Mexico could be left isolated, without investments and jobs, and facing an imminent economic recession if it leaves the United States-Mexico-Canada Agreement (USMCA).
After asking President Andrés Manuel López Obrador yesterday if he plans to withdraw from the treaty due to the controversy between the United States and Canada on the energy issue, the president responded that, although they are Mexico's main trading partners, he will not agree to give up national sovereignty.
“Even if we are dealing with the most important market in the world (the United States), if having access to that market means giving up sovereignty, we will not accept it. We will not surrender our independence to any foreign government. Furthermore, they are wrong,” said the President.
In this regard, the former president of the Appellate Body of the World Trade Organization (WTO), Ricardo Ramírez Hernández, said that Mexico has turned out to be the biggest beneficiary of the T-MEC.
“The denunciation of the USMCA should be considered twice. Mexico is the biggest beneficiary of the USMCA since it establishes clear rules for trade. Without the USMCA, we return to the law of the jungle, because we must not forget that the WTO mechanism is ineffective,” explained the founding partner of RRH Consultores.
In an interview with EL UNIVERSAL, he commented that Chapter 34 of the USMCA states that if a party intends to withdraw from the treaty, it must submit “a written notification of denunciation to the other parties. A denunciation will take effect six months after a party submits written notification to the other parties.”
For his part, the partner in charge of the transactional area of Santamarina and Steta, Juan Carlos Machorro, said that, taking into account the relationship and interconnection of the economies, it is extremely complicated to abandon the treaty, "because the value chains are interconnected between the partner countries of the treaty."
From his point of view, the most likely thing is that Mexico will lose a panel and have its benefits withdrawn, and that tariffs will be applied to the sectors that hurt us the most, such as auto parts, manufacturing and agricultural products.
If this happens, "what could happen is that the President will entrench himself even more, wrap himself in the anti-Yankee, pro-sovereignty, pro-oil ownership flag; although this does not affect sovereignty or oil ownership," he said.
If we leave the treaty, "we will be foolish sovereigns, because we will be left isolated, without investments, without jobs and with an economic recession that Moody's has already announced... and with an impoverished country," said Machorro.
He explained that, according to the USMCA, the country cannot modify the opening of the energy sector if it is to close it, nor adopt discriminatory measures against Americans and Canadians to support Pemex or CFE.
“But it seems that the President either does not understand, has not been told or does not want to understand that, despite what Chapter 8 says, the energy sector is protected. It is covered by the treaty in a cross-cutting manner in terms of Cross-Border Trade in Services, Investments, National Treatment, Most Favored Nation Treatment and State-Owned Enterprises,” he said.
For Machorro, the negotiator for AMLO's transition team in the negotiation of the T-MEC, Jesús Seade, "gave the President a run for his money and what he put in Chapter 8 is useless."
Source: El Universal