Mexico at a crossroads: AMLO's reforms challenge USMCA and generate tensions with the US.

At the height of commercial boom, Mexico finds itself at a crossroads where the reforms proposed by President Andrés Manuel López Obrador could unleash tensions with the United States and Canada, putting at risk the free trade agreement between the three countries, the USMCA. Despite the fact that trade between Mexico and the U.S. has reached historic figures, the implementation of the reforms proposed by the Mexican government could be in conflict with the principles of the trilateral agreement. Last year, trade between Mexico and the U.S. reached a record figure of $798 billion, positioning Mexico as the largest trading partner of the U.S., surpassing China. This achievement occurred in a context where the U.S. government has sought to reduce its economic dependence on China, creating an opportunity for Mexico to attract more foreign investment. However, the stability of this trade relationship is threatened by the reforms proposed by the López Obrador government. The USMCA, an agreement that establishes trade rules among the three countries, has been crucial for the growth of trade in the region. Since its entry into force in 2020, trade between the signatory countries has increased by 50%, representing approximately one-third of the global Gross Domestic Product (GDP). However, despite the evident economic benefits, trade tensions have arisen in various sectors, from dairy in Canada to the automotive sector in Mexico. The reforms proposed by López Obrador could jeopardize the harmony of the USMCA, according to experts like Jesús Carrillo from the Mexican Institute for Competitiveness. Specifically, five initiatives have been identified that could violate six chapters of the agreement, including administrative simplification that seeks to eliminate autonomous bodies in key sectors such as energy and telecommunications. If approved, these proposals could trigger trade conflicts to a new level. One of the most controversial points is the so-called Plan C, a reform to the judicial power that proposes the popular election of the majority of judges, which has generated uncertainty and affected the exchange rate in the country. Experts like Diego Marroquín Bítar and Earl Anthony Wayne from the Wilson Center warn that this measure could undermine the rule of law in Mexico and pose a challenge to regional competitiveness if approved. In terms of energy and agriculture, Mexico has faced off against the U.S. on issues such as the competitive advantage of Mexican state-owned companies and the prohibition of transgenic corn, respectively. These points of conflict have led to consultations and resolution panels, evidencing the existing trade tensions between the two countries. Despite this, experts like Juan Carlos Baker believe that the pragmatic stance of the U.S. in these disputes could be influenced by factors such as elections and the need to maintain a stable relationship with Mexico. In this context, a paradigm shift is looming in the Mexican economic landscape, with the consolidation of a regime different from previous years. While some of the proposed reforms may be necessary, there are aspects that conflict with the spirit of the USMCA and could affect competitiveness and economic stability in the region. In this scenario, it is crucial to find a balance between the internal reforms proposed by Mexico and the fulfillment of commitments made within the framework of the trilateral agreement.