begins

March 6, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

In 2016, the U.S. exported a record 3 million barrels a day of refined products, which is over double the 1.3 million barrels a day that were exported 10 years ago (Bloomberg).

The U.S. refining industry has experienced a major shift in recent years, and it has transformed from a domestic industry to a global venture. This is largely due to struggling countries such in Asia, Latin America, and Africa leaving gaps in the industry that U.S. companies have taken advantage of.  For the first time ever, in late 2016 the U.S. actually exported more crude and refined products to Latin America than it imported from the region. The U.S. is redrawing the global energy map.

Last year alone, Mexico relied on U.S. gasoline for a total of 50% of total consumption, and in December it imported a record high of 1.2 million barrels a day of U.S. fuels. However, this boom is mainly due to malfunctions of local Mexican refineries, not due to an increased demand for fuel. Aside from Mexico (22% of exports), U.S. refined products are also being exported to Canada (13%), Japan (7%), and Brazil (6%).

In an effort to stabilize oil prices, OPEC has agreed to cut back oil production in 2017. According to Reuters, this has caused a spike in American, British, and Brazilian sales of oil to Asia as companies attempt to fill the emerging supply gap. So far, OPEC has lost about 5% of its Asian market share since October.

This week is the 36th annual CERAweek in Houston, an international gathering where energy industry leaders and others meet to discuss future investment plans within the industry. The program provides insight into the global and regional energy future by discussing key issues. For more information about CERAweek, click here.

A Closer Look into U.S. Trade With Mexico

January 30, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

The past week has been rocky between the U.S. and Mexico. In addition to conflict over a Mexico-U.S. border wall, President Donald Trump also has raised concern over the trade imbalance with Mexico, claiming “Mexico has taken advantage of the US for long enough” (Politico).

While the U.S. did run a $49.2 billion deficit on the $583 billion total bilateral trade with Mexico in 2015, these numbers do not tell the full story. Within the category of professional services, the U.S. actually ran a surplus of $9.2 billion, including industries such as travel, transportation, and computer software (Global Trade Magazine). On the other side, Mexico mainly exports manufactured goods that typically require cheaper labor.

The year before NAFTA was enacted, total bilateral trade with Mexico stood at only $85 billion. In 2015 alone, the U.S. annual exports to Mexico stood at $236 billion (The Washington Post). This is almost triple the total bilateral trade between the two countries in 1995. Now, Mexico is America’s third-largest trading partner, and the two economies are highly intertwined.

In recent days, the White House has been warning against imposing a 20% tariff on Mexican goods. While America could experience a shortage of fresh vegetables and fruits, it is likely that Mexico’s economy would be devastated by such a tax (The New York Times). However, imposing a tariff on Mexico would imply that the U.S. pulls out of NAFTA, which would greatly harm American consumers and businesses alike.


Initiative Underway to Make $1.6 Billion in Daily Trade with Mexico More Efficient

February 24, 2016  |  No Comments  |  by Nicole àBeckett  |  Blog

Ambassador Basáñez was in Los Angeles this past Friday, February 19th, to speak at the Los Angeles AreaHello Chamber of Commerce. When speaking to the Chamber, he stressed the importance of a secure U.S.-Mexico border to improve business activity between the two countries and promote their collective competitiveness in global markets. This is the goal of the U.S.-Mexico Leadership Initiative which was launched in 2010.

Mexico has a substantial trade economy, with 60% of its GDP being a result of overall trade. As the United States’ second largest export market after Canada, Mexico is one of the most desired, increasingly modern marketplaces in which we wish to strengthen our trade relations. According to the U.S. Chamber of Commerce, over 6 million American jobs depend on trade with Mexico, and the Trans-Pacific Partnership (TPP) hopes to enhance these numbers by eliminating barriers that makes Mexican trade costly and inefficient.

The TPP, coupled with the U.S.-Mexico Leadership initiative, will revamp commercial trade across the U.S.-Mexico border that currently averages $1.6 billion a day (ITA). As Ambassador Basáñez asserted, border management is a critical tool for the progression of U.S.-Mexico trade. As the Mexican market is easily accessed, bilateral trade with Mexico is of particular interest to the U.S. Mexico is a good place for business, and according to the World Bank”s 2015 Ease of Doing Business Report, it takes much shorter time to begin doing business with Mexico than most other countries.

The U.S.-Mexican trade relationship is undergoing changes to strengthen both countries’ economic interests. Learn how to become apart of the success by contacting Mercatura Global today. 

Why Everyone Should Pay Attention to the Pacific Alliance Trade Bloc

May 6, 2014  |  1 Comments  |  by Nicole àBeckett  |  Blog

One of the most dynamic trade blocs in the world right now is one most people have never heard of. The Pacific Alliance was an initiative of former Peruvian President Alan Garcia who, in 2011, called a meeting of the Presidents of Mexico, Chile and Colombia with the initial goal to establish a regional alliance to further promote free trade and economic integration. The Alliance was solidified in early 2014.

Chile, Colombia, Mexico and Peru are the current powerhouses of Latin America and top lists for GDP, PPP, competition and ease of doing business. Costa Rica is finalizing its membership and several other Latin American countries are pursuing the same.

The Alliance goes deeper than pushing free-trade however. The Pacific Alliance has begun work on several projects to further solidify integration, including visa-free travel, joint embassies in several countries and, possibly the most groundbreaking, a common stock-exchange – the Mercado Integrado Latinoamericano (MILA).

MILA currently integrates the stock markets of Colombia, China and Peru and is the largest market in Latin America by issuers and second by capitalization (behind Brazil’s). The Mexican Stock Exchange is working on incorporating and is expected to be fully integrated by 2014’s year-end.  Any company listed on one of the exchanges can also be traded on the other two.

However, the greatest gains to be made with the Alliance come through their cooperative efforts to pursue opportunities in Asia Pacific. In natural resources alone, together they provide quite an attractive partner to Asia, particularly China. It seems that Latin America is taking greater measures to “pivot” to Asia Pacific than the United States.

With its sights set on regional cooperation to take advantage of opportunities in Asia, the Pacific Alliance could greatly reduce the negotiating power of the already-sputtering economic engines of Brazil and Argentina and even dig into the United States’ regional influence.

Regardless, greater free trade in Latin America is very good for US exporters. A more integrated neighboring region only means more developed channels for trade and increased partnership opportunities.

Read a more in-depth overview of the Pacific Alliance here from The Atlantic.

Trade Experts Share Thoughts on TPP Future

January 15, 2014  |  No Comments  |  by Nicole àBeckett  |  Blog

“Why not China? Why not Korea? Why not Taiwan?”

These were the words of former United States Trade Representative Mickey Kantor on Tuesday at the US-Australia Bilateral Dialogues when asked if the Trans Pacific Partnership (TPP) was just a starting point for a broader agreement that would open trade to the entire Asia-Pacific region. While that may still be far off, there is a sense of urgency to get this agreement completed in 2014.

The TPP is a massive trade agreement between Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Called a 21st century trade agreement, the TPP intends to move beyond policies of the traditional free trade agreements (tariff reductions, market access) and instead looks to harmonize digital property protections, promoting innovation, and environmental alignments among other regulations.

Kantor warned that the agreement, in its current state without China, was serving to alienate the country even further and would not advance an agenda of pushing China to enter into fair trade and transparent currency regulations.

Claude Barfield, a Resident Scholar at the American Enterprise Institute and former consultant to the US Trade Representative, opined that the agreement should be enacted with its current partners but should also be an ongoing and open agreement that allows further countries such as China, India, Indonesia to join down the road when they have demonstrated they meet the expectations of the pact. He also warned that missing the December 2013 completion deadline was a blow to the partnership and warned that President Obama must line up Democratic support now in order to get it across the finish line.

The two points that all panelists agreed on was that, first, completing the agreement this year is critical if it is to be completed at all. And second, that policymakers and the general public should look at this agreement not as a forthcoming hit to domestic industries but rather in the context of how it will make our economies more competitive, more innovative and revitalize the global economy.

Reforms to Pemex Presents New Opportunities

January 8, 2014  |  No Comments  |  by Nicole àBeckett  |  Blog

On January 1, historic reforms to Mexico’s energy sector took effect following constitutional changes approved by the congress in December 2013. The reforms put forth measures to open Petróleos Mexicanos (Pemex) to investment for the first time in nearly 100 years. Three articles modified in the constitution will allow for foreign private investment into Pemex for extraction and refinement of oil.

However, many gray areas remain and secondary laws still must be approved to further clarify the details of the changes such as profit and production-sharing contracts, licenses, foreign investment terms and regulator responsibilities. These are pivotal laws that will either incentivize private investment and elevate the long stagnant Mexican energy sector or, if mismanaged and bogged down in bureaucracy, will turn investors to projects with less uncertainties and continue the decline in oil production.

Mexico produced 2.5 million barrels per day in 2012, down from 3.4 million during its height in 2004. Government estimates show production capacity to be 4 million. The under utilization of resources comes from a lack of technology to reach deep reserves. This is where the opportunity lies for foreign partners. Some of the energy behemoths thought to be lining up for the partnerships include Spanish oil company Repsol, Chevron and China National Petroleum Corporation.

Demand for both technological equipment and technical expertise grow sharply if the tough reforms are indeed pushed through by President Pena Nieto and the congress.

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