The desire to expand trade and bring production closer to the US dominates the focus of Biden’s trip to Mexico

Expanding economic relations between the US, Canada and Mexico in the face of a looming global recession is the focus of President Biden’s meeting this week with his Mexican and Canadian counterparts, a summit of the three leaders who oversee the world’s most powerful free trade alliance.

Mr. Biden capitalized on former President Donald Trump’s success in reforming the alliance through the 2020 United States-Mexico-Canada Agreement (USMCA), which accounts for at least a third of global GDP.

Administration officials say they are interested in further building up the trilateral giant, even as other factors weigh in on Monday and Tuesday’s Mexico City summit.

The credibility of Mexico’s statement to combat fentanyl illicit manufacture and smuggling into the United States hinges on Mr. Biden’s meeting Monday with Mexican President Andrés Manuel López Obrador.

National Security Council spokesman John Kirby expressed optimism to reporters at the White House ahead of Mr. Biden’s trip, pointing to coordination between US and Mexican law enforcement over the fentanyl crisis.

“We’re going to continue to work with them in step to see what we can do together to try to limit this flow,” said Mr. Kirby, who praised Mexico’s arrest last week of Ovidio Guzmán, the son of the former Sinaloa cartel. boss Joaquin “El Chapo” Guzman, is currently in a US federal prison.

“Mexico has already taken important steps,” Mr. Kirby said, calling Mr. Guzmán Jr. “a key trafficker in fentanyl.”

The growing number of migrants at the US-Mexico border is another sensitive topic that dominates the Biden-López Obrador meeting on Monday.

Focus on “priority”

The meeting between the two presidents and Canadian Prime Minister Justin Trudeau marks the first time Mexico has hosted a U.S. president since 2014.

Mr Biden arrives at the National Palace in Mexico City on Monday afternoon to meet Mr López Obrador before Mr Trudeau joins them for dinner. Mr. Biden and Mr. Trudeau will hold talks on Tuesday, after which the three leaders will meet for a panel discussion.

In addition to curbing drug smuggling and migration, discussions will focus on climate change, cross-border manufacturing, trade, the economy and the potential global impact of a more cooperative North America amid growing economic competition with China, Biden administration officials said.

“Our partnerships with Canada and Mexico are critical to our economic security, prosperity, democratic stability and, of course, migration management,” Mr. Kirby said. “This summit of North American leaders will provide an opportunity for all of us to strengthen these partnerships and advance common priorities for North America.”

An analysis released on Friday by pro-business group Americas Society and Council of the Americas (AS/COA) notes the expansion of trade between the US, Canada and Mexico over the past decade, including as part of the Trump-era revision of North American Free Trade. Agreement (NAFTA) at USMCA.

“The new pact includes significant updates to NAFTA, including higher regional rules of origin for the automotive industry, a rapid response mechanism for labor disputes, and stronger enforcement provisions,” AS/COA said. “[It] new provisions on digital commerce, anti-corruption and environmental protection have also been updated or included.”

“Regional integration has made North America an economic powerhouse. The region accounts for a third of global GDP, and its combined GDP has more than doubled in the last decade,” the group added, claiming that “more than 5 million jobs in the United States depend on trade with Mexico.”

The analysis characterized the three-way economic link as potentially supporting US efforts to secure supply chains in North America, “bringing” the policy of geographic relocation of production closer to the US homeland.

Some analysts say Mexico is poised to capitalize on Washington’s adoption of such a policy in the wake of global supply disruptions due to COVID-19 and also in the face of potential future disruptions caused by growing economic competition and geopolitical tensions with China.

Mexico will benefit as US companies rethink their relationship with China, the Associated Press reported, which notes that Mexico’s proximity to the US and existing trade agreements could encourage US factories to move south of the border.

Analysts at Bank of America estimated in October that Mexico could increase its trade by as much as 30% if more supply chains returned to North America. The report notes that there has already been a jump in Mexican manufacturing as US policymakers and businesses have increasingly focused on expanding trade with allied countries that are close to US consumers.

“Each country arrives with different priorities, but there are points of convergence,” said Enrique Perret, managing director of the US-Mexico Foundation, a think tank focused on cooperation between the two countries. “It’s competitiveness, it’s the economy, it’s education, it’s labor mobility.”

In the first 10 months of 2022, the US imported more than $380 billion worth of goods from Mexico, the third largest source of imports after China and the European Union, according to the US Bureau of Economic Analysis.

friction points

For its part, Canada is the US’s fourth-largest import partner, with the State Department calling it “the world’s most comprehensive trading relationship.” The US and Canada are each other’s largest export market, and Canada is the US’s largest foreign energy supplier.

However, there are points of economic and other tension in the alliance.

U.S. and Canadian officials, for example, say the López Obrador administration is trying to favor a Mexican state-owned utility over power plants built by foreign and private investors, something the USMCA has banned.

Meanwhile, Mexican and Canadian officials have expressed wariness about Mr. Biden’s overall “Buy America” ​​plan. While the administration’s drive to expand electric vehicle production could be a boon for both countries due to North American battery tax breaks, there are fears that US allies will be left behind.

And then there’s fentanyl. According to a recent analysis by AS/COA, the US Drug Enforcement Administration seized 50.6 million counterfeit fentanyl prescription pills in 2022, compared to 20.4 million in 2021.

According to the analysis, the DEA also identified the Sinaloa and Jalisco drug cartels as “primarily responsible” for the production of fentanyl entering the United States, using precursors from China and other parts of Asia.

On a positive note, AS/COA pointed to the High-Level Security Dialogue (HLSD) launched between the US and Mexico in October 2021, noting that both sides have subsequently highlighted fentanyl and arms smuggling as major bilateral issues.

A statement from the second annual U.S.-Mexico HLSD in October 2022 claimed that Mexican authorities had made “historic fentanyl seizures” and also noted that U.S. Customs and Border Protection officials “seized an average of more than 800 pounds of fentanyl each month in 2021.”

• This article is based in part on wire service reports.

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