Dear Members and Friends:
Hope you are well, staying safe and have gotten your vaccines. Boosters are next!
September 9 marked an important day in relations between the U.S. and Mexico. It was the first time the High-Level Economic Dialogue, or HLED, had met since 2016. The HLED first began in 2013 during the Obama administration but stalled for four years after the election of then-President Donald Trump.
The meetings, held in Washington, were attended by Vice President Kamala Harris, U.S. Commerce Secretary Gina Raimondo, Secretary of State Antony Blinken, DHS Secretary Alejandro Mayorkas, U.S. Trade Representative Katherine Tai, USAID Administrator Samantha Power, and the U.S. Ambassador to Mexico, Ken Salazar. Mexico’s delegation included Foreign Secretary Marcelo Ebrard, Secretary of Economy Tatiana Clouthier, Ambassador to the U.S. Esteban Moctezuma, Under-Secretary of Finance Gabriel Yorio, Under-Secretary of Foreign Trade Luz Maria de la Mora, Chief Officer for North America Roberto Velasco, and Director General for International Treaties’ Monitoring, Administration and Compliance Oversight Lydia Antonio.
An excellent overview of the Dialogue, “The Return of the HLED: Better Late Than Never, But No Time to Waste,” is provided by Monarch Global Strategies, a consultancy headed by former U.S. Ambassador to Mexico James Jones. Michael Camuñez, President and CEO of Monarch, was one of the architects of the HLED when he was Assistant Secretary of Commerce. Monarch’s overview concludes by saying that “... time is running short, and if the U.S. wants to maintain its global leadership on matters of economic policy at least, much less re-establish its claim to moral and economic leadership in the Americas at large, it better start tending meaningfully to relationships in its immediate orbit, and that begins with Mexico and North America.” The plans for HLED going forward are contained in a Fact Sheet released by the White House.
On the trade front, Mexico ranked number one in two-way trade with the U.S. for year-to-date through July. However, Canada has taken over the number one position for the past three months. Through July, U.S.-Mexico trade totaled $376 billion with Canada and China slightly behind. Will Canada continue the leadership? In previous years China trade came on strong in the later months of the years due to holiday items. However, a number of supply-chain issues (to be covered below) might forestall a surge in China trade, especially imports. For those looking for a wealth of detail on U.S. trade, World City would be a great source (www.ustradenumbers.com). Their latest report covering primarily 2020, “2021 U.S. Trade Numbers,” provides details on trade with countries, products traded, and ports used.
On the supply-chain front, still a lot of turmoil. The initial issues with supply chain appeared with the first wave of COVID-19 when much economic activity was forcibly or voluntarily curtailed or stopped altogether in the major countries of the world as the virus spread. With any vaccines still way in the future, things got out of hand quickly. Demands were uncertain as were suppliers’ capabilities. Manufacturers began reconfiguring their chains with some suppliers offline and others struggling to figure out what was doable.
This year, with vaccines becoming more available, things were trying to get to a “new normal.” However, the Delta variant has interfered, thwarting efforts of employers to build new workforces – either on-site or virtual. Take your pick of recent issues: ports, chassis, containers, labor – all adding to woes. And part of this, maybe a large part, is the increase in consumer demand. On shipping, when the demand increased, ships and containers were not in the right position. Increased demand with limited capacity increased container costs and the backlog caused delays at ports – both loading and unloading. Container ships from China are now waiting up to four weeks to be unloaded on west coast ports. And now we have a power shortage in China. The news isn’t good for the holidays. Some knowledgeable sources say that the chaos will definitely last well into 2022. Possibly more opportunities for re-shoring!
Please find Business Development Partners’ latest report here: “Mexico Monthly Economy and Politics Brief - September 2021.”
On the European Union, President Joe Biden, European Commission President Ursula von der Leyen, and European Council President Charles Michel launched the Trade & Technology Council at the US-EU Summit in June. The Council's inaugural meeting was held in Pittsburgh on September 29. See the White House and USTR Fact Sheets on the Council and the outcome of the first meeting.
There are a number of areas of concern that the Council will address going forward: global trade challenges and non-market, trade distortive practices; semiconductor supply chains; investment screening; export controls; and artificial intelligence. An interesting view from the British perspective is provided by the Tony Blair Institute for Global Change in their recent piece, “What is the US-EU Trade and Technology Council?” The Institute’s feeling is that “Success is not guaranteed, however: the geopolitical incentives and regulatory philosophies of the EU and US are still far apart in many areas. Even if the EU and US can work together, they cannot go it alone.”
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We hope that you have been taking advantage of the webinars our Chapter has been doing in light of COVID. We have held six thus far under the title “Mexico in a World.” The recent ones have been on Globalization, Automotive, Technology, and Medical Devices. Our next one, “Mexico in a World of Aerospace,” will be held on Wednesday, October 13, from 1:00 to 2:30 p.m. You can find registration materials at our website at www.usmcocma.org. No registration fees involved.