A stack of unfulfilled TMEC processes can reach the elections in Mexico and the US

Truckers chat as they wait in a long line for customs border control to cross into the US, in Tijuana, Mexico, in 2019.ANDRES MARTINEZ CASARES (REUTERS)

Mexico once again resorted to the mechanisms of the free trade agreement in its trade tensions with the United States. This time, it seeks to review what the neighboring country claims is a percentage of dumping for which a steel company is responsible, as reported by the Ministry of Economy (SE) on Monday. The trade agreement, largely negotiated under previous administrations in the United States, Mexico and Canada, included provisions that were considered groundbreaking at the time. However, rulings, resolutions and consultations have been piling up in a kind of impasse in which no one obeys the orders or puts pressure because the neighbor does not comply either.

Through a notice in the Official Gazette of the Federation, the SE requested the review before a binational panel of an investigation carried out by the US in which they found that a Mexican company, Grupo Acerero, incurs dumping in a margin of up to 16 % in its sale of steel for concrete reinforcement. Dumping occurs when a company sells below current price or cost to eliminate competition and take over the market. These practices are considered in violation of the TMEC, so Mexico is asking to review the information found by the US before a binational panel.

Both Mexico and its two partners in the agreement, the US and Canada, have resorted to dispute mechanisms in processes that have been ineffective. The US lost a ruling that, in theory, should force it to more fairly interpret the rules of origin for auto parts it imports from Mexico and Canada. Canada should be complying with two rulings in favor of the US, one in the dairy sector and another in the solar panel sector. Two processes initiated by the US against Mexico, one in the energy sector and the other for corn biotechnology issues, are stuck at the consultation stage, despite the fact that the US could escalate them to a dispute panel. This has been a source of frustration among both US and Mexican businessmen, who recently asked the governments to comply with the TMEC.

The result has been a kind of pause in which resources have been accumulating, while no one is pressing for compliance, says Ignacio Martínez, academic coordinator of the Laboratory for Analysis of Commerce, Economy and Business at the National Autonomous University of Mexico (UNAM). ). “And now comes this request from the binational panel to be able to determine if there is dumping,” says Martínez, in response to the US investigation. “The reading of the United States is that little by little it is adding cases and processes. It does not execute, it does not sanction, but the pressure will come in this situation perhaps in the first or second quarter of 2024,” says the academic.

The political-electoral situation will be intense, since next year presidential elections will be held in both countries. One of the trade disputes, the ban on imports of GM corn that Mexico imposed by decree, is one that affects farmers in the US, an attractive bloc of votes. “That is precisely where we would be running the risk that, under all these elements, the United States will take pressure against Mexico. This would be in March 2024 and how is the political panorama coming for Mexico… if the fire continues to be overpowering and the valve continues, there will come a time when it will explode.

Mexico expects senior officials from the US and Mexican governments to meet this fall for the High Level Economic Dialogue (DEAN), a series of bilateral meetings to discuss economic issues that do not necessarily include disputes under the USMCA. For its part, Canada will be the host country for the next meeting of the three leaders, which will take place next year.

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