Former Mexican Ambassador Concerned USMCA Sunset Could Be Thorny

Former Mexican ambassadors to the U.S. and a former U.S. ambassador to Mexico expressed anxiety that Mexico is not able to capitalize on the move to nearshore or friendshore for a variety of reasons.

Geronimo Gutierrez, a former Mexican ambassador to the U.S. in 2017 and 2018, said during a May 16 Wilson Center webinar, "There is a gap growing between the narrative we see in terms of strengthening supply chains in North America and what we’re actually achieving. If the business climate in Mexico does not improve, and specific steps are taken on energy, to make sure there is sufficient electricity availability, it just won’t work."

Martha Barcena, who followed Gutierrez and served as ambassador until early 2021, said she's afraid that there will be more investment arbitration requests over Mexican policies, and she noted that there is a dispute pending where Canada and Mexico are challenging the U.S. interpretation of auto rules of origin.

"We have to keep in mind that USMCA has a sunset clause," she said, and if there are a lot of differences between the countries when the time to reevaluate the new NAFTA arrives, "it will be a very difficult moment for the economies of the three countries."

"What we are seeing is maybe we shouldn’t take for granted that our economies are going to align by themselves," she said. "Slowly, I’m afraid, we are drifting apart."

She said that Mexico and the U.S. don't agree on the energy transition related to climate change, they don't have common ground on the relationship between inequality, democracy and development, and are agreeing less and less on foreign policy.

Barcena, too, said she's concerned that Mexico is missing the moment on nearshoring, partly because of U.S. politicians' emphasis on bringing production to the U.S., not to the region, and partly because Mexico is having problems guaranteeing affordable energy supplies and because of its crime issues.

"We are not being able to have that investment because we are not giving certainty to that investment," she said.

Former U.S. ambassador to Mexico, Tony Wayne, was more optimistic, saying there has been quite a bit of reinvestment at current factory locations. "People see the value of operating in Mexico," he said.

He said it's interesting that Canada, Mexico and the U.S. are trying to delve deeply into supply chains, but he noted they don't have the expertise like the private sector does. "Can governments work in a way with the range of stakeholders to make this relationship more resilient?"